patron saint of the Internet

[Adam Stevens]

At 04:10 PM 6/17/99 -0400, you wrote:
>Adam Stevens wrote:
>
>>It would seem to me that no new wealth can actually be "created" by the
>>speculative exchange of paper, as opposed to the production of real physical
>>wealth created by human labor, i.e. the production of capital goods.
>>However, the debt extracted from regions like Sub Saharan Africa has real
>>physical consequences in that capital is allocated for debt service which
>>could have been used to create real wealth or improvements in the standard
>>of living -- like basic health care.>

Doug wrote:
>You're right about the difference between paper wealth and claims on real
>resources. But in pure balance sheet terms, forgiving the debts of the
>so-called HIPCs (highly indebted poor countries) would be nearly invisible
>to the creditor countries. The financial aspects aren't so important - it's
>the use of the debt as a political instrument of subordination.
>
>The 41 HIPCs, mostly in Africa, spend 1.6% of GDP on health, 3.0% on
>education, and 5.3% on debt service. Their debt service eats up about 90%
>of their grant income.
>
>Doug>

I don't doubt at all that debt is used to subordinate poor counties, but if
debt forgiveness would be financially inconsequential to the creditor
nations, why is it always a "crisis" with "systemic implications" when some
Third World nation looks like it might default on its debt?