The Debt Threat: How Debt Is Destroying the Developing World...and Threatening Us All,   ISBN:9780060560560

Customer Rating: 

This book clearly explains why Third World debt should be forgiven. I always felt that, hey, if you incur a debt, you should pay it. Reading this book changed my opinion.

A lot of debt in developing countries was incurred at a time when commercial banks needed to make loans. Sound familiar? Some of the borrowers were ruled at the time by despots who used the funds for their personal use.

Those who are now left with the debt find they cannot make the interest payments. They spend more on paying off the debt than getting clean water and education for their children. This book helped me see why many third world countries can't get ahead economically.

Of course, since the book was written, many Latin American countries such as Brazil and Argentina paid off their debt. But for the others, a fresh start would help not only them, but the rest of the world as well - including Americans.

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The relief of debt for poorer countries is an issue which many support but few really understand. Noreena Hertz is someone who knows what she is talking about. She formerly worked at the World Bank and in now Professor of Economics at Cambridge. She is also a tireless campaigner for debt relief.

What I most appreciated was her ability to explain the economics in a way that was both understandable and convincing. She tells us how the debts came about - often during the cold war in an attempt by the West to gain and maintain areas of influence in the developing world. She also reminds us that many of these loans went to corrupt leaders of countries whose citizens now have to pay the price. As a result basic human needs - food, housing, and healthcare are sacrificed to service the debt payments.

We are left in no doubt that we carry a significant responsibility for this situation. This is why we should lobby our leaders to write of these debts. It is easy to say that fault lies on both sides. That may be so but if poor children have to pay then we who are in a position to do something should do all that we can.

She writes all of this in a very readable style. This book did far more than big events such as Live 8 to convince me of the need to do something. I would urge all readers to get hold of a copy and read it!

Customer Rating: 

Insightful, interesting and accessable. I read this book as part of my disseration research for a critical assessment of World Bank/IMF policy with regards to third world development. Prof. Hertzs' arguements are persuasive and compelling. They demand the attention of the policy-makers, finanical workers and the international community at large. Debt hangs from the neck of the developing world preventing it from standing upright. Prof. Hertz explains that this need not be the case.

Customer Rating: 

Debt cancellation for developing countries is a subject that has attracted much attention and little real action, despite in 2005 G8 countries and few others have taken some clear-cut commitment. This readable book provides:

a) a quick and simple description as to how developing countries got trapped into unsustainable debt levels. But among developing countries it fails to distinguish between middle-income emerging market economies and low-income economies. Therefore, the author jumps to the conclusion that Argentina (or Turkey) and Somalia (or Botswana) should be treated the same.

b) a simple theory, which suggests that developed countries often offered loans to corrupt governments (or full-fledged dictatorship) of developing countries and therefore, the peoples of those countries cannot bear the burden of servicing that debt, for which they did not benefit at all. Thus understood the problem, the full debt cancellation is a moral (and maybe legal) obligation. The author does not develop further that theory, but in practice she says that those countries that have violated human rights, or more specifically, at the time of borrowing were violating civil and political liberties, and/or economic, social and cultural rights should be provided full debt cancellation. Who and how the violation would be assessed is not clear, but this idea merits to be developed further and into operational detail.

I would recommend it for the general reader and those interested in development issues without prior knowledge.

Customer Rating: 

Noreena Hertz's basic principle is that the rights of creditors do not stand above fundamental human rights.
Debt repayments should not be imposed on governments when they could put in danger a minimum level of food, health care, clothing, water, education and housing for the entire population.

But as US president Calvin Coolidge said to the English delegation after WWI: 'We lent you money. Didn't we?'
The fact is that a lot of money was lent to corrupt and despotic regimes (Suharto, Marcos, Abacha, Ceaucescu, Mengistu, the South-African apartheid regime ...). More, after the end of the cold war, the US asked immediate debt repayment from States which were no longer strategically important.

Democratic governments should not be responsible for irresponsible lending by States or International Organizations.
She remarks that 60-70 % of all World bank projects under Mc Namara were failures and that only 10 % were ecologically and socially sound investments.

For her, debt should be forgiven if it was lent to undemocratic regimes, if the investments were against the interests of the majority of the population and when those who gave the money knew for what it was disbursed.
Ultimately, debt forgiveness will ot only favour the poor but also the rich countries, for it should not force nations to implement unsound policies and should improve security in the world.

By the way, she rightly lambastes massive arms investments (4 stealth bombers represent 1 schoolyear for 155 million children) and agricultural subsidies in the US and Europe (every cow receives 2,20 $ per day, or more that 1 billion human beings on our planet).

This book is a must read about a crucial problem for a massive part of the world population.