The Great Debt Explosion

Abstract

Amidst the acres of newsprint about Mrs Thatcher’s Falklands trip last week it was barely possible to find a snippet to the effect that the major British banks had informed their international counterparts that owing to the present political difficulties surrounding Anglo-Argentine relations they did not feel able to join in the banking consortium faced with the problem of Argentina $43 billion debt. It was a very curious piece of news selection. The debt crisis of the less-developed countries (LDCS) and Eastern bloc is not only a far bigger story than any amount of Iron Ladies at Goose Green — it is the biggest story of all. If this crisis is going to bring down the international financial system it will be because the great banks of the West fail to maintain a common front — so a split in their ranks is news indeed. One can’t know when the chickens will come home to roost on this issue, but come home they eventually and certainly will.

First published in New Society, 27 January 1983.