Singer v Argentina: financial crimes against humanity

Paul Singer's immoral campaign to extort unearned wealth from the people of Argentina has hit the wall.

Bankruptcy is a funny thing. I remember a real estate broker in Guelph who had survived three bankruptcies. He kept his fine home and his fancy cars throughout, and if his financial history impacted his standing in the business community, it didn't show.

On the occasion of my own bankruptcy, I recall my elderly mafioso neighbour imparting some words of wisdom; "things happen, son; sometimes you just gotta tip it and move on."

Business folks large and small routinely shift their "non-performing assets," i.e mistakes, into their weakest holding company, pull the plug, and carry on as though nothing had happened.

None of the Reichman brothers had to move house or skimp on meals when their Olympia and York flamed out in what was at the time the biggest bankruptcy in Canadian history.

However, if you hear Paul Singer tell the tale, bankruptcy by a nation state is an affront to God, and he is doing God's work when he uses the courts to put the squeeze on already-crippled national economies.

It's not that Singer lent those countries money and wants it back. The Singer M.O. is to wait till a country defaults, buy up their bonds at pennies on the dollar, and then use his vast resources and political influence to extort face value plus interest on that discounted debt.

The reason this works with a nation state and not with an individual or corporate debtor is because in theory, a nation state could amortize those debts so far into the future that eventually they would be paid. In the meanwhile, the citizens of that country will have to forgo a few frills like education and health care, but at least they're confirming Singer's idea of the rule of law.

Thus, when the people of Peru or Congo or Argentina have to do without so that Paul Singer's vulture funds can make a few un-earned billions, all is well with the world.

That's the American way!

What do you cook in a million dollar kitchen?

The Farm Manager is busy with one of those real estate porn shows. This one's about folks who spend up to a million bucks on renovating a kitchen.

I don't even know how that is possible. Sure, you can bust the bank on a Sub-Zero fridge and a La Cornue range and lava countertops, but you'll still have a long way to go to make it to seven numbers.

People can lose touch with reality on these renovation projects. I remember back in the nineties, my buddy Bruno had a little carpentry shop, and he somehow ended up with a contract to supply and install the new interior doors on Paul Reichman's home reno in Toronto.

Bruno was quite the self-promoter. Everywhere he went he carried around a roll of stickers that said "Bruno's Custom Woodwork" along with his phone number. Wherever he saw some nice millwork, he'd slap on one of his Bruno stickers. Public library, traffic court, U of T admin buildings, didn't matter what. If there was some extra-fine craftsmanship on view, there'd be a Bruno sticker stuck to it somewhere. Somewhere Paul or Mrs. Reichman must have spotted one of those stickers and jotted down the phone number.

Now Reichman's home reno was quite epic. It went on for years and from time to time aspects of it would make the papers - usually legal aspects. Reichman spent as much on lawyers for his reno as he spent on the house, which was many millions.

Which was of course somewhat ironic because Paul Reichman was at that time in a bit of a funk due to having birthed the biggest bankruptcy in Canadian history, that of Olympia and York to the tune of 20 billion dollars.

I was doubly aware of the irony, because I had almost simultaneously birthed one of the smallest bankruptcies in Canadian history, an amount considerably less than what Reichman was spending on these doors.

So I can appreciate that people get carried away with reno projects, but why?

Seems to me if you've got a million lying around for a kitchen reno, you could just scrap the kitchen entirely. Wouldn't that be nice? Maybe keep a hotplate and a microwave for a cup of tea and some warm snacks, but that's it.

You can order in from Dominos or KFC twice a day and it's going to take you at least fifty years to make that add up to the cost of your million dollar kitchen.

And you won't even need a dishwasher.

Preacher caught with pants down

Gwyn Morgan is a very successful top drawer exec who is now the Chairman of the Board of SNC-Lavalin, Canada's biggest international construction conglomerate. Sort of a "Bechtel  North" outfit that's famous for landing the big deals in the shadier realms of the global economy.

When he's not busy in the Chairman's chair or out on the lecture circuit, where he likes to spread the gospel of "corporate ethics," Gwyn pens a column for Canada's newspaper of record. It's a somewhat preachy column, all things considered, and I found today's effort typically stinky.

He's tossing turds at the Euro-zone dumpster-divers, those benighted citizens who have been reduced to finding their next meal in the dumpsters of Europe, from Athens to Barcelona to Lisbon to Madrid. The reason they're in those dumpsters scrounging for their next meal is because Angela Merkel's "austerity enema" has made that dumpster their last best hope.

Gwyn takes exception to the fact that these folks are blaming the lenders or the politicians for their plight. They are "blaming others," when it is so patently obvious that it's their fault. After all, they are the ones who were living large off  all those " extravagant programs that drove debt to astronomical levels."

That's right! It wasn't those guys with the 100 foot boats in the ubiquitous Mediterranean yacht basins and the Bentleys and the Manhattan and Belgravia apartments. It was the grubby-fisted school teacher who thought he was entitled to retire at 62 WITH A PENSION!!!

Now that they've hit the debt wall of course, these coddled malcontents are looking for someone to blame, and their first instinct is always, you know it, blame the Bentleys-in-Belgravia crowd! And if those guys have hoisted anchor and sailed for the Caymans, well, blame the bankers!

Gwyn does a sterling job of setting the record straight. Debts are debts and if they're not repaid, well, God Himself fears what could happen next. So stop your whining, starving children of Spain and Greece. Suck it up! In two or three generations, if you keep your noses to the grindstone, the bond-holders should be paid in full and we'll let you out of the dumpster.

This is in stunning contrast to how excess debt is dealt with in the private sector. First of all, once you're deemed "too big to fail" you get a bail-out courtesy of those folks now rummaging through the trash.

If you weren't quite too big to fail, if you were an Enron or a Worldcom or an Olympia and York or a Lehman Brothers, hell, you just pulled the plug and moved on! Hundreds of billions of dollars of debt just go away!

It's magic! And neither Dick Fuld or Paul Reichman  has ever been spotted climbing out of a dumpster.