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Colonization by Bankruptcy: The High-Stakes Chess Match for Argentina

Debt campaigners hold a protest against vulture fund attacks on Argentina outside the office of Elliott Advisors, the owners of the vulture fund NML Capital, on the eve of the Argentinian government appeal hearing in New York, February 26, 2013. (Photo: Jubilee Debt Campaign / Flickr)

If Argentina were in a high-stakes chess match, the country's actions this week would be the equivalent of flipping over all the pieces on the board.

– David Dayen, Fiscal Times, August 22, 2014

Argentina is playing hardball with the vulture funds, which have been trying to force it into an involuntary bankruptcy. The vultures are demanding what amounts to a 600% return on bonds bought for pennies on the dollar, defeating a 2005 settlement in which 92% of creditors agreed to accept a 70% haircut on their bonds. A US court has backed the vulture funds; but last week, Argentina sidestepped its jurisdiction by transferring the trustee for payment from Bank of New York Mellon to its own central bank

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Can Public Banking Spur Economic Growth in Southern Arizona?

Tucson is one of the most impoverished cities in the country—for many reasons. The Arizona Legislature—driven by the American Legislative Exchange Council (ALEC) and short-sighted, "small government" ideology—has routinely swept funds earmarked for counties and cities to "balance" the state's budget or fund pet projects like lower corporate taxes.

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City moving forward with study on public bank

The idea of creating a public bank in Santa Fe is gaining traction.

The city is seeking someone qualified to study the feasibility of establishing a publicly owned bank that would help finance public projects, provide better returns on taxpayer investments and reduce the risk of public funds in existing financial markets.

 

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What does North Dakota's Public Bank Does for Small Businesses

Five years ago, Brian Brasch, president of Branick Industries, a maker of specialty automotive tools in Fargo, N.D., took a phone call from a stranger. The caller was an auto mechanic in Florida who had an idea for a new kind of drain plug for an oil pan, one with an O-ring that expands to stop oil leaks.

Mr. Brasch saw an opportunity. “There’s almost a billion oil changes a year in North America — so O.K., it’s a pretty big market, it’s a green product, everybody wins,” he said. The mechanic’s idea ultimately became Branick’s SMART-O drain plug, and the company now ships about 15,000 plugs a day that sell for about $6 each.

But before it could market the plugs, the company needed almost $2 million to import them from China, where, Mr. Brasch said, the manufacturer normally requires 50 percent down before it begins making the product. And, he said, given the time it takes for the manufacturer to ship two or three months’ worth of the product, and the time it takes for the first customers to pay for it, “that’s eight months of float.”

Mr. Brasch visited his local bank, Alerus Financial, based in Grand Forks, and came away with a financing package that would be unusual anywhere but North Dakota, which operates the country’s only public bank. The state-owned Bank of North Dakota helped finance the loan — and also used state money to buy down the interest rate, from 5.25 percent to 1 percent.

North Dakota uses the bank to funnel deposits from state agencies back into the state’s economy through a variety of loan and other development programs. Mostly it makes loans, teaming with local private banks that initiate the transactions with borrowers. The state-owned bank typically takes half of a business loan, and the interest rate on the state-lent portion is normally one or two percentage points below the market rate.

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Vermonters for a New Economy

Vermont Town Meeting Campaign

We were successful in getting articles in favor of a state bank on the town meeting warnings in 20 towns. The towns are: Bakersfield, Barnet, Berlin, Calais, Craftsbury, East Montpelier, Enosburg, Fayston, Greensboro, Marlboro, Montpelier, Plainfield, Putney, Randolph, Rochester, Royalton, Ryegate, Tunbridge, Waitsfield, and Warren. We wish to thank all those who engaged in the process of talking to their neighbors and gathering the necessary signatures.

The other really good news is that Washington County State Senator Bill Doyle has agreed to include a question asking people if they support a state bank on his annual town meeting questionaire so even those who live in towns that will not be discussing a state bank as part of the town meeting agenda will be able to weigh in on the question.

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