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Political Numbers. Can we make the world better..?





Possum
In 1979 Romania lent Zambia $15,000,000. In 1998 Romania wrote off the loan for $3,000,000 before the deal was finished a vulture got Romania's offer. The Vultures are now suing Zambia for $42,000,000.

This is just an example.

Do you think it is possible to make it a better world by understanding maths. Can we stop this sort of thing by being educated.

Vultures buying Third World Dept
deanhills
I don't think so. It is probably very straightforward. If one takes out a loan you have to repay it. Where it got complicated was when investment consultants worked on get-rich schemes to bundle those debts into investment instruments. So they were basically gambling with the debt. But in the end the thirld world country still has to pay their debt. Whether vultures or not. Looks as though Romania was quite shrewd to get rid of what was owing to them though. I'm quite surprised too as I thought Romania was a poor country in its own right and I did not realize it had money to lend to others, it would be more likely that Romania would borrow money from the large industrial countries?
Possum
No Dept is good dept
ocalhoun
Possum wrote:
No Dept is good dept


Actually, when used properly, debt is the mechanism by which people who need capital in order to make progress acquire it.

It's an integral part of the way resources are allocated in a capitalist system.


It can, of course, be misused in various ways, both by lenders and by borrowers though.
Possum
Quote:
debt is the mechanism by which people who need capital in order to make progress acquire it


There is no denying that.

But normally there is rational maths behind the load.

Buy house. Rent house. Pay house off. Sell house make profit.

There seems to no rational though in many of these government loans. No end date where the loan is paid off.
deanhills
Possum wrote:
There seems to no rational though in many of these government loans. No end date where the loan is paid off.
That is a good point. However usually it is not a straight loan and pay back situation. A loan like this would have been connected with aid to third world countries. Who really need it. Zambia is one of the poorest countries in Africa with the highest number of HIV cases. And it does not have a very ideal political system. I can't see how they would be able to repay any loan they get.
ocalhoun
Possum wrote:

Buy house. Rent house. Pay house off. Sell house make profit.

Yes, exactly. Debt is rational when you use it to increase your income potential more than the cost of interest on the debt.
Quote:

There seems to no rational though in many of these government loans. No end date where the loan is paid off.

Which could very well be true, which would make it an abuse of the lender/borrower system, and therefore likely to end badly for at least one party involved.

No good over-generalizing though.

(And heck, it's not limited to poor countries in Africa either. The US is also taking on lots of debt without any plan for using it to increase earnings or any plan to pay it off.)
deanhills
ocalhoun wrote:
(And heck, it's not limited to poor countries in Africa either. The US is also taking on lots of debt without any plan for using it to increase earnings or any plan to pay it off.)
Well said Ocalhoun, as per usual! Very Happy
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