Debt and unfair trading Essay

Submitted By Kirstinsmith
Words: 868
Pages: 4
Open Document
Debt in itself is not bad; it allows people and organisations to do things they wouldn’t otherwise be able to do, such as starting or expanding a business or buying a home. However throughout history, extreme debt build-up has been blamed for worsening economic problems, from the Great Depression right up to the present day, with the global financial and economic crisis.
When individual or businesses reach the point where they absolutely cannot pay their debts, our laws in the United Kingdom give them the ability to declare themselves bankrupt. This not a decision any business wants to be put in, but it means that some or even all of their debts can be written off (reduced or cancelled), or they can organise a to pay back a fraction of what they owe at a level they can manage e.g. monthly payments, and their trustees have to accept that they will not get all of their money back. On the contrary there are no such options like these for the governments of struggling, impoverished countries and there are no international laws exist to protect them. If they need money to develop they borrow from: other governments, the World Bank, the International Momentary Fund (IMF) and in some cases even High street banks. When LEDCS (Less economically developed countries) are in excessive amounts of debt they have no choice but are forced into spending more on repayments than on helping their own people, which means the country doesn’t have enough for infrastructure and falls into a void of economic degradation. Governments of LEDCS owe huge sums to wealthy countries and the international banks they borrowed from. Many LEDCS borrowed money to try to develop their country (e.g. by building motorways, hospitals and schools). Although they were given aid by the MEDCS this often comes with ‘strings attached’ and the amount of aid wasn’t enough to raise the living standards in the LEDC quickly enough. The people of these countries are in debtor’s prison because they are unable to access the freedom that better health, education and social development could bring.
Third World Debt – Brief History
Millions of people in the world’s poorest countries are confined by debt. Debts run up by governments on their behalf. Debts that were started up as easy credit pushed by rich lender. Debts that enrich these lenders further but leave children malnourished, and families living in desperate poverty. The flow diagram below shows how debt crises rose in the 70s and 80s.

Why should debt be cancelled?
When money is loaned to poorer countries for development it should be done on fair terms and in a responsible way that leads to improved quality of life and opportunities for the millions who are trapped in the poverty cycle. Some debts are even run up by the previous colonial regimes and then passed on to newly liberated countries, essentially meaning they were born into debt. Therefore a large proportion of poor country debt is unjust. One example of this would be Haiti. Haiti is an LEDC and suffered from a severe earthquake only a few years ago. It was also a colony owned by the French during the slave trade. After liberating the country the French declared that Haiti was in debt and should pay a certain amount of money back to the country
Show More

Related Documents: Debt and unfair trading Essay

Concluding Case One Stock Market Games And Dark Side Of Financial Counseling

internally before being announced to the public, however obtaining this information before it goes public can be advantageous and profitable. Andrew Rankin was a star investment banker with Royal Bank of Canada Dominion and was charged with insider trading and tipping his friend Daniel Duic about several big corporate deals that were about to unfold. Utilizing this special information Duic made over four million in profit by buying and selling the stocks of these companies when the information provided…

Words 579 - Pages 3

exam answer Essay

Semester 2, 2007 Exam Question 1: (a) Financial report disclosure and AGM (5 marks) Pierce Pty Ltd was formed recently. During Pierce Pty Ltd’s first year of operations it hired 75 employees and was expected to be extremely profitable this year. Its three shareholders and respective shareholdings are Burns owns 4% of Pierce Pty Ltd’s shares; Donovan Ltd owns 76% of Pierce Pty Ltd’s shares; and McIntyre Pty Ltd owns 20% of Pierce Pty Ltd’s shares. Burns was concerned when Pierce Pty…

Words 7652 - Pages 31

Final Exam Veronika Z Essay

Table of Contents Marvel 1 Why did Marvel file for Chapter 11? Was it bad luck? Bad strategy? Bad execution? 1 Will the proposed plan solve the problem? 2 Will Marvel debt holders approve the plan? Will public bondholders like Carl Icahn approve the plan? 3 Assess the projections, are they credible? How much is the equity worth according to the plan? 3 Bankruptcy Questions 5 What is a pre-packed Chapter 11? What is the commercial significance of a pre-pack? 5 What is the “right of set off”…

Words 1940 - Pages 8

Essay The Need of Buisness

connected or linked together economically must constantly be in communication with one another. Communication is key to a countries success. A thriving nation such as America maintains communication with all of its trading partners. In some instances when there are disagreements in the trading relationships with our partner nations there arises what is known as a trade dispute or in strongly contested disagreements we describe them as trade wars. When such events occur the nations rely on the governments…

Words 718 - Pages 3

The Enlightenment Essay

spoken word.” The French and Indian war was the final war in a series of wars that had occurred during the French and Indian Wars between the French and the British, which were mostly fought in the American Colonies over control of forts and river trading routes. In this final war, England decided that the battles in Europe were more deserving of their time and left the colonists to fend almost entirely for themselves against the French and the Natives. Also, at the end of all these wars, the British…

Words 1031 - Pages 5

Whiskey Rebellion Research Paper

because of poor storage and dangerous roads. Farmers many times turned their grain into liquor which was easier to ship and preserve. Whiskey, made from corn, rye, and grain was some of the produce of the farmers. Whiskey also was sometimes used for trading in these days. That helped to make this tax unpopular in some of the farming areas. The Whiskey rebellion was provoked by a tax on this whiskey and was the first serious challenge to federal authority. Collection of the tax met violent resistance…

Words 610 - Pages 3

Essay on Corporate Finance Intoduction

right of the BS) * Current Liabilities: Short term loans or obligations to be repaid within a year * Long-term Debt: Debt does not have to repaid in one year * Shareholders’ Equity: Difference between the value of assets and the debt of the firm (Residual claim on the firm’s asset) * Capital Structure: Proportions of the firm’s financing from current and long-term debt and equity * Net Working Capital: Current Assets less Current Liabilities (Manage short-term finance) 2. the financial…

Words 1828 - Pages 8

Essay about Modern History and early Modern Era

greed for wealth and needs that the Americas provided for. The declination of Spain’s hold on the Incas was a gradual change on the trade because other countries were not restricted to not trading with the Americas. The evidence of the change can be seen starting from the 18th century, when foreign wars, increasing debt, declining population, and internal revolts weakened Spain. Spain’s rivals, France, England, and Holland, were able to reach Spanish-America and soon started their own colonies. The effects…

Words 728 - Pages 3

french-indian war Essay

The French and Indian War of 1754-1763 drastically influenced the political, economic, idealogical bond between Britain and its American colonies by shifting Britain to the most dominant power in the North America’s and setting an astounding war debt on the colonists shoulders, ultimately leading to a unmendable tear in the British-Colonial relations. The Mother Country’s practice of salutary neglect was completely altered due to the aftermath of the French and Indian War. The course of the war…

Words 726 - Pages 3

Articles of confederation Essay

have been created in its perfect entirety. Life without either of these documents would be dramatically different for every single American citizen. Heck, there probably would not even be a United States. It’s possible we would be living under some unfair laws that a dictator forced upon us. Anything would be possible if the Articles of Confederation or our new Constitution was never put in place. But, instead of thinking on the negative side, life also could have been better. A different country would…

Words 2078 - Pages 9