Economic Outlook: American Credit Debts to Big International Banks

The Economic Outlook column peeks over the edge to present and future problems on American credit debts to big international banks.

| November/December 1982

The Economic Outlook column shares the possible future of American credit debts to big international banks, and a poem of downhome economic wisdom called My Mother Has Illusions About Government Connections But Not About Anything Else.


By now the truth ought to be evident to anyone with the courage to face it: The hard times that this column has—over and over and over again—tried to warn its readers about are here. And those of you who've been fortunate enough to be able to act on our warnings—to get yourselves free of the easy-credit society and establish your family on a piece of land that can supply at least some of your needs—can face the future with a little less fear than you might have if the current crisis had found you suddenly unemployed when you were already spending half of each paycheck on financed goods and didn't actually own a single damn thing of any use.

Of course, no one—even those few individuals who have actually achieved near total food, shelter, and energy independence—can afford to be smug in the face of the challenges that are likely to confront all of us very soon. Have you ever encountered the expression "the wolf is at the door"? Well, listen carefully, and you'll be able to hear each of its panting breaths.

Consider, if you will, the key to most of our present (and future) misfortune of American credit debts to big international banks: To begin with, there's the problem of Mexico. By the time this magazine reaches print, it's very likely that our neighbor to the south will already have defaulted on its many debts to international banks . . . debts so staggering that 58% of the nation's export earnings are barely sufficient to keep up with the servicing of the loans.

Furthermore, Poland—as you'll recall—was unable to meet its debt payments some months back . . . and both of these nations are still financially afloat only because the banks involved have agreed to settle for token payments (often of interest alone, or even of part of that interest) rather than admit that the loans will never be paid back. Worse yet, Argentina, East Germany, Brazil, Nigeria, Chile, Zaire, Yugoslavia, Bolivia, Venezuela, Peru, Tanzania, Sudan, Indonesia, Romania, and many other "less developed countries" are in similar straits.

Of course, the international banks are busily back-pedaling in an effort to set up a payment plan (any plan) that Mexico can handle . . .just to maintain the illusion that business is going on as usual (the latest , rumor, as this column is being written, is that Mexico doesn't intend to make any payments on the principal of its debt until the end of 1983).

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