Though, for most, the London Inter-Bank Offer Rate (Libor) interest rate fixing scandal appears to be distant and far too complex to understand, its potential consequences may be as economically devastating as a world war.
The Libor is used to set payments on $800 trillion worth of financial instruments. It sets the prices that people and corporations pay for loans and receive for savings. Given that the fraud impacted $10 trillion in consumer loans, the Libor scandal will likely leave a long list of previous financial scandals that contributed to the Great Recession look like child's play.
It also pulls back the curtain on the mechanisms behind the world economy, its anti-social priorities, its willingness to gamble away the future of billions of people, and the government's collusion in these operations. The Libor scandal reveals that the "invisible hand" Adam Smith spoke of in explaining how a capitalist economy regulates itself has been transformed into the trained hand of a swindler.
The Libor and its Problems
The Libor sets interest rates that banks charge one another to borrow on a daily basis. Sixteen (now eighteen) large banks submit their assessment of what they anticipate credit would cost them. The four lowest and four highest calculations are thrown out, and the interest rate is determined as the middle figure among the remaining assessments.
While the method that the banks use to determine the figure they report to Libor is largely arbitrary, it is, nevertheless, assumed that they won't take advantage of the process to game the system. This is a rather remarkable leap of faith since there are billions of dollars of profit if the banks can find a clever way to sidestep the rules. In contrast to popular knowledge, the Libor expects honor among thieves.
A fascinating shift has happened in the U.S. mainstream media: After a year of anti-Syria war propaganda and lies, glimmers of truth are making their way into the public’s view. This may be too little too late: the country is being torn at the seams into the nightmare of ethnic-religious cleansing and massacres.
After non-stop war mongering, The New York Times took a second to wipe the blood off its hands to report the true state of things in Syria. Apparently, the previous, ongoing reports about the Syrian army indiscriminately massacring citizens in the city of Homs was simply a lie, repeated over and over.
It now turns out that the exact opposite was true.
In actuality, many of the refugees fleeing Homs were persecuted Christians, attacked by members of the Free Syrian Army, who have been killing religious minorities in an attempt to recruit hard-line Sunnis in Syria as they wage a religious war against the Syrian secular state.
Because the Free Syrian Army did not emerge from a popular revolution — but instead the pocketbooks and arsenal
of Saudi Arabia — the war to destroy the Syrian government had to be waged as an ethnic-religious war. Saudi Arabia has a long history of exporting its rare extremist form of Sunni Islam, Wahhabism, as a political tool to help overthrow unfriendly governments.
The U.S. has a long-standing alliance with Saudi Arabia in this effort, a dynamic that, over the years, has given birth to both the Taliban and Al Qaeda. The U.S. refuses to stop using this strategy because it’s incredibly effective at overthrowing “unfriendly” governments, while keeping large sections of the Middle East stalled in the formative years of Islam, which keeps a good check on any political activity from working people, since in Saudi Arabia protests, labor unions, and civil rights are illegal.
Thanks to Occupy, most working people are well aware of the growing inequalities in wealth. But for those who lack the specifics, former Secretary of Labor Robert Reich provides a useful overview:
“…the rich have been getting a larger and larger portion of total income. From 9 percent in 1980, the top 1 percent's take increased to 23.5 percent by 2007. CEOs who in the 1970s took home 40 times the compensation of average workers now rake in 350 times.” (“Confessions of a Class Warrior,” August 22, 2010).
During roughly the same period, however, hourly wages declined by more than 7 percent. (Robert Frank, “Income Inequality: Too Big to Ignore,” The New York Times, October 16, 2010).
In other words, not only are the rich getting richer, the rest of us are getting poorer.
What has Contributed to Increased Inequality?
Many factors have converged to produce these trends. Good-paying manufacturing jobs have migrated overseas. Technology has replaced many other good-paying jobs. More importantly, across the country many unions have demonstrated an overwhelming willingness to accept concessions without waging a struggle, thereby contributing to the growing inequalities. This willingness to give up hard won gains in turn has resulted in the continuing decline of union membership, which now stands at 8 percent. Who would want to join a union and pay dues only to make concessions? (In contrast, in the 1930s when unions were staging all-out fights for better pay and working conditions, and winning, union membership surged.) The decline of unions signifies the loss of a powerful weapon that can be used to defend the standard of living of the working class.
The U.S. media has made its intentions clear: the 'rebels' attacking Syria's government must have more support to advance Syria's "revolution.” This was the result of the much-hyped advance of Syria's rebels into the country’s two largest cities, which the western media portrayed as a defining moment in global democracy. But "journalists" like these have blood on their hands, with much more in the works.
The systematic dismantling of Syria has more to do with western media lies and geo-politics than "revolution;” and the more that the U.S. media cheers on this bloodletting, the more politicians feel enabled to spill it.
Victory Around the Corner?
The rebel attacks on the cities of Damascus and Aleppo were, in actuality, meant to convince the western media that the rebels are near victory, with the hopes of attracting more direct military support from abroad. In reality, however, the attacks in Damascus were instantly crushed by the Syrian government, but the U.S. media predicted "victory just around the corner" for the rebels.
Suddenly Syria is becoming a U.S. presidential topic of debate. Republicans have accused Obama of "outsourcing" the Syrian conflict, refusing to be involved when the rebels deserve extra support (guns mainly). But Obama is the principal cause of this humanitarian catastrophe. Middle East expert Robert Fisk explains:
"While Qatar and Saudi Arabia arm and fund the rebels of Syria...Washington mutters not a word of criticism against them. President Barack Obama and his Secretary of State, Hillary Clinton, say they want a democracy in Syria. But Qatar is an autocracy and Saudi Arabia is among the most pernicious of caliphate-kingly-dictatorships in the Arab world."
In a recent article published on the website of Socialist Viewpoint, Chris Kinder criticized those on the left who call for raising taxes on the rich. Identifying himself as a Trotskyist, Mr. Kinder displayed particular displeasure with Trotskyists who embrace this demand. Yet, as we will argue, his arguments fundamentally deviate from the political-strategic framework established by Marx and Engels and developed by Lenin and Trotsky.
“‘Tax the rich’ is far from a transitional demand,” Mr. Kinder argued and added: “Demanding taxation of the rich presumes the continued existence of the rich! But revolutionists seek to expropriate the rich capitalists as a precursor to creating an egalitarian, socialist society.”
This argument was further developed when he added: “Furthermore, ‘tax the rich,’ by presuming the continued existence of the exploiter class, cuts off any avenue to being a ‘bridge’ to a revolutionary program. As Trotsky explained in The Death Agony of Capitalism..., a transitional demand should help the masses to ‘find the bridge between present demands and the socialist program of the revolution.’”
Mr. Kinder continues his critique by noting that taxing the rich has been promoted by liberals, and, unlike transitional demands, can be won within the framework of capitalism. By improving the lot of the working class it can then defuse their revolutionary impulses.
He also argues that “it’s not a particularly internationalist demand,” since it would only benefit the workers of a particular country.
Echoing the story of David vs. Goliath, janitors in Houston are on strike and taking on such corporate giants as JPMorganChase and Exxon Mobile in an effort to pressure the janitorial companies they employ to agree to the workers' modest demands. It is these big business behemoths that are the real powers behind cleaning contractors such as ABM, GCA, ISS etc. By striking against these contractors, and publicly targeting these contractors' employers, the janitors are using their collective power in a showdown that has great significance for not only the Labor Movement but all workers.
The janitors are members of Service Employees International Union (SEIU) Local 1, which has a membership of 3,200 in Houston. Currently, these workers' wages top out at $8.35 per hour. On average, they make under $9,000 a year. The government defines the poverty line as an income of $22,314 for a family of four and $11,139 for an individual.
The janitors are asking for a $10.00 per hour starting wage. In response, the contractors offered a combined 50 cents an hour raise over the course of a five-year contract. With the growing cost of living over this time, these workers would sink even further into poverty if they accepted this. The contractors' proposal was nothing more than an insult.
Not content with merely insulting their employees, the contractors began to back up their position with injury. The janitors were subject to captive audience meetings where their jobs were threatened if they participated in union activity. Management warned that they would call for an immigration audit if the employees didn't quiet down. In addition, they also withheld paychecks of some union supporters. In all, 13 Unfair Labor Practices have been filed with the National Labor Relations Board.
Akbayan Chairperson Risa Hontiveros called on the Sandiganbayan today to issue a warrant of arrest against former president Gloria Macapagal Arroyo (GMA) in connection with the plunder charge filed against her and several others before the anti-graft court by the Office of the ombudsman.
Hontiveros said the Sandiganbayan has original jurisdiction over cases for plunder, while the Ombudsman acts as the prosecutor.
“Since the Rules of Criminal Procedure applies suppletorily to cases filed with the Sandiganbayan, Section 5, Rule 112 of the Rules of Court can be applied which states that within ten (10) days from the filing of the information for plunder, the Sandiganbayan justice shall personally evaluate the resolution of the Ombudsman and its supporting evidence. If the court finds probably cause, it shall issue a warrant of arrest,” Hontiveros said.
Hontiveros said the Sandiganbayan already deemed the case has probable cause when it issued a hold departure order against Arroyo.
“The plunder case has probable cause. It is rock-solid. It won’t take long for Arroyo to realize that she has simply jumped from the frying pan and into the fire. The Sandiganbayan has no reason not to issue a warrant of arrest against Arroyo. We look forward that the anti-graft body will swiftly act on this issue,” Hontiveros added.
Recently, Akbayan called on the Sandiganbayan to expedite the plunder charge against her, which they said will land Arroyo in jail.
On Thursday at rush hour at five New York State store locations of the cosmetics
giant, Aveda, customers were greeted by more than the smiling make-up-caked faces
of customer service representatives. On that summer day, environmentalists rallied to
challenge the corporation’s support of Environmental Advocates of New York (EANY),
an Albany-tied organization that has taken an increasingly prominent role in the widely
disparaged industrial practice of fracking. Activists drew attention to EANY’s support for
regulated fracking (or ‘safe fracking’, as the industry has called it). EANY’s Washington,
D.C.-based parent organization, the National Wildlife Federation, also came in for some
bruising criticism for their support of this polluting practice.
“Aveda should know that consumers of its goods are being informed about their
partnering non-profit, Environmental Advocates of New York. EANY sits on Governor
Cuomo’s Hydrofracking Advisory Panel,” said Robert Jereski, an environmental
activist handing out literature outside Aveda’s swanky Flatiron District salon in New
York City. “This panel includes other promoters of ‘safe fracking’ such as the Natural
Resources Defense Council and Riverkeeper. It does not represent the vast majority of
environmentalists who oppose fracking and want it banned and criminalized.”
Environmental activists rallied outside of Aveda stores in 5 locations across New York
State including in New York City and issued the following demands to Aveda:
Demand that EANY resign from and publicly denounce Governor Cuomo’s ‘safe
fracking’ Advisory Panel, which is tasked with “developing proper regulations”
(for ‘safe fracking’);
Portland based conscious hip hop artist Jeremy, and the band Profane sass, had an encounter with the park city, utah police. While playing their set on the street, the police arrived and ordered them to stop. The band finished up the song they were on, and this enraged the po-pos, who called in for an additional 8 officers. The crowd booed and chanted free speech slogans. The police singled out Jeremy, and Tomas, who were both snatched away, and are charged with inciting a riot. Bail was set for $5,700 for each, an exhorbitant fee that they need help with. The judge will not be in for arraignment until next tuesday! The popular underground band has a lengthy tour schedule that they are on, and this majorly disrupts and jeopardizes their remaining dates, several of which are in Colorado. If you can help with bail,please do so by calling Eric or Roger at 970-245-3720. Jeremy and Tomas are prisoners because their rights to free speech and assembly have been grossly violated. Any probono lawyers are especially sought after. This is a clear case of judicial overreach, and cannot stand. More information will follow as we get it.http://www.youtube.com/watch?v=xYEMRyqrXSc
Four people are dead and many more injured following protests over a proposed gold mine in Peru. A series of anti-mining protests has seen the government impose a state of emergency three times in the last year. A state of emergency has been declared in northern Peru's Cajamarca province and two neighboring provinces. The protests, which surround the US-based company Newmont Mining Co.'s gold mining project, have left four dead and many more injured.
Newmont Mining has a history of corruption in peru. Freedom fighters in Cajamarca are being tortured and murdered in defense of their communities and mother earth. They need and deserve our immediate solidarity.
Newmont Mining corporation's head quarters is located at:
6363 South Fiddler's Green Circle
Greenwood Village, CO 80111
Wiki Newmont Mining, shit is fucked up.
We are friends and family members of the "Cleveland 5," the five guys here who are on trial, accused of trying to demolish an area bridge. We are working to support these young activists, in whatever ways they need. Thus far, what stands out as the most pivotal thing is that the boys need a good lawyer, who cares about the case, has relevant experience and goes the extra mile for it. As it stands, they're all being represented by public defenders, with varying degrees of apparent interest in the case. We have been in communication with a local attorney with an inspiring record of civil rights work, but to hire him, we need to raise $20,000 immediately.
We're not going to lie -- this is a desperate situation. The trial date is set for this September, only three months from now. This time frame will make building the case (reviewing evidence, making investigations, filing motions) incredibly challenging. The deadline for filing motions for their trial is June 30th, we need a lawyer, and investigative team working around the clock. Every day that we're not able to hire a lawyer is a day closer to that deadline. These boys entire future hinges on what happens right now. Worse yet, they are being held in solitary confinement, which aside from being brutal treatment in itself, also means that they are severly limited in how much they can speak with their lawyers and supporters -- less than one hour a day. Quick action is essential. We are all putting our personal savings on the line, and we ask that you help us support these guys by chipping in as well.
Any amount is helpful. If you don't have money to contribute, get in touch with us at firstname.lastname@example.org to discuss other ways you can help support the five.
Homestead Media in partnership with Black Apple Media announce that they will be pushing the start date of principal photography for their independent film: “Dutchman’s Run”.
After much consideration, principal photography has been delayed for “Dutchman’s Run”, in order to allow for better potential filming opportunities in the summer of 2013 or other, not yet determined, production dates. Producer Angie Gaffney, had the following to say about the team’s decision:
“The development of “Dutchaman’s Run” has been a consistent independent film venture since its conception and launch in 2011. Although it was a difficult decision to alter our production timeframe, it is in our best interest to take the time we need to ensure a successful production, develop new relationships, and incorporate the schedules of interested parties.” – Angie Gaffney, Producer
All casting applicants will be contacted regarding the adjusted timeframe and their resumes and headshots will be deferred to summer 2013 or a potentially later date. Once future production dates are determined, all applicants will be contacted with audition details and submission processes directly.
Immediate updates regarding newly announced production scheduling can be found online at:
For more information, or to inquire about interview availability, please contact Nikki Williams at: ColoradoFilms@gmail.com.
About Homestead Media:
Formed in 2010, Homestead Media emphasizes collaboration and seeks to strengthen a tight knit community of artists with a focus on independent, entertaining, and thoughtful narrative filmmaking.
While Dilma Roussef hits each day more, "pulling" the leveling of interest of the Brazilian public debt to international levels and begins to devise an industrial policy firmly grounded in a serious exchange rate policy and in science and technology, in addition to important tax cuts, Congress is the scene of successive corruption scandals, all them originated in the corporate funding of campaigns and in "not very corporate" funding of campaigns, and approves, with a rapporteur funded by the agro-business, apocalyptic Forest Code: A million square KM to the devastation.
*1 mile = 1,6 KM
About five Brazilian states such as Paraná, is what the Chamber of Deputies booked to destruction, sonn, approving the new and regrettable Forest Code.
The Legal Amazon is about 5.2 million square km big, almost 62% of Brazilian territory, and the new law reserves 20% of the properties to general cultures, as soy or cattle.
As the soil of the Amazon is very thin, brought by the waters and built by the forest with rotting logs, leaves, carcasses, feces, seeds and other natural features, the felling of trees stops soil fixing and the multimilenar reconstruction of the ground and exports the soil in the form of soy, or disaggregates it with the weight of thousands of heads of cattle livestock.
The only acceptable form of cultivation in the Amazon are Agroforestry Regenerative Analog Systems, of Ernst Götsch, that exploit the forest sustainably, its active pharmacological principles and make a policultural agriculture inside and around the forest, with economic results far superior, usable by much more people, eternal and without bequeath a desert to our children and grandchildren. The work of Götsch is easy to find on the web, including YouTube and numerous masters and doctoral theses (coming in english soon).
Joe's home now. After spending 8 years in the Marine Corps, several of those years on the ground in Iraq, he doesn't like the government much. I guess he's earned that right Joe's home now, but some 6,000 young men and women won't be coming home again. Some of those men were Joe's friends. I beleive he watched some of them die. Eight years is a long time. So I'm not too surprised that Joe is a little different from most folks. He's not a drunk, though he raises a glass sometimes. He's not on drugs. Sometimes he smokes a joint, but far as I know he doesn't do hard drugs. But for some reason he can't really hold on to a job. I'm not to sure why, his service record was good. He did his job over there well enough. Guess it's different being back after all that. He tried school for while. Don't really know why he stopped doing that. His grades were fine. Joe's not stupid, actually he's real smart. But after a couple of semesters he dropped out. Maybe he's just that way. Maybe he was like that before the war. I didn't know him back then so I can't say for sure, but I suspect not. Can't say I really know what happened to him over there. He doesn't talk about it and I don't ask. But he's a real good guy as far as I can tell. He's homeless now. Been that way a couple years now, going city to city, sleeping in brush, occasionally getting some day labor to get a pack of smokes. He got real involved with that Occupy protest while he was on the coast I hear. The other young people, made him one of their spokespeople, had him writing their press releases and giving interviews to all the radio, TV, and newspaper people that come wanting to know what they were protesting about. Everyone liked him. But then the cops came and shut down their camp out there. Joe come out here after that.
"With so many countries facing debt crises, we urgently need solutions to protect investors and poor people," noted Eric LeCompte, who is participating in the UN meetings. LeCompte is the executive director of the religious development organization Jubilee USA Network. "The UN's work is a step in the right direction, but we still have a lot of work to do if we want a legally binding process."
Synagogues and churches held prayer services for students as the Consumer Financial Protection Bureau fined Discover Bank $18.5 million for illegal student lending practices. The bank must repay students $16 million, pay a $2.5 million civil penalty and reform its lending practices. The Bureau accused Discover of overstating the minimum amount due in billing statements, misrepresenting students' total interest payments and engaging in illegal debt collection practices. The penalty is the first of its kind by the Bureau against a student loan company.
"This fine sends a strong message to companies that take advantage of students," said Eric LeCompte, executive director of the religious anti-poverty coalition Jubilee USA Network, which advocates for responsible student lending policies. "Predatory lending traps students in debt."
This past weekend, 64 faith communities from 26 states prayed and acted for fair student lending policies as part of Jubilee USA's national interfaith "Jubilee for Students" prayer event. In 2012 and 2013, the event pushed congressional legislation to stop federal student loan interest rate increases.
"Unfair lending practices put our young people at risk," said Rabbi Barnett Brickner of Temple Israel in Alameda, Calif. "It's important we protect our students and ensure they can graduate college without mountains of debt."
As a part of religious services, communities collected students' stories as part of a national campaign to highlight predatory lending practices.
Pope Francis called for an international bankruptcy process in a news conference as he left Latin America on Monday. According to the Associated Press, when asked about the Greek debt crisis, Francis stated, "if a company can declare bankruptcy, why can't a country do so and we go to the aid of others?" Francis offered further comments noting that too many countries are struggling with high debts and he suggested a United Nations bankruptcy proposal could be the solution.
“Pope Francis knows that heavy debt loads cause poverty and inequality,” said Eric LeCompte, who consulted the Vatican on its position. LeCompte is the head of the religious development organization Jubilee USA Network. “The Pope's statement is a logical extension of the Catholic Church's strong support of debt relief for struggling countries."
Last year, LeCompte led a delegation of global Jubilee organizations to advise Vatican Secretary of State Cardinal Pietro Parolin on the need for a bankruptcy process to address inequality. The Catholic Church is a founder of Jubilee USA and supports its efforts to win debt relief for struggling countries.
In September of 2014, the United Nations General Assembly voted 124-11 to develop the bankruptcy process that Pope Francis referenced. LeCompte addressed the UN earlier this year on the creation of the process. This Fall, the United Nations is set to review progress on the proposal. Because International Monetary Fund (IMF) studies point to debt as a cause of inequality, the IMF is exploring aspects of a bankruptcy process based on an April 2013 paper. In addition to the debt crisis in Greece, nearly 50 countries face worrying levels of debt distress according to World Bank statistics.
At a United Nations development summit, world leaders, the International Monetary Fund and development organizations recommend the elimination of a type of hedge fund that preys on countries in financial crisis. So called “vulture funds” are featured in a global agreement to be signed this week at the Financing for Development Conference.
“These predatory funds undermine development and can destabilize a country’s economy,” said Eric LeCompte, Executive Director of the religious development organization Jubilee USA Network. “From Zambia to Peru, they target, litigate and collect aid monies that should be building schools and hospitals.”
When countries face economic hardship, "vulture funds" buy a country's debt cheaply and then sue for full repayment. After Zambia received international debt relief in 2006, a hedge fund called Donegal International sued Zambia to collect $55 million on a $15 million debt the fund purchased for $3.3 million on the secondary market. NML Capital sued Argentina over debt holdings and refused to participate in Argentina's debt restructuring. The Argentina case put a broader spotlight on this type of litigation.
“World leaders are saying enough is enough,” stated LeCompte who is attending the summit and participated in agreement negotiations. “The final agreement recommends changing contracts to prevent the behavior or legislating the funds out of existence.”
On July 1st, Belgium was the latest country to pass a law restricting this behavior. Three of the ten paragraphs in the United Nations agreement that focus on debt, state concern or recommend ways to stop these hedge funds. Two additional paragraphs promote aspects of global bankruptcy and responsible lending and borrowing which further deter this behavior.
European negotiators agreed unanimously to a new financing deal with Greece. The deal includes up to $96 billion in new loans to Greece in exchange for economic reforms, including austerity measures. Greece can reschedule its debt under the deal but cannot receive debt relief. Greece's parliament and Eurozone parliaments must approve the deal.
Eric LeCompte, executive director of the religious development organization Jubilee USA, issues the following statement:
"It's too early to tell if this deal will work, but I'm skeptical. It's important that they can extend debt payments into the future, but no debt relief and more austerity is a recipe for more of the same for Greece.
"The International Monetary Fund is right that Greece needs debt relief to end this crisis. Without debt relief, it's hard to believe Greece can grow its economy.
"The Greek people voted clearly against austerity because they've seen its impact first hand.
"In the long run, we need an international bankruptcy process to avoid more and more crises like this one."
Jubilee USA Network is an alliance of more than 75 US organizations and 400 faith communities working with 50 Jubilee global partners. Jubilee's mission is to build an economy that serves, protects and promotes the participation of the most vulnerable. Jubilee USA has won critical global financial reforms and more than $130 billion in debt relief to benefit the world's poorest people. www.jubileeusa.org
Greek voters rejected a financing plan that would have provided funds for the debt-ridden country in exchange for austerity measures such as pension cuts. Sixty-one percent voted against the plan while 38.7% voted yes.
"Austerity programs over the last five years pushed a third of the Greek population under the poverty line," said Eric LeCompte, executive director of the religious development organization Jubilee USA. "The Greek people voted in large numbers for debt relief."
Greece and its lenders will now need further negotiations to reach a financing agreement. European leaders meet this week to discuss next steps. Greece owes $300 billion in total debt. It missed a 1.5 billion euro payment to the International Monetary Fund (IMF) on June 30. Approximately 7 billion euros in payments are due in July. The IMF stated in a report this week that any new agreement between Greece and its lenders should include debt relief.
"Greece is the most heavily indebted country in Europe," LeCompte noted. "I agree with the International Monetary Fund that Greece needs serious debt relief and needs to extend other debt payments into the future."
Greece implemented austerity measures as part of emergency financing agreements with the European Union, the IMF and the European Central Bank in 2010 and 2012. The new financing plan Greek voters rejected included pension cuts and other austerity provisions.
"Austerity in exchange for financing doesn't work. It's like treating an injured person with beatings," LeCompte stated. "Unless we establish a global bankruptcy process for countries, we'll continue to see more situations like Greece around the world."
Read the IMF's paper, Greece: Preliminary Draft Debt Sustainability Analysis.
Puerto Rico's public utility company, the Puerto Rico Electric Power Authority (PREPA), reached a deal Wednesday with investors to extend debt negotiations. PREPA will pay $416 million immediately and then will have until September 15 to reach a long-term deal. PREPA owes a total of $9 billion in debt. Puerto Rican Governor Alejandro Garcia Padilla announced this week that the island cannot pay its $72 billion debt burden and asked to extend payment terms.
"Without access to US bankruptcy law or emergency financing, Puerto Rico has few options," said Eric LeCompte, executive director of the religious development organization Jubilee USA Network. It's good news that Puerto Rico won't default in the short term, but we need a long term solution."
Meanwhile, Senator Charles Schumer (D-NY) announced Tuesday he will introduce a bill to allow PREPA to access US Chapter 9 bankruptcy protection. Puerto Rico's representative in the US House introduced a similar bill (HR 870) in February. Puerto Rico is currently unable to access bankruptcy protection because it is a territory and not a US state.
"Congress should immediately extend bankruptcy protection to Puerto Rico. The island should have the same protections as any US city or state," LeCompte stated. "Bankruptcy law protects both investors and debtors from crises just like this."
This week's Nepal donor conference pledged $4.4 billion in aid to Nepal, short of the $6.6 billion Nepal requested for earthquake recovery. About half of the total financing is loans and half is grants. Nepal did not receive any pledges of debt relief while world leaders gathered in Kathmandu. The International Monetary Fund (IMF) said Thursday Nepal will not qualify for its new emergency debt relief trust fund.
"The initial aid pledges are helpful and we can close the $2 billion gap quickly with debt relief," said Eric LeCompte, Executive Director of the religious development organization Jubilee USA Network. "One of the quickest ways that the World Bank, Asian Development Bank and governments can deliver rebuilding grants is by canceling debt."
Nepal spends $600,000 a day paying its debt, or more than $35 million since the first April earthquake.
The World Bank and the Asian Development Bank pledged a combined $1.1 billion in new concessional loans and grants. Nepal already owes the World Bank and Asian Development Bank approximately $3 billion.
Although the World Bank has not announced plans for a debt relief fund, the IMF created the Catastrophe Containment and Relief Trust in the wake of the Ebola crisis and cancelled $100 million of West Africa's debt. IMF spokesperson Gerry Rice said Thursday Nepal met the first requirement for relief but that the earthquake did not cause enough total economic damage. Rice did not reference whether or not damage to Nepal's "productive capacity" pulled another trigger for the fund to release about $23 million in debt relief.
International Monetary Fund (IMF) spokesperson Gerry Rice announced Nepal will not receive debt relief from a special IMF trust fund that helps poor countries when they face natural disasters. The IMF's Catastrophe Containment and Relief Trust cancelled nearly $100 million in debt owed by Ebola-impacted West African nations. Jubilee USA Network, a religious development organization, advocated for the trust fund and debt relief for West Africa and Nepal. A powerful earthquake struck Nepal April 25, killing more than 8,600 people and destroying over 500,000 homes.
"This is troubling news," said Eric LeCompte, a United Nations debt expert and executive director of Jubilee USA Network. "Given the devastation in Nepal, it's hard to believe that the criteria was not met."
Nepal is one of 38 low-income countries eligible for relief from the new fund. To qualify for that relief after a natural disaster, an eligible country must meet certain criteria. The disaster must impact at least one-third of the country's population and either destroy 25% of the nation's productive capacity or cause damage equal to the size of the country's economy. According to Rice, Nepal met the first condition but the earthquake did not cause enough total economic damage. Nepal's earthquake and its aftershocks caused $5-10 billion in damage, about one-third of the country's total economy. However, Rice did not comment on whether or not Nepal's productive capacity met the the threshold to trigger debt relief under the trust.
"This fund was created for situations just like this and debt relief in Nepal could make a significant difference," said LeCompte. "Beyond the IMF, the World Bank and Asian Development Bank who hold about $3 billion of Nepal's debt have unfortunately not announced any debt relief plans yet."
World leaders gather in Kathmandu around Nepal's request for USD 6.6 billion in rebuilding aid after a series of spring earthquakes. United Nations Secretary-General Ban Ki-moon is attending June 25 negotiations where Nepal's 3.8 billion debt is on the table as part of an earthquake recovery package. Nepal spends $600,000 a day servicing debt, or more than $35 million since the first April earthquake.
"Nepal is requesting relief from some debt payments as a portion of the aid plan," said Eric LeCompte, Executive Director of the religious development organization Jubilee USA Network. "Nepal's government is being too careful to call for total debt cancellation because of misplaced worries that they'll scare off investors."
Nepal is one of 38 countries eligible for debt relief from the International Monetary Fund's (IMF) new debt relief trust fund. The IMF created the Catastrophe Containment and Relief Trust to relieve a country's debt payments when a natural disaster impacts a third of the country's population and destroys 25% of the nation's productive capacity. If Nepal qualifies for the trust, it could receive $23 million in debt relief of the $54 million it owes the IMF.
"Nepal's rebuilding efforts are a perfect example of why the International Monetary Fund set up this new emergency debt relief trust," shared LeCompte, who serves on United Nation finance expert groups. "We now need to see the World Bank and Asian Development Bank step up to the plate, as the two groups hold three billion in Nepal's debt."
Nepal owes $1.5 billion to the Asian Development Bank and another $1.5 billion to the World Bank. Jubilee USA Network is petitioning the World Bank to grant debt relief for Nepal and to create an emergency debt relief fund. The World Bank pledged $500 million in loans to finance Nepal's reconstruction.