No phenomenon lasting for a decade deserves to be labeled a “crisis.” It has thus become acutely embarrassing to speak in 1992 of the third-world debt “crisis.” Certainly a chronic condition; arguably a cancer; some even say a conspiracy—but a crisis, no.
The longevity of Africa’s debt is particularly worrisome. It is also bizarre. There seem no valid economic reasons whatever for the rich world to have made Africa drag its debt burden so far, for so long. One can, perhaps, understand why the banks are prolonging the agony in Latin America: they still have some $250 billion in shaky loans outstanding there.’ Banks spent the eighties disengaging from the southern hemisphere, off-loading a significant portion of their dubious debt onto public institutions, diluting their portfolios, cashing in debt against tangible foreign assets (“debt-for-equity” swaps) and generally finding their way out of the Latin American woods that they entered with such enthusiasm in the 1970s. Meanwhile, however, they have made so many other stupid loans (for instance, to the U.S. energy or property development sectors) that one can see why they are trying to squeeze every last penny out of the likes of Argentina, Mexico, or Brazil....
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