You load 16 tons, what do you get?
Another day older and deeper in debt.
Saint Peter, don’t you call me ’cause I can’t go;
I owe my soul to the company store.
Remember Tennessee Ernie Ford’s 1955 hit? Probably not. There aren’t a lot of us still alive and reading (or writing) blogs who were listening to the radio or watching TV back then. But it’s becoming more relevant now than ever.
Even though Americans’ household debt declined last month for the first time in half a century, it is still dangerously high. Meanwhile, banks are increasing minimum payments, late penalties and interest rates. And personal bankruptcies have skyrocketed. The situation is much the same around the world.
It’s not just individuals who are slipping inexorably into unpayable debt. Countries, islands, entire continents are sinking day by day into a bottomless pit of debt. Back in the year 2000, Rev. Molefe Tsele, chair of the South African Campaign, charged that debt was “a political tool that is used to subjugate and inflict suffering, at times with more severity than outright war.” That’s even more true today, despite sporadic initiatives by the international community to relieve Third World debt.
I was saddened to see a TV commentator laughing at the fact that Zimbabwe recently issued a billion-dollar bill, which is worth about a hundred U.S. dollars. Surely that’s nothing to laugh about. I wouldn’t argue that bad government didn’t cause the crisis in Zimbabwe. But the unfair global financial system must share the blame. Runaway inflation was triggered by a staggering debt burden. In just four months last year, Zimbabwe’s domestic debt soared by 7,417. 5 per cent to more than 790 quadrillion Zimbabwe dollars. According to the governor of the Zimbabwe Reserve Bank, the debt piled up because of “huge interest payments” over the years.
Don’t look down your nose too quickly at Zimbabwe. The Caribbean Policy Research Institute noted last March that Jamaica is the fourth most indebted country (in relation to GDP) in the world, behind Lebanon, Japan, and the Seychelles. And even the mighty United States is in the red to the tune of nearly $11 trillion, about half of which is owed to “foreigners.”
Who are these “foreigners”? Some are individuals, some are investment groups, some are corporations, and some are countries. For example, the governments of Japan, China, Germany, the United Kingdom and the oil exporting countries (Saudi Arabia, for example) are among America’s biggest creditors. But those other countries are debtors, too. They issue interest-bearing bonds, which are purchased by individuals, corporations, institutions and other governments.
Even more curiously, the International Monetary Fund, established in 1944 as a lender of last resort, is financed by 185 countries – all of which are deeply in debt. And the World Bank, the other global lender, also set up in 1944, sells bonds to raise money that it lends to developing countries. It’s an endless circle of borrowing money to lend it out.
Somewhere, someone must be piling up all these IOUs. Who are the world’s creditors? And what will they do when the debts aren’t paid? I’ve searched and searched the Internet but I cannot find the answer. If anyone reading this blog can shed light on this murky question, please come to my rescue. It’s driving me crazy. Click the “Comments” button and set me straight.