Economic Outlook: American Credit Debts to Big International Banks

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Though the "big international banks" carry the notes on all of these potentially defaulted loans, there are precious few small banks in the United States that haven't picked up a piece of the less-developed-country loan pie during the past decade.

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).

And the fact that Mexico might be getting off the hook isn’t being lost on Argentina and all the others. As Denis Healey, Britain’s ex-Chancellor of the Exchequer, said recently (as quoted in the Wall Street Journal), “The risk of a major default triggering a chain reaction is growing every day.”

Worse yet, though the “big international banks” carry the notes on all of these potentially defaulted loans, there are precious few small banks in the United States that haven’t picked up a piece of the less-developed-country loan pie during the past decade . . . and the sudden shutoff of only portions of those loan payments, coupled with the crippling effects that high interest rates and unemployment have–indirectly–upon lending institutions, has already caused the failure of a number of U.S. banks. If the whole house of debt cards topples, there are very few people who won’t get hurt.

Even so, there’s no profit in tearing our hair over what might happen (or has already happened). Instead, let’s all buckle down and do what can still be done . . . because there are courses of action open, no matter how bad things might become. Consider the old fellow in Tennessee who was interviewed by ABC radio right after his town’s financial institution–the Hohenwald Bank and Trust Company–went bankrupt. “No one will starve,” he said. “It’ll be deer season pretty soon.”

That sort of practical, no-nonsense attitude can go a long way during a crisis. So, as a sort of Christmas gift to you all (and to provide a little light in this necessarily dark column), we’d like to present another sampling of downhome economic wisdom . . . in the form of the accompanying poem.

My Mother Has Illusions About My Government Connections But Not About Anything Else

I saw on TV this morning that the President is wanting some kind of airplane I don’t remember which one but I do remember that it’ll cost a lot of money Now Sally Louise Messer has three children and 18 dollars a month food stamps If the President didn’t buy that plane maybe Sally Louise and her youngens could have something to eat this winter Why don’t you pass that along to some of your friends in the government Maybe the President really don’t need another airplane You know it’s not like he ain’t got one Got one he flies to California in and a helicopter he takes little hops in And if he says he’s wanting to give it to somebody else Tell him Sally Louise can’t afford it She’s got youngens hungry and a grate as cold and dead as Moses which is what Sally and them kids are gonna be if the President keeps on buying airplanes

Another thing I saw on TV is that wife of his, Nancy is buying some kind of fancy plates Got gold on ’em and I don’t know what else If my ears were hearing the price right they must be made out of the bones of angels and painted with God’s own breath Now I was just visiting Widder Cope the other day and she would be for me to have a cup of coffee with her though I know that’s a dear item for her to buy But she couldn’t even find a cup other than the one she was using and it with no handle Well she got to the sink and scrubbed that cup to a shining, put in a teaspoon of Maxwell House and poured hot water in it and I don’t know if I’ve ever had a drink that taste any better to me seeing how she’d honeyed it with so much pride

Now you tell your friends in the government to talk to Nancy Reagan about putting some heart into the food she serves and then her company won’t notice what kind of dishes they’re eating off of Why the government could save a whole bunch of money and maybe the Widder Cope could have enough of a raise in her social security check to get a set of pottery barn seconds or at least a second cup

Now I know you don’t have occasion to speak directly with the President everyday but if you do get a chance would you please tell him that although I’ve not had any more experience in running the country than he has I do believe I could help him manage his money I know how to make do out of nothing and I’ve raised a family off what’s been thrown away My advice is that he and his friends don’t need to fly on the backs of folks not able to get off the ground And be sure and tell Nancy that the K-Mart has a nice set of dishes at a very good price with a real pretty picture on the plates of afire burning in the grate and fat babies are laced all around the rim.
— Lee Howard

Lee Howard is a native of eastern Kentucky living in Oak Ridge, Tennessee. She is the author of The Last Unmined Vein, a book of poems that can be ordered–for $4.00–from Anemone Press, Dept. TMEN, Washington, D.C.