fatvegan

One of the key problems of sovereign debt is the problem of trade barriers. Countries borrowed money on the understanding that they'd be able to pay it back by exporting stuff to the countries they borrowed it from. In fact that is the whole point of international lending. The countries themselves are meant to benefit, and some of those benefits they give back in the form of exports (or money from exports). They didn't count on all the crazy trade barriers than the US and Europe have put up. So the poor countries can't export. And the rich countries are not being paid back and the debt is getting bigger and bigger.

The problem with international lending is that the lending is done by the rich, but the costs are paid by the poor. After lending happens, exports in poor countries grow, industries in rich countries go bankrupt, wages in the rich countries fall and the poor in rich countries suffer. The rich in rich countries are happy because they can buy the stuff they love cheaper, and they're getting money coming in from interest repayments. International lending creates a structural flow of wealth that can only be balanced out by making the rich more rich and the poor even less rich. So the poor resist. The rich governments put up trade barriers. The poor in poor countries suffer. The poor countries borrow more. The rich bankers get more interest. The poor in poor countries suffer. And it goes around and around.

The whole fantastic mess is why we need massive compulsory superannuation. Align the interests of the rich and poor in the rich countries, and the poor in the poor countries will stop getting sandwiched in the middle.