National Debt Relief Initiative
The Third World Debt Crisis
As human beings we are able to recognize that we
don't always make the right decisions. We have all made mistakes, and we have certainly proven that we are not as infallible as we would like to think we are. And, as human beings, we are able to look at our past and realize that any poor decisions we have made are to first be learnt from and then forgiven. Without this ability to learn and move on our societies would not be able to grow and flourish, and we would be sliding backwards in a world filled with resentment. So why, then, are we still punishing people for the mistakes their predecessors made over four decades ago? As we go about our daily lives there are millions of people in hundreds of countries still paying the price for blunders made by their past leaders and contributed to by our own. As a direct result of bad judgement on behalf of both the Western-based banks and the politicians in developing countries, one of the major societal issues faced today is the rising problem of Third World Debt. Over a period of forty odd years, and fuelled an ever-changing economy, debt owed by countries in the developing world has risen to crisis status. As history has shown, if we continue with our current practices - without taking into account and even rectifying previous errors - this predicament we find ourselves in will only continue to get worse. It seems the only solution is to wipe the slate clean and begin again.
It all began during the 1960's and 70's. During the 60's the US government spent a lot more money than they had and so had to print off more dollars to compensate. As a result, the dollar value quickly decreased. This devaluation had a significant effect on oil-producing countries, whose export earnings dropped because they received much less money for the oil they sold. To combat this drop in their earnings, oil prices were hiked up. These oil-producing countries then made incredible amounts of money in a short time, all of which was deposited into Western banks. And this is where the trouble really began.
After receiving such massive deposits and with interest rates dropping rapidly, Western banks stood to lose a lot of income
that had been previously generated through interest paid loans. In order to stop the slide, the banks lent out money quickly and to whoever was willing to take it. They focused on Third World countries who were sustaining themselves sufficiently, but borrowed to maintain development and to be able to afford the now expensive oil prices. Governments in the Third World happily borrowed lavish amounts of money, pleased that they were paying such low
interest rates. However, the loans were often the first these countries had taken out, and the large sums of money proved to be in incapable hands. Most countries borrowed the money with the intention of using it to improve the standards of their people, yet the majority of it went to funding militaries and large-scale developments that were of little use to the common person. Very little of the money borrowed actually benefited the poor.
By Rebecca Wells -
Next page: Debt Relief Network
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