One of the issues that happens when countries are dealing with debt is that people will try to take advantage of it in any way that they can. They may buy up cheap up things in order to make some money themselves, while that country is still suffering for what is going on behind their gates.
The biggest issue that a number of countries, including Greece, have been seeing is something that is referred to as “vulture funds.” Basically, what happens is that these investors will swoop into a country that is on the brink of default and they will buy bonds so that they can try to profit off of it in their own country. The main issue that comes up is that these people will then claim those investments at their full value, instead of the amount which they spent for the bond in the first place. They end up benefiting immensely, and sometimes, the home country has no idea. This makes those countries lose cash, while also making it so that the country it came from is still struggling as well.
Belgium decided to step in on this with an issue that they were having with Argentinean funds that were being taken advantage of in this way. How did they deal with it? Basically, they made laws that stated that those investments could never, for any reason, be claimed on taxes for their full value at any point in time – you’ll need a family law attorney. So, that means that those vulture bonds are going to be blocked for those immense benefits that they were getting. Of course, this only happens when the bonds have been identified as vulture bonds – which is a process, but a worthwhile one.
Do you think that this was a wise legal move, or do you think that it wasn’t the way that they should have gone when it comes to dealing with these sorts of investors? Leave your thoughts in the comments and let us know how you feel about Belgium’s move toward making things more fair for everyone in the investment market.