Debt

[migratory]

I don't understand, the United States owe China 2.5 Trillion dollars, so why are we here teaching these folks English, shouldn't they be teaching citizens in the US Chinese instead..?

I wonder where the best place is gonna be to hang out, when the world wars of unpaid dept breaks out.. here.. or far, far away..

[Spigzy]

Everyone owes everyone else, it's complicated. Stay calm, carry on - drink beer.

[Hun Ben]

Everyone owes everyone else, it's complicated. Stay calm, carry on - drink beer.

+1

[cambod]

I don't understand, the United States owe China 2.5 Trillion dollars, so why are we here teaching these folks English, shouldn't they be teaching citizens in the US chinese instead..?

I wonder where the best place is gonna be to hang out, when the world wars of unpaid dept breaks out.. here.. or far, far away..

Ha! U make it sound like we plan on paying it back or something!

[migratory]

Absolutely not, there are two equals on this in my mind, a global war, or a global conference, both would include a lot of jet flying, which would be bad for the environment anyway, so who cares, back to the beer.. ;

[andyinasia]

Only the poor nations/people pay their debts.

[KL&fool]

Unfortunately, there are lies and damn lies...there is also 'harsh reality'.


The Causes of the Debt Crisis: (1) Poverty as a General Motive for Borrowing

The economic debts of the developing world will not be fully repaid, quite simply because the people who live in the developing world cannot afford to repay them. The harsh reality of poverty in poorer countries was an initial stimulus for the loans. As we shall see below, economic conditions suggested that borrowing money was a reasonable course of action in the 1970s, particularly for poor countries, which perceived few, if any, alternative ways to address the economic plight of their citizens. Those who live in the rich countries of the developed world can readily observe profound poverty: all who live in the wealthy, industrialized nations do not have equal access to education, health care, good nutrition, and housing. The fact that these deprivations exist alongside great wealth is shocking, but they pale when compared to the scale of global poverty. The hunger, homelessness, illness, and suffering of the poor in the developed countries must be multiplied a thousand times, in some respects a million times, to begin to reflect the scope of poverty in the world's poorest nations. In 1987, the average per capita income for people living in the poor countries in the South was only 6 percent of the income in the developed countries of the North. In Africa, one-fifth of the population lives in poverty, with those in sub-Saharan Africa bearing the heaviest burden.6 A child in the developing world suffers a risk of death four to ten times greater than that of a child in Western Europe or North America. A pregnant woman in the developing world is 50 to 100 times more likely to die in childbirth than women in the wealthy, developed nations.7

Despite the overwhelming number of statistics and indicators, global poverty is as hard to measure as it is to conceptualize. Although it is simple to characterize abstractly the living conditions of the world's impoverished population, there is no widely accepted, standard method of identifying the poor, and, therefore, of measuring the exact extent of global poverty. Economists, social scientists, politicians, and agencies for international aid each advocate their own particular definition of poverty depending upon the interests, whether noble or self-serving, which they are protecting or pursuing. Nonetheless, whatever the bias of the analyst or the method used to estimate the number of global poor, the statistics are appallingly high, almost beyond comprehension. Consider, for example, these estimates taken from the September 1990 UN Chronicle (p. 46):

1 billion people live in absolute poverty
100 million persons are completely homeless
800 million persons go hungry every day
1.75 billion people are without access to safe drinking water
1.5 billion persons are without access to primary health care

Source: https://www.mtholyoke.edu/acad/intrel/globdebt.htm

Blowed if I know where to start calculating! In 1994, the following analysis was made of the situation concerning the US/Mexico in 1982:

These declines seriously aggravated an already bad trade situation for the United States. The absolute declines were quite large; and if one extrapolates losses from an expected increase for export growth based on recent history, the declines are quite significant. Richard Feinberg translated the export loss to the United States in terms of lost jobs when he testified before the Senate: ". . . roughly 930,000 jobs would have been created if the growth trend [of U.S. exports to the Third World] of the 1970s had continued after 1980. In sum, nearly 1.6 million U.S. jobs have been lost due to recession in the Third World."37

This final point deserves more sustained attention than it has yet received: it is also in the interests of the advanced industrial nations to seek an equitable solution to the debt crisis. No one's long-term interests are served by the increasing impoverishment of millions of people. The financial health and stability of the richer countries depends crucially on debt-resolution terms that allow and foster the economic growth and development of the poorer countries.

How Real was the Threat of an International Banking Collapse?

The global cost most talked about in lending circles was that of a massive default by the debtor countries, which might have had the effect of unraveling the international financial system. The point at which the debt crisis actually made it to the front pages of newspapers in the advanced industrial countries was in 1982, when it became clear that Mexico was unable to meet its financial commitments. The size of the Mexican debt, coupled with the overexposure (lending in excess of capital assets) of the private banks that had provided loans to Mexico, raised the possibility of a widespread banking collapse, reminiscent of the bank failures in the 1930s. Table 17.4 gives some idea of the extent of overexposure in 1982....etc

'Overexposure to risk' seems to be a recurring phrase, even these days. When will they/we ever learn?

I suppose that any loan is exposed to risk, but clearly, some loans are more risky than others. I don't want to sound like Margaret Thatcher, but good housekeeping goes a long way to identifying a country that is less likely to default than another. Jobs at home and abroad may depend on good decision making.