Rounding out the news I read this morning, Mr. Pat Buchanan wrote an article on the debt forgiveness proposal that bears commenting on.[1] In a couple respects he is correct. He is correct that the clause talking about the need to take anti-corruption measures is a joke. It means that either no debt relief will occur, or that no reforms will. He is also right when he says that we the tax payer will ultimately bear the burden for this.
But he utterly ignores the fact that we would be doing so anyway. These debts are beyond the resources of the current, admittedly corrupt, governments to pay. With the current financial structure, the presence of these bad loans would have served as reason to further prop up these governments, lest they get overthrown and the new government not agree to honor the debts. Further, for the most part, only interest was being paid anyway, the debt was not decreasing.
While it would be nice to see the IMF and the World Bank held accountable for these loans, it is useless to say that it should happen just as it would to "any U.S. government bank" for two reasons. One, there ARE no "U.S. government banks. The Federal Reserve bank has a U.S. mandated monopoly on the production of money, and uses government resources to do so, but it is a private bank. As are all the other banks. Secondly, only small banks are allowed to fail anyway. Bigger banks get rescued by the Federal Reserve or by Congress directly just as big corporations such as Lockheed or United Air have been. This is exactly the same thing.
It is also the right thing to do. Yes, these loans should never have existed. And yes, the governments are corrupt. But that does not excuse us crippling any chance these countries have for even minuscule advancement under the heavy debt burden that currently exists. If we do not accept what are ultimately our own mistakes (through our elected and appointed officials), these countries will never have a chance to give their people a decent life. And that alone tells you what the right course of action is. It is our fault they have these loans, our fault that the interest cripples them. It is thus ours to bear the default on them.
[1] http://www.wnd.com/news/article.asp?ARTICLE_ID=44789