Advertise On EU-Digest

Annual Advertising Rates

9/26/08

Counter Punch: Is Another Third World Debt Crisis in the Offing? - by Eric Toussaint

For the complete report from Counterpunch please click on this link

Is Another Third World Debt Crisis in the Offing? - by Eric Toussaint

While taking a significant toll on public revenues , repayment of public debt has, since 2004, ceased to be a major concern for most middle-revenue countries and for raw material exporting countries in general. In fact the majority of governments of these countries are having no trouble finding loans at historically low interest rates. However, the debt crisis that hit the advanced industrial countries in 2007 could radically change the conditions of indebtedness in developing countries in the near future. Are we approaching the onset of another debt crisis in developing countries? The question requires thought, because if such is the case, we need to be prepared and take appropriate measures to limit the damage.

While there was a veritable flood of credit up to July 2007, the various private sources suddenly dried up in the North. Private banks that were tied up in shaky debt packages began to distrust each other and were reluctant to lend money. The authorities of the US, Western Europe and Japan had to inject huge liquidities on several occasions (hundreds of billions of dollars and euros) to prevent the North’s financial system from collapsing.

US capitalism is facing its worst crisis since 1929 and the US government is attempting a (dangerous) damage limitation process through a (taxpayer financed) rescue package that if accepted will end up costing over 700 billion dollars. (with very limited chance of success) The current crisis has a global dimension and the consequences for developing countries will be very important.

No comments: