[stop-imf] US Debt implications for global finance, global South

[robert weissman]

 >"Will US Debt Lead to a Financial Crisis?" is the title of a new KAIROS
 >briefing paper on debt and finance issues.
 >
 >This paper is an abriged and updated version of a discussion paper first
 >prepared for the South North Consultation on "Resistance and Alternatives
 >to Debt Domination held in havana last September.
 >
 >The paper discusses the prospects for a global financial crisis caused by
 >the USA's huge external debts. It discusses some of the implications for
 >Canada as well as how a financial crisis might create conditions for mass
 >defaults or repudiations of illegitimate debts by Southern countries.
 >
 >To open a pdf version of this paper click on the following link:
 >
 ><http://www.kairoscanada.org/e/resources/policyBriefing1USDebt0602.pdf>ht=
tp://www.kairoscanada.org/e/resources/policyBriefing1USDebt0602.pdf
 >
 >To order a paper copy please contact John Dillon, Program Coordinator,
 >Global Economic Justice at KAIROS
 ><mailto:jdillon@kairoscanada.org>jdillon@kairoscanada.org

CONCLUSION:

Implications for the Illegitimate External Debt of
Southern Countries
In December of 2004 The Economist noted that if the de-
cline in the US dollar continues it will =93amount to the big-
gest default in history.=9422 This unilateral change in the
terms of the USA=92s own debts is another example of the
exorbitant privilege attached to being the issuer of the
world=92s principal reserve currency. This same privilege is
not available to Southern countries that cannot borrow
funds in their own currencies. But the example of a unilat-
eral default by the world=92s largest debtor gives Southern
governments another reason for refusing to make pay-
ments on debts that are clearly illegitimate by virtue of
their origin as odious debts incurred by dictatorial regimes
or because they accumulated due to sky-high interest rates.
How will Southern governments react to another fi-
nancial crisis like that of 1982 that suddenly reduces their
export earnings and raises interest rates making it impossi-
ble to service their debts?
Much will depend on the strength of the global justice
movement and peoples memories of the disastrous results
of following IMF dictates during the crises of the 1980s
and 1990s. When a new crisis occurs this movement will
pressure Southern governments to repudiate illegitimate
debts and refuse to sign agreements with the IMF.