Gleneagle style debt forgiveness for Ireland

KP81

In 2005 at the G8 summit in Gleneagles most African debt was written off (total was $40 billion I think). No particular adverse reactions seem to have occured. Can't Bob Geldof and Bono get together and have Irish (or Greek, Spanish, US etc) debt written off similarly? Wouldn't that reduce the risk of default and lower bond spreads in one go? What might be the drawbacks?

hiorta

The trouble with that is that who would ever trust them again?
What would prevent the whole sorry greedy mess happening all over?
Firm evidence of financial maturity and responsibility would surely be required.

slimjimmc

If we had African levels of poverty and undevelopment then we might have a chance for a write-off. But we are far better off than that and we can afford to repay our debts. It's not a matter of inability to pay it's a matter of doing it with the least pain possible.

We could have a song too..'Feed the consumerist irish economy, Let them know they're in Negative Equity'..

Chuchoter

You know the way we've now written off the African debt, will countries no longer lend to Africa ever again?What will they do without that income?

Meh, no, they just wrote off the sovereign debt...they're still heavily endebted to private corporations, who are now first in line..

SkepticOne

crayolastereo wrote: »

You know the way we've now written off the African debt, will countries no longer lend to Africa ever again?What will they do without that income?

But borrowing is only ever a temporary solution to financial problems. Although it is good to have the facility to borrow when necessary, it can't be the basis for long term income.

Chuchoter

SkepticOne wrote: »

But borrowing is only ever a temporary solution to financial problems. Although it is good to have the facility to borrow when necessary, it can't be the basis for long term income.

Well before obviously they need 40bil, what if they need money again?

SkepticOne

crayolastereo wrote: »

Well before obviously they need 40bil, what if they need money again?

They needed to get into crippling debt? They will need to get into crippling debt again?

Chuchoter

SkepticOne wrote: »

They needed to get into crippling debt? They will need to get into crippling debt again?

Why did they take out 40billion in the first place? They must have been using it for something.

SkepticOne

crayolastereo wrote: »

Why did they take out 40billion in the first place? They must have been using it for something.

You can't unfortunately separate the cash from the obligation to service that debt.

If you had run up credit card debts to the extent that you could not eat due to having to pay interest on those debts, would you turn down debt forgiveness if it meant it would be hard to get back into debt subsequently?

That is an extreme example but it illustrates the point. If a country has gotten into debt to the extent that servicing that debt becomes a great burden then any chance to have the debt forgiven should be taken even if it means difficulty in borrowing in the future.

As I said, borrowing should only be to get over short term difficulties. It is not free money. You can only say that those African countries "needed" that money if they can point to how they are better off now because they borrowed that money. Given that they do not seem to be better off, it would seem that they didn't need the loans and would have been better off without them.

myrak

Most African debt has never been written off. Gleneagles was another in a long line of G8 'promises' Countries deemed 'deserving' of cancellation have been put thro' years of restructuring- reducing basic services, privatisations and unequal trade deals to earn the right to have some cancellation. There is no bottom line below which hospitals, schools and basic services cannot be allowed to fall and debt repayment be made to take second place to human need. Much of the lending went straight to dictators, govt officials or cold war allies and little went to basic services or ordinary people but when repayment became impossible or leaders changed or died much of the lending became 'sovereign debt' to be paid by generations of...ordinary people, Sound familiar? There is nothing new under the sun and our debt crisis is at the end of a long line of same. Haiti today rebuilds while repaying debt to the IMF. Fair or what?

population

Just don't give 22 billion to Anglo and the need to cap in hand decreases considerably