High levels of global debt are likely to turn what could be a controllable shift from expansion to contraction into a blowout of unfulfilled expectations and obligations, leading to widespread suffering.
An enormous debt bomb threatens the U.S. federal government and the nation’s financial system unless warring politicians can agree on a plan to defuse it. However, there are even bigger debt bombs ticking away beneath us all, of which fewer people are aware. It may be impossible to disarm all of them, but action is required to minimize the casualties.
Let’s start by focusing on the immediate U.S. debt threat, then widen our view to take in longer-term and more serious liabilities that have the potential to bring down the entire global industrial economy.
Argentina has constantly been trapped over two centuries in unpayable external debt owed to foreign imperial powers. This affects the everyday life of everyone: inflation, salaries, employment, public services, elections. Here is a brief history of the deuda.
The deuda (“debt” in Spanish) is one of the most persistent elements in the two centuries of Argentina’s history. It has conditioned the political life and the economy of the country like no other factor, for generations.
But this should not be confused with just any debt. The word deuda normally refers to the external debt (both public and private), a debt owed to foreign creditors.
Historically, the key aspect of the deuda is that it is based on a foreign currency, the world trade currency controlled by the ruling empire. It was once the British pound. Since 1944 it has largely been the US dollar.
Sri Lanka owes 81% of its external debt to US and European financial institutions and Western allies Japan and India. China owns just 10%. But Washington blames imaginary “Chinese debt traps” for the nation’s crisis, as it considers a 17th IMF structural adjustment program.
It’s been a big week for the major central banks. First, the European Central Bank (ECB) called an emergency meeting because government bond yields were rising sharply in the more indebted Eurozone economies like Italy and Spain. That threatens to deliver a new sovereign debt crisis as happened after the Great Recession from 2010-2014, leading to the Greek nightmare.
Sometimes we make decisions only thinking about the immediate situation, while forgetting the repercussions they may have in the next 5-10 years. We think that it will all just work itself out. We tend to be optimistic at best, but the reality is that we are inconsistent. When it comes to the decision of an individual, the consequences of that decision rarely affects a considerable amount of people. However, when it comes to that of the government of a country, a single measure can change the lives of millions for generations to come.
Argentina is a country that knows what this means, especially when we talk about the economy. The South American country’s economic history has un-erasable footprints of Neoliberalism and the International Monetary Fund’s (IMF) associated policies.
There is much talk among ‘progressive’ economists that the IMF and the World Bank have turned over a new leaf. Gone are the days of supporting fiscal austerity, demanding that national governments get public debt levels down and insisting on conditions for countries borrowing IMF-WB funds that their governments privatise their state assets, deregulate markets and reduce labour rights.
Now after the experience of the unprecedented COVID pandemic slump, the old ‘Washington Consensus’ is over and has been replaced by a new ‘consensus’. Whereas the “Washington Consensus” for international economic policies of the 1990s saw government failures as the reason for poor growth performance and advised governments ‘to get out of the way’ of market forces, now the IMF, the World Bank and the World Trade Organisation’s chiefs call for more fiscal spending, more funds for lending, and measures to reduce inequality between nations and within nations through higher taxes on the rich.Read More »
The COVID-19 crisis has seen a very different response from the advanced countries compared with the Third World countries. The former have unrolled substantial fiscal packages for rescue and recovery while the latter have been trapped in fiscal austerity.
Among Third World countries, India’s fiscal package has been perhaps the most niggardly, amounting to no more than 1% of GDP; but even other Third World countries have not fared all that much better.Read More »
FACE OF AN ECONOMY: UK: Rent Debt Crisis: Rent or food: 840,000 Britons fall behind on rent since the pandemic began
A Journal of People report
According to a new report by the National Residential Landlords Association (NRLA), an estimated 840,000 private tenants have built rent arrears since coronavirus-lockdown measures began in the UK, and the young people and the self-employed most likely to have missed payments. The NRLA has warned of a “rent debt crisis.”
The NRLA is renewing its call for an urgent financial package to help tenants pay off these debts.
The survey for the NRLA found 7% of renters had built up arrears because of the coronavirus pandemic, a figure that would equate to 840,000 people across England and Wales.Read More »
Fifty years after rich countries agreed to give 0.7 per cent of their gross national income (GNI) in aid, they have failed to deliver $5.7 trillion to the globe’s poorest, according to a study by nonprofit group, Oxfam.
This figure is nine times larger than sub-Saharan Africa’s stock of external debt at the end of 2019 of $625 billion, Fifty Years of Broken Promises, said. It was on October 24, 1970 that developed countries had made the commitment on aid.
Poor countries lost out around $114 billion a year since rich countries reneged on their ‘solemn promise’ to deliver the aid, Oxfam said.Read More »
A statement signed by former Brazilian president Dilma Rousseff and Indian Kerala State’s finance minister Thomas Isaac, among others, highlights the inadequacy of the measures announced recently by the G20 and IMF to postpone debt repayment
Prominent left-wing politicians and journalists from across the world have issued a joint statement demanding the cancellation of all debts incurred by the developing countries. The signatories to the statement include former Brazilian president Dilma Rousseff, foreign minister of Venezuela Jorge Arreaza and the finance minister of the Indian State of Kerala, Thomas Isaac. They reminded global leaders that “debt suspension or postponement does not provide a foundation for the necessary development” but “merely puts off the reckoning.Read More »