Let me see if I understand this whole "vulture fund" story correctly. Zambia owes Romania $42 million, but Zambia's broke and can't afford to pay up. Plus, Third World-debt relief has become a major issue, and Romania's under a lot of pressure to just forgive the damn thing. So Romania strikes a deal: It will liquidate the debt for $3 million. But before Zambia can pay that amount, a U.S.-based fund named Donegal International "swoops in" and buys up the debt. Donegal then turns around and sues in court, forcing Zambia to pay the full $42 million and turning a tidy profit. Zambia, it seems, gets screwed.

The whole situation's horrible. Obviously it defeats the whole purpose of debt relief—which is supposed to help developing countries get back on their feet—if vulture funds can come in, buy up debt that's about to be forgiven, and then ask a judge to force the Third World country to repay in full. Gordon Brown has called these vulture funds perverse and immoral. Fair enough But here's a question: Isn't the other bad actor here the Romanian government? Why did they sell the debt off in the first place? Didn't they know that this would happen? Maybe it's hard to blame them for wanting to sell Zambia's debt for something rather than nothing.

Meanwhile, check out this Democracy Now! segment on the subject. Greg Palast argues that President Bush has the power to stop many of these funds from collecting their money from poor countries. I don't understand the rationale here, but even if the president could stop it, he probably wouldn't. As it turns out, one of the biggest vulture funds in the United States, Elliott Associates, is run by billionaire Paul Singer, who was Bush's biggest contributor in New York City. So he's safe. In the case of Zambia, Donegal is owned by Debt Advisory International, which has spent a lot of money to lobby the White House over this issue. Hey, they even hired Jack Abramoff's old firm! Gangster capitalism at its finest?

MORE: Felix Salmon mounts a lo-o-o-ong defense of vulture funds (both in the Zambia case and in general) over at his blog. He and Brad Setser go back and forth in comments over a few points. And Salon's Andrew Leonard responds to Salmon here.