National / International News

VIDEO: Immersive cinema: Is this the future?

BBC - Thu, 2014-07-31 15:17
Newsnight reports on the growing popularity of immersive entertainment.

VIDEO: Who are the children fleeing to the US border?

BBC - Thu, 2014-07-31 15:16
New data from the Pew Research center shows that children 12 and under are coming to the US in droves

Technique turns bodies 'see-through'

BBC - Thu, 2014-07-31 15:13
A newly discovered way to make entire bodies transparent could pave the way for a new generation of treatments, scientists say.

Keeping the cyber thieves at bay

BBC - Thu, 2014-07-31 15:12
Keeping cyber thieves' paws off your data

VIDEO: Commonwealth Games goes virtual

BBC - Thu, 2014-07-31 15:08
Commonwealth Games streamed live to a virtual reality headset.

'Draconian' Russian net law enacted

BBC - Thu, 2014-07-31 15:05
A new law imposing restrictions on bloggers and social media users has come into effect in Russia.

Most Of California Reported To Be In 'Extreme Drought'

NPR News - Thu, 2014-07-31 15:03

About 58 percent of California is currently in the worst of the four drought levels used by experts, in conditions normally seen only once every 50-100 years.

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Switching broadband is 'too costly'

BBC - Thu, 2014-07-31 15:01
Tens of thousands of broadband customers in the UK are having to pay "costly" charges to change supplier, Citizens Advice warns.

Argentina blames US for debt default

BBC - Thu, 2014-07-31 14:50
Argentina blames the US for its default, calling the mediator in debt negotiations which ended in failure "incompetent".

Home favourite Child wins silver medal

BBC - Thu, 2014-07-31 14:40
Commonwealth Games poster girl Eilidh Child wins silver in the women's 400m hurdles at Hampden Park.

Broods: New Zealand's next pop export

BBC - Thu, 2014-07-31 14:16
Meet New Zealand's next big musical exports

WTO fails to seal global trade deal

BBC - Thu, 2014-07-31 14:14
The World Trade Organization says its 160 members have failed to agree a global customs pact drawn up in meetings in Bali last December.

The inside story of the great Southampton sell-off

BBC - Thu, 2014-07-31 14:06
Broken pacts, discontent and a silent owner - sports reporter Ben Smith on the background to Saints' £92m player sale.

Weightlifter attack on Welsh athlete

BBC - Thu, 2014-07-31 13:56
An Australian weightlifter admits assaulting a member of the Welsh team at the Commonwealth Games.

Israel And Hamas Agree To 3-Day Cease-Fire, U.N. Says

NPR News - Thu, 2014-07-31 13:55

The truce begins Friday morning local time. Envoys will travel to Cairo to negotiate a possible longer peace deal.

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From headline act to supporting role

BBC - Thu, 2014-07-31 13:50
Is there still a place for trailblazer and television star Louis Smith, after being beaten by the gymnasts he inspired?

When China Spurns GMO Corn Imports, American Farmers Lose Billions

NPR News - Thu, 2014-07-31 13:45

China has been a big and growing market for U.S. corn. But then farmers started planting a kind of genetically engineered corn that's not yet approved in China, and the Chinese government struck back.

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Tory disquiet over Israel action

BBC - Thu, 2014-07-31 13:44
Conservative MPs put pressure on David Cameron to take a more robust stance with Israel over its actions in Gaza.

As Ebola Surges, CDC Sends Aid And Warns Against Travel

NPR News - Thu, 2014-07-31 13:44

It will take at least three to six months to contain the largest Ebola outbreak in history, the health agency says. Fifty-seven people have died in four days, raising the death toll to 729.

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Vultures show Argentina no mercy

Marketplace - American Public Media - Thu, 2014-07-31 13:41

"Vulture funds" earned their nickname because they are, in a sense, scavengers.

They go after the debt of dying firms or crisis-addled countries, buying it on the cheap when nobody thinks it’ll get paid back and many other creditors have given up and agreed to accept pennies on the dollar. Then, they sue to get it paid back in full. This can result in a situation where a vast majority of original creditors have agreed to accept a fraction of their original debt, leaving the vulture minority to win big.

For example, in the current dispute between a group of investors and Argentina, a firm called Elliott Capital Management purchased Argentine debt for $48.7 million and is now seeking payment of $832 million. 

“These firms profit from the backs of poor people,” says Eric LeCompte, executive director of Jubilee USA, a religious organization that lobbies for debt relief for poor countries and international financial reform. “One of the most tragic recent examples is money from debt relief was sent to Zambia, but that money for schools and hospitals was collected by vulture funds.”

Funds have been aggressive in using whatever legal means they can to ensure full repayment of sometimes decades old debt. In 2010, Elliott Capital Management convinced a court in Ghana to bar an Argentine navy ship from leaving that country as a way to extract the money it says it is owed.

Such examples are extreme and give a bad name to what is otherwise a simple case of enforcing commitments, argues Edward Altman, professor of finance at New York University’s Stern School of Business.   

“Asking for full payment is totally appropriate,” he says. The original owners of a country’s securities are ill-equipped to negotiate when those countries renege on their commitments, and the vultures have the appetite and ability to play hardball.

Like vultures in the wild, vulture funds may serve an important ecological purpose.

“They provide in the case of distressed assets a liquidity that simply wouldn’t be there,” he says. (In other words, it’s helpful to have somebody out there who will buy bad debt.)

There's a hole in international law

Whether morally bankrupt or legally secure, the reason why vulture funds can operate in the first place and why there is such controversy around them boils down to a hole in international law: There is no bankruptcy court for countries. 

“When you, or I, or General Motors runs out of money, we can file for bankruptcy and there’s somebody to oversee that process,” explains Anna Gelpern, professor of law at Georgetown University and a senior fellow at the Peterson Institute for International Economics. “When a government runs out of money there is no such process, all you have are a bunch of contracts and it’s every person and fund for themselves.”

Theoretically, it’s possible to write contracts when bonds are issued that lay out what happens in the case of a default. For example, to set out in the contract that if 90 percent of creditors agree to accepting 30 cents on the dollar, it applies to all creditors. 

The problem, of course, is that nobody wants to talk about default when they issue a bond. Bankruptcy laws get around this problem by laying out rules in law. No such luck for countries.

Over the years, an informal system developed whereby countries would get a majority of creditors on board with restructured debt when defaults occur. But the Argentina case, the firms who sued “have thrown a big wrench in the process of coming up with a methodology for an orderly resolution of countries with debt problems,” says Barry Bosworth, senior fellow at the Brookings Institution. 

Gelpern points out that as firms and countries fight through international legal and financial systems, it’s banks and financial institutions that suffer jabs and bruises along the way. 

“You can’t make Argentina do anything, but by golly, you can threaten anyone who has anything to do with Argentina,” she says.  “Going forward, countries will find it harder to restructure their debts, creditors will have to think about risk more carefully when getting involved with countries that are in trouble.”    

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