The Return of the Debt Crisis

Two years ago there was a nine- month publicity campaign directing our attention to the international debt crisis. In the end it achieved its purpose. The Reagan Administration reversed itself and supported an $8.4 billion expansion of the International Monetary Fund’s lending authority. But it was a close shave because the necessary legislation passed the House of Representatives by only six votes. It was opposed both by leftists who saw the potential for nationalization in a banking collapse; and by rightists who saw that continued foreign lending is the only thing that keeps international socialism afloat.

At that time the foreign debt totaled about $800 billion. Today it is approaching $1 trillion, and what we are hearing, unless I am mistaken, is the lull before the next storm. The problems that existed two years ago not only have not been corrected. They have been aggravated by the IMF’s loan conditions, which impose a regime of austerity on indebted countries. The wrong belts get tightened. The people rather than their rulers are expected to suffer. (The current wave of austerity economics emanates not just from the IMF but reflects the consensus of professional economists in the U.S. and Western Europe.)

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Tom Bethell

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Two years ago there was a nine- month publicity campaign directing our attention to the international debt crisis. In the end it achieved its purpose. The Reagan Administration reversed itself and supported an $8.4 billion expansion of the International Monetary Fund’s lending authority. But it was a close shave because the necessary legislation passed the House of Representatives by only six votes. It was opposed both by leftists who saw the potential for nationalization in a banking collapse; and by rightists who saw that continued foreign lending is the only thing that keeps international socialism afloat.

At that time the foreign debt totaled about $800 billion. Today it is approaching $1 trillion, and what we are hearing, unless I am mistaken, is the lull before the next storm. The problems that existed two years ago not only have not been corrected. They have been aggravated by the IMF’s loan conditions, which impose a regime of austerity on indebted countries. The wrong belts get tightened. The people rather than their rulers are expected to suffer. (The current wave of austerity economics emanates not just from the IMF but reflects the consensus of professional economists in the U.S. and Western Europe.)