DEVS 100 Chapter Notes - Chapter 14: Heavily Indebted Poor Countries, Debt Relief, Jubilee 2000
14 Nov 2016
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Interest payments most common, usually a percentage of the outstanding loan each year: principal plus interest, usury excessive interest rates. Private banks in developed countries lending to poorer developing-country governments and businesses. Charles kindleberger on economic cycles: starts with a period of real growth involving a rise in profits from the use of new technologies or transportation/communication systems such as railways. Rapid expansion of bank credit: money growth outstrips possible productive investments, while investors look for even higher rates of profit. Money goes into speculation, often linked to fraud and swindles. Period of bubbles, manias : bubbles: international lending as banks run out of domestic borrowers desperate to lend, make higher-risk foreign loans, bubble bursts: prices fall, investors to sell or to collect on their loans. Period of panic: investors all rush for the exit. Panic feeds on itself leads to crash. After each cycle, complaints of reckless landing and of loan pushing.
