NOREENA HERTZ is a British economist who teaches political economy at the University Of Utrecht, Netherlands. Her last book is I.O.U. The debt threat. In this book, she talks about Bono, the lead singer of U2 (real name Paul Hewson), who will challenge the rich world to help eradicate Third World debt. She explains the various ways to follow to understand the reasons of this debt and the manner to cancel it. Bono will argue that the technology and financial resources now exist, for the first time in human history, to wipe out global poverty, and that the only thing lacking is the political will. Mrs Hertz can describe him as someone who has tenacity. He's prepared to pound up and down the corridors of power, attend meetings and do what has to be done to move these ideas forward. He's not into playing politics to sell records.
[...] Summers, US Treasury secretary in waiting, Arnold Schwarzenegger, John Kasich, congressman of Colombus Ohio, Sonny Callahan, congressman of Alabama and also people from business big groups: Goldman Sachs, Motorola, Bechtel, Caterpillar and Merck, who agreed with participating to the debt cancellation. Davison Budhoo who resigned from IMF in 1988 about international credit problem for Trinidad and Tobago, and Joseph Stiglitz: former chief Economist of World Bank has been contacted by Bono too. There was also Jesse Helms, a Republican senator, who was opposed to foreign aid and who agreed to the meeting. [...]
[...] In fact, policies are developed from Washington and parachuted in, exacerbating the situation they were supposed to rectify. The rich world owed much of its success to the very protectionist policies that were being denied to the developing world? For example, Democratic Republic of Congo have to spent 37% of government revenue servicing the debt but it Growth National Income per capita is $90. In front of this, domestic savings can not finance investment for growth and development. Exports were not sufficient to fund imports and debts. [...]
[...] To the traders and investors in developing world debt it is all a big game of smoke and mirrors, illusions and deceit. III) Institutional aspects In 1944 were created the Bretton Woods institutions to answer to the question: how can we have full employment and expanding world trade at the same time? The two main characters were JM Keynes and Dexter White. The World Bank has been invented to help a bombed out Europe rebuild herself. Keynes and Dexter White proposed to return to the Gold Standard: fixed exchange rates could be put in place to prevent countries from devaluing their currency at will. [...]
[...] To conclude in this part, we can see that short sighted decisions created by geopolitical consideration devoid of humanity are a crucial component in the building story of the debt threat. II) Economic and financial aspects Poor countries made contracts about weapons, oil, and pipeline with Export Credit Agency (ECA) in their countries. If the country stops honoring its contract with ECA, the debt is added to the outstanding bilateral debt owed by the debtor country. The responsibility engaged is the one of the government. [...]
[...] And countries which could not pay back their debts were just given even more new loans to pay off the old ones. After 1979 developing countries that had taken out loans under variable interest rates saw that these rates jumped up, they were unable to repay, new loans, the debt junkies started overdosing. So commercial banks contributed to the enslaving of of the world with yet more hundred of billions of dollars of unpayable debt. trader can't feel guilty, he has to be unemotional, we're not here for charity”. [...]
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