(Music: Nick
Hornby: The way it is)
Many people know
what it feels like to owe money, even if only to a building society
for a mortgage&ldots; But it's a different matter to be deeply in
debt and unable to repay it. And even worse to be in that situation
if someone else ran up the debt and left you to carry it.
In the 1960's the
US government spent more money than it earns and to make up for this
decided to print more dollars. So the world's stocks of dollars fell
in value.
Bad news for major
oil producing countries whose oil was priced in dollars. They made
less money. So they hiked their price, made huge sums of money and
deposited it in western banks.
Then interest
rates plummeted and there loomed an international financial crisis.
So they lent the money fast, to stop the slide and turned to the
Third world whose economies were doing well, but wanted money to
maintain development and meet the rising cost of oil.
Third World
Countries, encouraged to grow cash crops, suddenly found they weren't
getting the prices they were used to for their copper, coffee, tea,
cotton, cocoa. Too many countries - advised by the West - were
producing the same crops, so prices fell.
Then interest
rates began to rise and so did oil prices. The trap was sprung. Thrid
World Countries were earning less than ever for their exports and
paying more than ever on their loans and imports. They had to borrow
more money just to pay off the interest..
Essentially, poor
countries have gone bankrupt.
