DEVS 100 Lecture Notes - Lecture 10: Capital Accumulation, Neocolonialism, Heavily Indebted Poor Countries
10 Dec 2017
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Money invested in private banks, mostly in the united states. Recycling money to the south: northern banks lend out money to countries in the south to earn money, they loaned bullions to states in the south (many problems includes): Cold war politics: banks used floating intrestest rates -the interest rate increased as national instrest rate increased. Odious lending: no ethics principles by leaders (it was not clear if the countries would ever be able to pay it back, corrupt regimes, dictators, apartheid state, loans spent on unproductuive things ie. military. It is still considered safe because loaning to the governments is the safest because the bank will still make money/ (sovereign debt) Intrest rates rise deamatically: recession in the north, commodity prices collapse, debts become difficult to pay in the south, mexico defaults in 1982, financial markets panic, bank stocks tumble, some banks collapse. Bank bailouts (this is where the imf and world bank step in)
