recognizing Wall St in the debt crisis of the 80’s

by Melissa

Perhaps from the outset it seems that the Philippines is unconnected to Collateralized Debt Obligations, mortgage crisis, bank (and European Union) bail outs, austerity measures and other distinctly Western experiences of the last 5 years.  However, this is far from the truth.  In fact, what the West is currently experiencing is a debt crisis spurred by systemic predatory lending.

Analyses of  the US recession and the European debt crisis have been largely silent about the specific parallels between what’s happening now and the Third World’s experience of finance capitalism in the 80’s (that continues today)…  although a recent article in the Nation has captured the political  fallout of the  debt crisis well:

“When the dictates of foreign debt or trade treaties put core economic decisions beyond the control of elected representatives, “democracy” becomes a cruel joke or, worse, a spectacle designed to absorb popular frustration while the real deals go down elsewhere…  The OWS moment seems to reflect a recognition that we have joined our neighbors to the south in being ruled by a system that, whatever its other virtues may be, is powerless to solve the most important problems plaguing the country.”

This blog wants to bring this conversation along-  I want to highlight that Wall St was behind many defaulted loans that created the debt crisis in the 80’s-  and moreover that Wall St. has benefited from this same crisis through debtor management.

There’s an incredible story from a 1983 Harper’s article (Numbers – Adventures in the Loan Trade 11 01 83) that tracks the experience of one American banker engaged in making risky loans in the Philippines and beyond.  This article (and a book called the Loan Pushers (check out this short article by the same author), have re-oriented my understanding of the Third World debt crisis.  I was a baby in the 80’s (and barely that) and my impression of that crisis always includes the history of Martial Law and widespread fraud and corruption under Marcos.  But these articles point to the crisis of finance capitalism:  frontier markets, orchestrated mass debt peonage, and the ongoing crisis of democracy (as we  know it) due to money power.

In the the 5000 years of debt history (thanks Dr. Graeber) a central tension has always been who benefits from debt negotiations: the creditor or the debtor?

Those affected by the current crisis (everyone, no? ) can learn about Wall St. debtor management tactics from the Third World experience.   And more importantly imagine what a worldwide debtor movement might look like?

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