June 06, 2017

Should financing gas chambers in Auschwitz be right if the risk premiums are right?

Sir, Steve Johnson quotes Claudia Calich, the emerging markets debt manager at M&G Investments: “with a lot of the countries [EM bond funds] invest in . . . If you start to be very strict on every country, there would be very few that are squeaky clean in terms of democracy and human rights.” “Investors bet Venezuela crisis triggers default” June 6.

What does she mean to be “very strict”? Not investing in a country because of corruption and mismanagement, in which people die for lack of food and medicines, and where human rights’ violations are committed, is that being too strict?

The world needs a sovereign debt restructuring mechanism (SDRM), and the first order of issue of such mechanism, should be to classify the credits being presented for collection into bona fide, suspicious and outright odious. 

As a citizen, I can’t wait for that date when credits given to a government, with interest rates that exceed in some substantial way those paid by other safer sovereigns, have their collection possibilities automatically restricted by a SDRM. For instance those buying bonds for 30 cents on the dollar, should not be able to present for collection more than those 30 cents.

Those knowingly financing human right violations should also be deemed accessory to those crimes. 

Sir, financiers might need credit ratings, but we citizens need ethics-ratings even more. Those ethics ratings should of course reflect the existence of accusations for violations to human rights. .