Debt Crisis: Do you feel that the North knew fully well that the South would fail to pay off their loans?

Question

I read that the nations of the North, such as the United States, knew that the money they were lending to developing nations were being used for reasons other than promoting economic development. Do you agree with this view, and if so, why?

Answer 1

Yes, everything can be labeled as "Economic Aid" but it is money given to the government to the country and after it is handed over the reciever can do whatever it wants with the money it has.
The true intentions can be disguised by labeling money as EconAid, usually if a country recieves aid it's in the interest of the donor that the country stays afloat.
A good example of this is South Korea as it had a corrupt government during the early years and it was a poor country. I think the US donation was several times of the GPD of South Korea. The aid was used constructively later on- but nevertheless the US kept giving SKorea aid even when everyone thought at the time that South Korea will never be nothing more than a wasteland. At the time the US was giving aid South Korea was the poorest country in the world.

Answer 2

Some people knew, but fully aware is an overstatement, The US government and US bank are different institutions with different knowledge and motives. Not everything is known to everybody and different agencies and institutions in the US often work at cross purposes.US politicians and government assume the for profit Bank would not make loans that were likely to default because they would lose money doing so. US Banks assumed that in case of default the US government would bail them out.
Also in some cases the loans were for political purposes of influencing governments when aid packages would not be approved by congress. Congress is generally clueless about international and financial matters, and vote to pleases their even more clueless constituents.