Bankrupt Ethics—Webs of weaponized economic debt, predatory loans & vulture funds—Ashes Ashes #59
Channel: Stop Fossil Fuels
Date: 2019-02-10

After the US government shutdown of 2018-2019 witheld two paychecks from 800,000 federal workers and countless more contractors and businesses, and with US officials encouraging furloughed employees to simply take out loans, we've got debt on the mind again.

Citizens of the US and UK are experiencing record high levels of debt concurrent with falling wages, and higher costs of living. But the financial systems that enable these vicious debt spirals play out on the world stage, as private companies and wealthy governments alike employ innovative strategies for ensnaring vulnerable countries, companies, and individuals in inescapable economic webs.

Vulture funds play an important role here, but we also want to understand how the opportunities for vulture funds open in the first place. Will we finally solve the global debt crisis, or will the hole get deeper and deeper?

Podcast by Ashes Ashes, reposted under CC License. Browse episode resources & read full transcript at https://ashesashes.org/blog/episode-59-bankrupt-ethics

Stop Fossil Fuels researches and disseminates effective strategies and tactics to halt fossil fuel combustion as fast as possible. Learn more at https://stopfossilfuels.org

CHAPTERS
0:33 Debt on the Mind
13:35 Africa: opportunities for predatory financial systems
26:30 Sudan and the HIPC Initiative
34:32 Puerto Rico: Vicious Cycle
47:15 Debt in a Climate Change World
50:38 What Can We Do?David Torcivia:

EXCERPTS
Daniel: Mariner Finance, privately owned by an 11.2 billion dollar private equity fund, offers consumer loans. It's figured out a clever way to draw in new business and return profits to its wealthy millionaire stockholders. And that's by mailing checks to poor people.

Daniel: Wait, what? How does it make money by giving money away?

David: It mails checks to poor people. But if they cash it they have actually entered into a loan contract.

Daniel: That's not a check.

David: It is a check, it has value, it has money on it, but it's also a contract. Steven Huggins from Nashville TN received such a $1,200 check in the mail, saw the 33% interest rate in the fine print and decided not to touch it. But then his truck needed maintenance, and he didn't have the money to pay for it, and he decided to take the money after all. By the time it was all over Huggins ended up borrowing $2,000 and within just one year Mariner Finance had sued him for a total of $3,221.27, including over $530 that Mariner charged him to pay their attorney who sued him. Of course, Huggins couldn't afford his own attorney.

I mentioned that this company makes money for its millionaire investors, I think it's worth clarifying. The minimum investment to be a stakeholder in this scheme is 20 million dollars. In 2017 Mariner sued 300 people in Boston alone forcing them all to pay for Mariner’s attorneys and some of these lawsuits have come just five months after the original check was cashed or deposited. Mariner has over 500,000 customers and 30% of its revenue is made from these fake check loans it directly mails to people that it knows are in desperate struggles.

David: Whenever Africa comes up, you encounter prominent stereotypes about Africa and African people. You hear the word poor a lot, assumed to be a symptom of people who are uneducated, maybe illiterate, backwards, sometimes even the word barbaric gets in there. These notions justify us exporting Western models of education, missionary trips from Western religious groups to “save Africans”.

But the land of Africa is anything but poor, in fact the continent as a whole is the richest part of the world in minerals and resources, even home to some of the oldest regions of agricultural innovation and development. South Africa is sitting on some 2.5 trillion dollars of valuable mineral reserves.

In 2015, African countries exported 232 billion dollars worth of oil and mineral. The continent is anything but poor. The stereotype sold to us is that while the land itself is rich in resources the people are poor because they either squander this wealth or don’t know how to be good stewards. But we would be fools to accept this line of reasoning without looking at the role of the international community in developing these resources.

Daniel: For that we can turn to the report “Honest Accounts 2017—How the world profits from Africa’s wealth”. According to the data grand total of 161.6 billion dollars flowed into Africa in 2015 in loans, grants, foreign aid and payments for goods and services. However, 203 billion dollars was taken out of Africa leaving a 41 billion dollar net loss. That goes on every year.

Of the 200 billion dollars taken, some 68 billion were stolen by multinational corporations illegally through innovative ways such as trade misinvoicing or misrepresenting the value of goods being exported or imported in order to dodge taxes. These common ways for corporations to steal from the continent add up to 48 of that 68 billion dollar total.