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Post by Brenda on Aug 20, 2009 1:56:37 GMT -5
Hey guys from Third World Debt,
Just wondering,
Do you agree that the western banks that invested in the plans of the third world nations were justified in doing so as it is impossible to predict the feasibilities of such plans given the limited information?
love,
Brenda
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Post by Motmie Hec on Aug 20, 2009 2:05:13 GMT -5
Dear Brenda,
I do not agree.
Western nations should not have given the interest in that case! The western nations should demanded for the details of such plans should they want to invest such exorbitant amounts of credit in Third World Nations!
I would like to bring up a new point. Third World Nations should NOT be waived of the debt it may develop a crutch mentality in the government. Although the nations seem to have no way to get out of the vicious cycle of debt, if we waive their debt, they will get overdependent on the first world nations. This would definitely be detrimental to the international community as poor nations would rely on first world nations by borrowing credit, later demanding for the waiving of debt, raising these examples.
Please consider my point.
Motmie Hec
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Post by Censer The Hog on Aug 20, 2009 2:12:23 GMT -5
Dear Motmie,
Please take this point into consideration.
How about allowing third world nations to be waived of the debt?
The new government of third world nations has inherited the bad soil of the previous governments where they are unable to make a lasting impact in the country as they are put in a difficult position, unable to solve the problems of the past.
Hence, the new governments should be given a fresh page to start on, write their own new history and be able to solve the problems of poverty. First world nations do need functioning economies in the world, in line of the rapid globalisation we are undergoing as a world.
Censer
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Post by Melanie on Aug 20, 2009 7:57:04 GMT -5
HEY GUYS! YOU ROCK FOR TRYING TO TACKLE SUCH ISSUES!  |
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Post by Glendon on Aug 20, 2009 8:30:22 GMT -5
Hey,
Just to give my two cents' worth.
There are varying interpretations of the oil crisis and the loans doled out by banks.
At that point in time, the decision of the banks to loan such huge sums of money to the Third World was an admittedly sound business decision. Cash surpluses from Arab states profiting in the aftermath of the oil crisis immediately flowed into these Western banks. Banks being banks, this money was then loaned out to Third World nations who needed the money and where able to pay high interest rates. it was a convenient way of putting spare capital to good use.
Of course, there are those that Brenda that believe that the banks could not have possibly known the devastating impact of their decisions. This is indeed true. No one expected that Third World nations would have defaulted on their payments so swiftly, especially after one considers the unexpected economic crisis of the '80s. Then again, Motmie is not wrong in pointing out that banks do have some form of corporate social responsiblity - to assess the potential effects of their loans, especially on fiscally unstable Third World nations.
Yet I personally doubt any of these considerations were major factors in the decisions of the banks. Banks are after all commercial enterprises, and some would argue that it is their right to offer loans that make perfect business sense but may be detrimental to the borrowing nations. Adopting this line of logic, borrowers should be responsible for unwisely borrowing money - if they well knew they could not repay the loans, they should not have borrowed money in the first place.
Do note that this issue of whether the banks were reckless in loans also ties in very much with the issue of who is really to blame - see the thread for this issue!
Glendon
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