Should countries refuse to honor debts run up by dictators?

[DAVOUT]

Originally posted by Smiley
The odd thing is that practically every government in the world is in debt. Who knows, one of these days they might all get together and say "screw you" to the lenders.

In fact the rich countries dont say it, but they do it. They never repay their debt, only pay the yearly interests. When the interests become excessive, they organize a ten years inflation period which reduces the actual cost to an acceptable level. This time will come soon.

[Ned]

Originally posted by chegitz guevara


What about the accumulated and capitalized interest on those loans? What if the indebted country tried to refinance? These are real questions, as many of the countries that emerged from dictatorship tried to meet wht they thought were their loan obligations, only to face ever mounting and ever more crushing debt, especially as IMF restructioing tanked their economies.

I think of places like the former Zaire, where Mubutu Sese Seko stole more than ten billion from the country, or the Philippines where the Marcos' did the same. Nicaragua, whose 6 million dlllar loan was compounded by an illegal war forced upon it by the United States, and to whom the US refuses to pay awarded damages.

This has got to be a real problem especially if the emerging country takes the socialist path which only retards their ability to make enough money to pay off the former regime's debts.

But still, we should carefully define the type of debts that would be declared void under international law. We could add the debts incured in trade in violation of UN sanctions.

[:) Smiley]

Originally posted by DAVOUT
In fact the rich countries dont say it, but they do it. They never repay their debt, only pay the yearly interests. When the interests become excessive, they organize a ten years inflation period which reduces the actual cost to an acceptable level. This time will come soon.

So at whose expense is this free lunch? In a way people in those countries are getting extra government services now and end up with less spending income later. Still those extra government services now gotta come from somewhere, we ain't got time travel yet.

[Saras]

Originally posted by Smiley


So at whose expense is this free lunch? In a way people in those countries are getting extra government services now and end up with less spending income later. Still those extra government services now gotta come from somewhere, we ain't got time travel yet.

Bondholders, of course. The value of bonds decreases when real yields fall below market interest rates, and when you get inflation your real (moninal yield -inflation rate) yield falls.

[DAVOUT]

Originally posted by Smiley


So at whose expense is this free lunch? In a way people in those countries are getting extra government services now and end up with less spending income later. Still those extra government services now gotta come from somewhere, we ain't got time travel yet.

During the inflation period, the holders of government debts are loosing a slice of their value every year, and the tax payers benefit from the interests being offset by inflation. During the interim non inflationary period, the holders of governments debts receive interests exceeding inflation (which on a no risk investment is just perfect), and the tax payers bear an actual charge of interests increasing year after year.

This can be seen as a loan (partly cancelled from time to time) from the wealthy to the whole community, and it would be fine if :
- the actual interest rate did not become excessive as it was the case since 1983, which gives an undeserved premium to the no risk investment;
- the governments debt increases only when the economy is failing.
- the inflation would inversely matches the economy growth, which is likely impossible.

[germanos]

Allthough it is obviously very harsh on the populace of the countries that have suffered from dictators and the debt that was created, the new governments cannot forfeit the debts and stop repaying them:

First, it will be very hard to establish what portion of the loans was put to good use and what wasn't.
If a dictator borrows money to build a hospital, he will have the money he gets from local taxes to pay for 'bad' things. (I'm not even starting to think about if we could find consensus on what 'bad' would be...)
In many cases, loans are given to countries and the use is being certified. Still the dictator can waste plenty of money, and leave the country with a huge debt.

Then there is nepotism. In all dictatorships, many people get rich from the corruption. It's a happy few, but it's still plenty. The dictator must get some support in order to stay in power. This support is not established by terror (that is used on the people who do not support him), but by buying loyalty.
The local contractor will make good money on the hospital, enough to open a Swiss bankaccount.


Who finances these loans? The banks where you put your savings in, the same bank where you have taken your mortgage and to which you pay your interest. If you think any STATE offers these loans, then you're mistaken. As is mentioned before, all nations have debts, they don't have any money to loan. At best nation-states will give 'insurance' to financial institutes for the loans they offer to other nations.

If you are conceirned with the financing of dictators, and the mess this creates for the people living under these dictatorships, I suggest you think twice to which bank you bring your hard earned money. There are financial institutions who are very carefull with regard to their investments. Offcourse your money will not bring the best interests, and your mortgage will be more expensive, so you will be 'worse off', but it might be worth while.

The supply side of these loans should dry up, and it is us, citizens of the wealthy and democratic developed countries who are supplying these loans.
If you are up to this, there is one downside to this though:

You'll have to give up that dream of going on safari in Mozambique next year (and the years there-after). And that new 4.1 GHz laptop might have to wait another year as well.


Happy Christmas

[Vince278]

Originally posted by DAVOUT
There have been so many lies about France

It is true that France is a victim of many lies. So is the U.S. and others. We should not allow that to blind us to the truth. The truth is out there...

[Vince278]

Originally posted by Smiley
The odd thing is that practically every government in the world is in debt.

I've heard the same. Makes me wonder who is holding all that debt. Or are we in debt to each other in one big circle?

[Saras]

Originally posted by Vince278
Makes me wonder who is holding all that debt.

The ZOG, quite obviously.

[Graag]

it is us, citizens of the wealthy and democratic developed countries who are supplying these loans.

don't say that, that would make indiviudals accountable for their actions (spending)! god forbid and long live the free market

[Imran Siddiqui]

The ZOG, quite obviously.

I thought it was you, Saras .

[Saras]

Originally posted by Imran Siddiqui

The ZOG, quite obviously.

I thought it was you, Saras .

I'm just a pawn with a carreer plan

[Ted Striker]

I agree with Jon Miller

Jon Miller

[Lefty Scaevola]

Originally posted by Vince278
The truth is out there.

No, it is locked in the databases and archives of the Illuminati, and you pitiful mortals shall never have it.

[GhengisFarb™]

Should countries refuse to honor debts run up by dictators?

If a President of the United States qualifies, then yes I am all for wiping out the debts.