Chamba Kajege, Tanzania Coalition on Debt and Development (TCDD)

Source World Bank, World Debt Tables 1996 (Washington, D.C., World Bank, 1996).

You're gonna pay a debt with peppermints?

Technical Co operation Agreement between UNCTAD and the Eastern Southern African initiative on debt and reserves management, 27 September 1994.

Also, T. J. Moss and H. S. Chiang, Issue paper on debt sustainability No. 3 the other costs of high debt in poor countries growth, policy dynamics, and institutions , (Washington, D.C., Center for Global Development, August 2003), p. 11 available at http www.cgdev.org docs Moss_Chiang.pdf.

29 See Krueger A. O. Sovereign Debt Restructuring and Dispute Resolution, speech by Anne Krueger, First Deputy Managing Director of the International Monetary Fund, 6 June 2002.

See IMF Reviewing the process for sovereign debt restructuring within the existing legal framework, Policy Development and Review, International Capital Markets, and Legal Departments, 1 August 2003.

The Italian champ couldn't stand us race drivers being waiters... so he paid off our debt to this joint, so we're free.

Some believe that this vacuum is the primary difficulty with the international debt system. Ambitious proposals to redress it, such as a Sovereign Debt Restructuring Mechanism (SDRM) housed at the International Monetary Fund, have always run into political roadblocks.

The truth of the matter, as David Graeber points out in his majestic Debt The First 5,000 Years, is that that the creditor debtor relationship embodies no iron law of morality rather, it is a social relationship that always must be negotiated. When quantitative precision and an unyielding approach to debt obligations are the rule, conflict and penury soon follow.

First, the capacity for fiscal intervention at least among developed economies has been underutilized. As former United States Deputy Secretary of the Treasury Frank Newman argued in a recent book, Freedom from National Debt, a country s capacity for fiscal intervention is better assessed by examining its aggregate balance sheet than by the traditional method of comparing its debt (a liability) to its GDP (a flow).

In their widely cited paper Growth in a Time of Debt, Kenneth Rogoff and Carmen Reinhart argue that, when government debt exceeds 90 of GDP, countries suffer slower economic growth. Many Western countries national debt is now dangerously near, and in some cases above, this critical threshold.

Consider Strike Debt, an offshoot of the Occupy movement, which calls itself a nationwide movement of debt resisters fighting for economic justice and democratic freedom. Its Web site argues that w ith stagnant wages, systemic unemployment, and public service cuts people are being forced into debt in order to obtain the most basic necessities of life, leading them to surrender their futures to the banks.

In the meantime, Greece s regulatory authorities would be keeping a watchful eye over commercial lending practices, while a debt brake would prevent our government from indulging in old, bad habits, ensuring that our state never again slips into primary deficits. Cartels, anti competitive invoicing practices, senselessly closed professions, and a bureaucracy that has traditionally turned the state into a public menace would soon discover that our government is their worst foe.

That argument is persuasively made by Atif Mian and Amir Sufi in House of Debt, an important new book that analyzes US data on a county by county basis. Mian and Sufi show that the recession was caused by a collapse of household consumption, and that consumption fell most in those counties where pre crisis borrowing and post crisis real estate prices left households facing the largest relative losses in net wealth.

But TLAC is just jargon for saying that these banks should fund themselves with both equity and bail in able debt debt that can be converted to equity (or wiped out) when there is an official resolution event. All this really means is that some debt can fall dramatically in value when government officials pull the trigger.

America s fiscal cliff, for example, was long in coming, but we are scrambling to avoid it only now. So we should take early stock of the fact that there is another problem coming our way, which may be called (to give it the resonance of a coming storm) Edward 160 the European Debt Wall and Repayment Deadline.

The dilemma is that, whereas fiscal consolidation is necessary to prevent an unsustainable increase in the spread on sovereign bonds, the short run effects of raising taxes and cutting government spending tend to be contractionary. This, too, complicates the public debt dynamics and impedes the restoration of public debt sustainability.

America s fiscal cliff, for example, was long in coming, but we are scrambling to avoid it only now. So we should take early stock of the fact that there is another problem coming our way, which may be called (to give it the resonance of a coming storm) Edward the European Debt Wall and Repayment Deadline.