#dropthedebt — Public Fediverse posts

.> A complementary approach might invoke the old-fashioned capitalist idea that those who borrow are responsible for repayment, and those who lend take the risk.
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.> The banks were eager to lend and upbeat about the prospects. On the eve of the 1982 disaster Citibank director Walter Wriston, known in the financial world as “the greatest recycler of them all,” described Latin American lending as so risk-free that commercial banks could safely treble Third World loans (as proportion of assets). After disaster struck, Citibank declared that “we don’t feel unduly exposed” in Brazil, which had doubled bank debt in the preceding 4 years, with Citibank exposure in Brazil alone greater than 100% of capital. In 1986, after the collapse of the international lending boom in which he was a prime mover, Wriston wrote that “events of the past dozen years would seem to suggest that we [bankers] have been doing our job [of risk assessment] reasonably well”; true enough, if we factor in the ensuing socialization of risk, welcomed by Wriston and others famous for their contempt of government and adulation of the free market.
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.> Jeffrey Sachs, “International Economics: Unlocking the Mysteries of Globalization, “Foreign Policy (Spring 1998); Paul Krugman, “Cycles of Conventional Wisdom on Economic Development,” International Affairs 71:4 (Oct. 1995). Joseph Stiglitz, “Some Lessons from the East Asian Miracle,” World Bank Research Observer 11:2 (Aug. 1996). Stiglitz was soon to be appointed chief economist of the World Bank. For his reflections on the East Asian crisis, see his WIDER Annual Lectures 2, UN University, 1997; “An Agenda for Development in the Twenty-First Century,” Annual World Bank Conference on Development Economics 1997, IBRD, 1998.

The article where I learned the key concepts capital flight and odious debt, in 1998!!

.> The Latin American debt that reached crisis levels from 1982 would have been sharply reduced by return of flight capital — in some cases, overcome, though all figures are dubious for these secret and often illegal operations. The World Bank estimated that Venezuela’s flight capital exceeded its foreign debt by 40% in 1987....
.> A recent Council on Foreign Relations study points out that “defaults on foreign bonds by U.S. railroads in the 1890s were on the same scale as current developing country debt problems.” Britain, France and Italy defaulted on U.S. debts in the 1930s: Washington “forgave (or forgot),” the Wall Street Journal reports. After World War II, there was massive flow of capital from Europe to the United States. Cooperative controls could have kept the funds at home for postwar reconstruction, but policy makers preferred to have wealthy Europeans send their capital to New York banks, with the costs of reconstruction transferred to U.S. taxpayers....
.> When the U.S. took over Cuba 100 years ago it cancelled Cuba’s debt to Spain on the grounds that the burden was “imposed upon the people of Cuba without their consent and by force of arms.” Such debts were later called “odious debt” by legal scholarship, “not an obligation for the nation” but the “debt of the power that has incurred it,” while the creditors who “have committed a hostile act with regard to the people” can expect no payment from the victims. Rejecting a British challenge to Costa Rican laws cancelling the debt of the former dictator to the Royal Bank of Canada, the arbitrator — U.S. Supreme Court Chief Justice William Howard Taft — concluded that the Bank lent the money for no “legitimate use,” so its claim for payment “must fail.” The logic extends readily to much of today’s debt: “odious debt” with no legal or moral standing, imposed upon people without their consent, often serving to repress them and enrich their masters.