If we forgive the debt owed by third world countries what's to stop them getting into hock all over again?

Answer 1

nuthin

Answer 2

That's a good question.

For one interesting set of answers, put yourself in the rest of the world's shoes. America actually owes more money to foreigners than most of the 3rd world countries put together. US foreign debt is by far the biggest in the world.

And, the US reached a point some years ago where it could not afford to make the payments on that debt. What did they do?

Well, the US has one big advantage: The dollar has been the reserve currency of the world for some time. This means that if, say, India borrows money from other nations, they can't pay it back in rupees, they have to exchange the rupees for dollars and pay it back in dollars. But because the dollar is the reserve currency of the world at the moment, the US *can* pay back their foreign loans in dollars--they don't need to change them into anything else first.

So what did they do? How did the US make payments on it's debts when it had borrowed too much?

They devalued the dollar, tremendously, over the last 6 years. "Oh, we borrowed a billion dollars from you in 1999? Here you are, we're repaying you, here's a billion dollars plus interest now." But the problem is, the billion dollars plus interest is now only worth a fraction of the money they borrowed, because they devalued the dollar in the interim.

Who suffered? Both the international investors, who are only getting a small chunk of their money back, and the american people, whose own government magically made their real purchasing power in the world largely dissappear by reducing the value of the dollar so hugely. Your house in the US appreciated by 30% over the last five years? Boy, that's too bad, because the dollar depreciated quite a bit more than that, so you actually lost money.

So let me rephrase your question. If the rest of the world allows the US to get away with only paying a fraction of what it has borrowed (effectively forgiving vast swaths of American debt--and remember, this is the largest national debt in the world!) what's to stop America from just getting into hock all over again?

Well, forgiving the relatively tiny debt the people of some poor country are struggling to repay after the US loaned billions of dollars to the puppet military dictator the CIA installed (billions which, by the way, that dictator used to finance the army that oppressed the people of that poor country for the last several decades) --forgiveness like that might be in the category of "That's the very *least* they could do!"

It might make those countries a little more favourably inclined, at least, to cooperate when the US continues to welch on huge portions of what it owes the world, which, given the rate at which America is still accumulating foreign debt, will only increase in the coming years.

At very least, before we talk about "those poor third world countries who can't pay their debts", we should recognize who is the worst offender. After all, If Haiti or Djibouti defaults, it isn't going to destroy the global economy.

Answer 3

A great deal of it, owed to the US, has been forgiven. What, supposedly keeps them from getting in over their heads again is that now the World Bank is handling such loans and addresses them more like a business proposition. That is, the country borrowing the dough has to show that the money is to be use for something productive to improve their economy; factories, agricultural development, etc., to 1) create jobs, 2) create tax revenues, and 3) to, hopefully, provide the country goods to be traded on the world market. Not that TWB hasn't pulled some boners, they have, but they're not simply loaning loot because some grand high poobah whines for it. The most effective thing TWB is doing is making what they call micr-loans to indiveduals in third world nations, providing them with professional business advice, and helping them start small businesses. The success rate for start ups far exceeds that of the US, and is beginning to employ more and more people as the little ventures grow.

Answer 4

The problem of third world debt is that I keeps the countries from being able to move ahead. In some the debt exceeds many time their gross domestic product. In the intrest of breaking dependance on handouts to feed the population and ultamately to turn the population into consumers of our products debt elimination is being discussed.

Whether they go into debt again also depends on the lenders who are from the World Bank and their judgement as well as on current and future leaders.

The point is that this debt can never be repaid anyway so it can just stay on the books and continue to cripple third world economise or be written off and we will all have to do a better job in the future.

Answer 5

Absolutely nothing, all of the third world countries that have had debt forgiven have in fact went back into debt again to other countries, it's like give whiskey to a alcoholic.

Answer 6

God put enough resources on this earth to take care of everyone, not to be hoarded by some and sold to others.

Resources should not be "owned" by one country or another but distributed so that EVERYONE has basic quality of life, with ample food, shelter and education.

Get rid of all the borders, no countries (Amen John Lennon) stop spending billions of taxpayers dollars annually on the military and feed, clothe, house and educate every single living person so that everyone has the chance to be successful.

No foreign debt, no higher taxes, nobody starving to death.

Answer 7

This Debt isn't the yankee human beings's doing, that's the out of u . s . a . and wasteful government. as a manner to get out of debt the straightforward way, we positioned the politicians to blame for that debt on trial and convict them of theft from the yankee citizen. The debt dies with the politicians.

Answer 8

Nothing. In fact, foregiving debts encourages the those nations to borrow more.

Answer 9

hey, could you give me 100.000 dollars to buy a house and change my car????
oh... i forgot, i have no work and i like drugs and alcohol.
Well, the same thing happens with the 3th world countries.
The banks gives them money, knowing the can't pay back.
At the other hand, for that's banks, 1.000.000.000 dollars are the same as for you give $5 to a boy who cleans your swimming pool.

Answer 10

Nothing,but why worry about what you know you will never get back.