American Consequences - December 2017

World Debt, joined the Greek people by saying... “Greece must unilaterally suspend repayment of its debt.” In one interview, he questioned the legitimacy of the debt related to the Olympic Games and debt relating to Greece entering the European monetary union. Other cries of odious debt came from left- wing politicians in Germany. According to a translation from a local documentary, Sahra Wagenknecht from the German left-wing political party Die Linke, argues that part of the national debts in the European Union countries is illegitimate because they resulted from policies against the people’s interest. More recently, these cries have turned into action... Look at Croatia. In February 2015, it erased more than $20 million in debts for 60,000 people. This was money owed to banks, telecom operators, municipal authorities, and utility companies. Not a single person or investor was refunded for their losses. And it’s probably no surprise that the stock market went down significantly over the next year (see chart). AMERICA’S MOST HEROIC DEBTOR

Correa has been threatening default and demonizing foreign investors since his presidential campaign in 2006. Most recently, he has cited a presidential commission report that found evidence of criminal violations by previous governments that sold debt to pension funds, hedge funds, and other overseas investors. These problems didn’t go away under Correa’s watch, however. While he claimed to have lowered debt while he was in office, the real numbers show that he increased it... potentially to levels not allowed by the country’s constitution. And this year, the country’s new leftist president Lenin Moreno is trying to refinance “expensive” foreign debt. According to Reuters: “ Ecuador has to cough up some $6 billion for debt payments and oil-for-loans, mostly to China .” What’s next for Ecuador? Why, more debt: Moreno said he had reached out to the World Bank for potential financing that could help him fund ambitious social programs including free education, health and housing for lower-income families, and subsidies to eradicate extreme poverty. And you’re no doubt familiar with the well- documented problems in Greece... Among violent protests outside parliament, the people of Greece called for debt repudiation, claiming the debts aren’t their responsibility. Eric Toussaint, who heads up the do-gooders at the organization The Committee for the Cancellation of the Third

You shouldn’t be surprised to discover that modern governments have found it useful to scorn their own obligations.

24 | December 2017 October 2017

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