The postwar liberal trading framework has become hopelessly distorted during the past two decades by the hegemony of the U.S. dollar, high interest rates, debt deflation, and capital flight; the asymmetries of a world so structured are proving intolerable. The economist John Maynard Keynes recognized this issue with characteristic clarity in the design of the Bretton Woods institutions--the World Bank and International Monetary Fund--in 1944. Keynes favored free markets and liberal trading arrangements insofar as they could be made to work, but he was also well aware that free markets are inherently unstable and prone to collapse. Keynes also understood that the characteristic structure of unregulated international finance placed bankers and creditors in the dominant position, and so would inevitably force adjustment by debtors. But what was locally rational in a financial transaction would prove disastrous for the system as a whole. As individual debtors contracted their economies in order to meet their interest payments, their demand for imports would diminish, and so would the exports of their suppliers. The entire economic system would contract, and in the end no one would be further forward in their ability to pay their debts.
THE INTERNATIONAL MONETARY FUND (IMF) has offered Brazil a $30 billion
loan, most of it reserved for next year, on condition that the country
continue to run a large primary surplus in the government budget. In this
way the IMF maintains a strong arm over Brazil's next government, almost
surely to be drawn from the left. Any significant move toward fiscal expansion
would trigger revocation of the promised loan, followed by capital market
chaos. Or so one is led to suppose.
Right now, Brazil is in the grip of recession. With declining demand for
imports, the country has a surplus in its trade account (outflows less
inflows of goods and services). It has, nevertheless, a substantial deficit
in its current account (outflows less inflows of financial assets), most
of which must be interest payments on external debts. These outflows are
offset by capital inflows, which are not, however, mainly new investments--currently
low, owing to the depressed state of internal demand--but operating loans
to existing businesses and the sale of existing national assets to foreigners.
In short, Brazil's external balance today is a matter of mortgaging or
selling property to pay interest, meanwhile hoping that things will somehow
get better.
The IMF's requirement that Brazil maintain a primary budget surplus amounts
to a prohibition against fighting recession by increasing domestic demand,
an action that would raise domestic investment and move the trade balance
back into deficit (and the current account even more so), which in turn
would require that foreign investors be found who are actually willing
to bankroll new activity. Of course, such investors do not exist. If they
did, the IMF would not be in the picture.
Conversely, the pressure to maintain a trade surplus is a device for balancing
the existing willingness of foreigners to buy Brazilian assets against
the existing burden of debt service. In part because of the political
climate, that willingness is eroding more rapidly than Brazil can manage
by shrinking real activity and curtailing imports. Panic therefore threatens
from day to day. The short-run purpose of the loan is merely to shift
the timing of panic so that it occurs under the new government instead
of the old. A report in the New York Times on August 21, 2002, makes this
clear:
American and European banks have all been scaling back their lending to
Brazilian exporters and manufacturers in the last six months. Most are
refusing to comment on their willingness to jump back into that market
on the heels of the fund's big loan deal.
In the medium term, if the new government respects the conditions of the
loan, the effect must be to finance a continuing reduction in private
capital inflows, substituting debt to the IMF for exposure to private
external investors while maintaining external debt payments to satisfy
older creditors. It is probably not accidental that the net IMF loan for
next year is roughly the same size as the present surplus on the capital
account.
Nothing here holds out any hope that Brazil's high indebtedness and interest
obligations can be reduced. There is no amortization plan. Therefore,
unless something does turn up (for instance, massive price increases for
orange juice and coffee, which are not very likely), the outlook is for
another IMF loan, and another, and another, into the indefinite future,
until the private foreign sector is safely divested of its Brazilian holdings.
There is also nothing in the loan that holds out the prospect for economic
progress in Brazil itself. Neither increased public spending nor increased
imports can be financed from it. Hence the loan represents no new money
that would benefit Brazilians, except to the extent that wealthy Brazilian
nationals also transfer their assets abroad, and that locals purchase
durable imports while they can. It is a standstill, not a progressive
package, whose purpose is to keep the wheels of finance spinning, aimlessly,
on the Brazilian beach.
Who benefits? In the first place, private holders of Brazilian assets,
who have an opportunity to escape before a severe devaluation. In the
second place, foreign bankers, whose loans will receive interest longer
than would otherwise be the case. And in the third place, domestic political
forces inside Brazil that oppose growth in public services and social
reform.
What is not clear is why a Brazilian government of the left, elected with
a mandate to rule in the interest of the working population, should sacrifice
its freedom of maneuver to these interests. It would be one thing if the
loan held out a prospect of an early return to net new borrowing in support
of state policy and private activity, but this is not the case. Instead,
the loan is more properly thought of as a form of blackmail. The IMF promises,
in effect, to help maintain an illusion of business as usual, during which
interval the new government can occupy its offices in Brasilia and enjoy
the perquisites of power, but only so long as no actual changes of policy
are made. The threatened alternative, if the terms are broken, is financial
chaos, no doubt accompanied by concerted efforts to destabilize the new
regime.
In particular, has Luiz Inacio Lula da Silva worked for so many decades
to build the Workers Party only to govern on such diminished terms? Or
is he prepared seriously to consider an alternative strategy? If so, of
what should it consist? And although disapproval by the U.S. government
is a foregone conclusion, what should be the attitude of the people of
the United States to such an alternative approach?
The Myth of "Sound" Financial Policies
Brazil is a large, resource-rich, industrialized developing country with
a history of interventionist policies in several industrial areas, including
aerospace, computers, and energy. It is the economic center of gravity
in Latin America. The country's notorious flaw lies in income and wealth
inequalities higher than virtually anywhere on earth, and a ruling elite
very much aligned with the sectarian interests of the wealthy. A weak
regulatory regime persists, particularly with respect to newly privatized
sectors. Taxes have never been raised sufficiently to finance satisfactory
mass urbanization, and the country's vast national resources have not
been protected or developed in a sustainable fashion. Capital, moreover,
has been free to take flight whenever policy threatened to move in these
directions.
A case could once have been made for capital market openness in Brazil
on the grounds that the country was short of capital resources and that
these could only be acquired abroad. But that case was valid for the extremely
short period between 1973, when the old Bretton Woods institutions were
dismantled, and 1982, when the resulting explosion of private debt culminated
in economic collapse. During the oil shocks, Brazil did manage to finance
growth and its import bill from abroad, but of course it could not do
so on a sustainable basis. Since then, Brazil and the rest of Latin America
have labored under the dead hand of past debt, unpayable except by selling
off existing capital assets. There is no serious case to be made that
airlines, roads, power grids, and telecommunications networks actually
function better under foreign ownership. At present the entire case for
privatization is financial: it raises resources to permit the continued
servicing of past debt.
For what purpose? The rationalizing argument behind current IMF programs
is that countries that follow "sound" financial policies--balanced
budgets, tight money, deregulation, and privatization of capital assets--will
be rewarded with a stamp of creditworthiness. They should then benefit
by being able to borrow from private capital markets on favorable terms,
relative to their own histories and the record of countries who are less
responsible. In principle this should mean they can run deficits on their
trade accounts, loan-finance the purchase of capital goods imports to
support development, and maintain high levels of economic growth and job
creation. They should be able to do all of this and still attract inflows
of direct foreign capital investment.
It has been clear for several decades, however, that this argument is
a myth, that the promised land it envisions is a mirage. If it were not,
would Brazil be able to complain? The country has a trade surplus and
a primary surplus on the government budget. The only source of deficits
in both accounts relates to the payment of interest on past debt. To run
a surplus on the current account--reducing imports by another $20 billion
or so--would require massive further deflation of the real Brazilian economy.
This would destroy the tax base and greatly worsen the public budget.
Thus, there is no way to improve Brazil's accounts from their current
position, short of an export boom--which depends on external demand, over
which Brazil has no control--or a write-down of past debt. But of course
the very purpose of Wall Street's interest in Brazil is to be paid as
much as possible for the past loans.
The Brazilian particulars illustrate a general point. The running of "sound"
policies does not translate into favorable treatment on Wall Street. Instead,
private investor judgments are driven largely by considerations over which
national policies in developing countries have no influence at all. Most
notably, these considerations include conditions in other developing countries
and in the United States.
Conditions in other developing countries periodically affect Brazil through
contagion in financial markets. Upheaval and financial crisis in Russia
in 1998 directly affected the risk exposure of many emerging markets funds.
Forced to account for the rising risk in Russia, they reacted by reducing
exposure in other "risky" markets, such as Brazil, even though
there was no connection between the Brazilian and Russian economies at
that time. Similarly, contagion from Argentina--itself only recently a
"model country" from the standpoint of the IMF--is affecting
Brazil now. Brazil is being punished by the financial markets because
of the failure of the IMF's sound-money prescriptions as they were applied
in Argentina--even though Brazil did not follow the Argentine road of
full acquiescence to the IMF's neoliberal schemes. The irony is, well,
Latin American.
U.S. policies and internal conditions affect Brazil through their influence
on relative rates of return facing investors. In the late 1990s, with
a "flight to quality" compounded by the bubble mentality of
the technology sectors, capital flowed into the United States and away
from developing economies such as Brazil. Now that the bubble has collapsed,
so has the appetite for emerging-country risk, and perhaps also the capacity
to purchase Brazilian assets. This too is beyond Brazilian control.
It follows that the only route available to Brazilian policymakers acting
on their own to restore growth and expand public goods and services in
the short run must involve a reduction of debt payments. The easiest way
to achieve this is straightforwardly to cut back on payments while imposing
strict controls over capital flight. Alongside these measures, the real
would be devalued, and interest rates reduced to accommodate both exporters
and import substitution. This is the model followed by Russia in 1998,
and the result was, in fact, a modest revival of domestic production after
a terrible crash. Since that time, the crisis in Russia has eased, even
though the vast damage done since the advent of shock therapy has not
been overcome.
The case against a policy of debt reduction comes in two parts. One is
specious, but the other must be taken more seriously. The specious argument
holds that capital markets will punish Brazil for its defiance. The difficulty
with this argument is straightforward: Brazil presently enjoys no benefit
from its participation in world capital markets. Even the IMF package
serves, from the standpoint of ordinary Brazilians, merely to keep up
appearances. It is self-evident that to interrupt the recycling of IMF
loans into debt service would change nothing in real terms, while the
effective imposition of capital controls--if technically possible in Brazil's
case--would slow the exit of private investors, and so the decline of
domestic asset prices. It does no harm to a bankrupt entity to declare
bankruptcy. The main effect is to halt the outflow of inside money. Although
affected investors obviously do not welcome this sudden loss of freedom,
there is no moral or ethical basis on which they can claim a greater "right
to escape" than that of ordinary workers and other citizens to whom
the market grants no such opportunities.
The more serious objection is that Brazil's internal political stability
may be threatened by a policy undertaken in the national interest. This
is the danger of subversion from the outside. The interests of international
finance protect themselves by the means at their disposal. There is a
long history of this in Latin America, including Brazil in 1964 and extending
to present-day Venezuela, where the complicity of the U.S. State Department
and doubtless other services in recent and continuing events is clear.
In the Russian case, such risks are much smaller because the government
rests on the bedrock of its security services, whose defects are well-known
but whose loyalties do not seem to be in question. How well a new Brazilian
government may be able to meet this danger is a matter of internal politics
on which a distant observer cannot speak with any authority. But it is
there--in the "crisis of confidence"--and not in the supposed
power of a market that the true danger lies.
Is There a Better Way?
Is there a better way, for Brazil and the world, than a complete rupture
between countries in the North and South on financial matters? And are
the national interests of the United States absolutely congruent with
those of our leading financiers, so that policy with respect to international
development can be safely left to their judgment and in their hands? Or
is it possible that, to borrow a phrase, another world is possible after
all?
Surely it has to be. The liberal economic vision--with multilateral clearing,
relatively free and open trade, easy flow of technology, travel, migration,
and human learning--has a core of virtues. It has helped to create a far
more open and attractive world, in many important respects, than could
ever have been achieved under the previous regimes of colonialism and
empire. The world is today safer from global war than it was in the first
half of the last century. Trade and peace do go hand in hand--most of
the time. There are reasons why the enduring success of such a system
remains an ideal for many intelligent and well-meaning people.
At the same time, however, the world we inhabit fails to rise to the standard
set by the liberal ideal. Particularly over the past two decades, the
postwar trading framework has become hopelessly distorted by the hegemony
of the U.S. dollar, unsustainably high interest rates, debt deflation,
and capital flight. The asymmetries of a world so structured are intolerable,
as they lead to unprecedented prosperity in the rich countries and deepening
crisis for the poor. It is a minor miracle that they have not long since
led to a full-scale revolt against U.S. global leadership. But the fact
is, such a revolt may not be very far off. There already exists widespread
rejection of American world leadership by the populations of developing
countries worldwide, and the reputation once enjoyed by the United States
as a pillar of multilateral order, having respect for differences and
fair play, has long since been squandered. This cannot fail to translate
into political terms sooner or later.
The British economist John Maynard Keynes had already recognized this
issue with his characteristic clarity in the design of the Bretton Woods
institutions--the World Bank and the IMF--in 1944. Keynes, as the third
volume of Robert Skidelsky's biography makes especially clear, was an
economic and a political liberal. He favored free markets and liberal
trading arrangements insofar as they could be made to work. But he also
had not forgotten the fact, which the Depression had driven home to all
observers, that free markets are inherently unstable and prone to collapse.
Keynes understood that the characteristic structure of unregulated international
finance placed bankers and creditors in the dominant position, and so
worked to force adjustment by debtors. This was locally rational in financial
transactions, but disastrous for the system as a whole. Individual debtors
would be forced to contract their economies in order to meet their interest
payments. Their demand for imports would diminish, and so would the exports
of their suppliers. In the end, the entire economic system would contract,
and no nation would be further forward in its ability to pay its debts.
The purpose of the Bretton Woods institutions, in Keynes's plan, was to
evade this trap. The substantial mechanism was to be a multilateral clearing
union, with authority to issue overdrafts to debtors--in effect, to print
international money. Under Keynes's scheme, it would be creditors who
would have to adjust by expanding their domestic economies, their employment,
and their absorption of imports until their consumption of imports rose
to match their sale of exports. Otherwise, creditors would face legitimate
discrimination against their exports. In this way, the system would balance
at high levels of employment (and the principal economic risk, of course,
would be international inflation rather than global slump). No member
country would, in Keynes's vision, be required to contract domestic economic
activity and forgo full employment simply in order to meet international
clearing obligations or pay debt service to foreigners.
Keynes did not get his way in the negotiations. The American side, led
by Harry Dexter White, insisted on a system dominated by lender interests.
As a result, the Bretton Woods institutions contributed almost nothing
to postwar reconstruction until calamity threatened in 1948 and the Marshall
Plan was put in place to avert it. After that, development largely proceeded
under the impetus of cold and hot wars; one in Korea, which jump-started
the recovery of Japan, and one in Vietnam, which provided a similar service
for Korea and much of southern Asia.
The IMF began developing its modern regimens of debtor adjustment--devaluation
plus deflation--for imposition in Europe in the late 1960s. There followed
a brief moment, in the aftermath of the oil shock of 1973-74, when the
IMF might have emerged as the principal conduit for the recycling of petrodollars
to the oil-importing countries of the developing world, but the Nixon
administration blocked this. Instead, the job of financing development
was turned back to the major commercial banks, along with their European
and Japanese colleagues. They made the necessary loans on commercial terms
and at variable interest rates keyed to the London Interbank Offer Rate
(LIBOR). Development from that point forward was to proceed on commercial
terms and "free market" principles, at interest rates determined
after the fact by the monetary authorities of the United States.
These arrangements were doomed from the beginning. They collapsed even
sooner than they might have otherwise, when Paul A. Volcker and the Federal
Reserve pushed American interest rates past 20 percent in their 1981 campaign
against inflation. The result was a global crisis of debt, insolvency,
and perpetual debtor adjustment that afflicts the entire developing world
(except for India, China, and a handful of south Asian city-states) to
this day.
The original authors of the IMF and World Bank generally supposed that
the United States would remain in its immediate postwar position as a
strong surplus country and creditor to the rest of the world. Thus dollars
could be "scarce" and, if they were, international liquidity
would have to be issued in some other medium. This rather soon proved
to be a colossal misjudgment. Instead, the United States went into deficit
and eventually became the world's largest debtor. The world became so
awash in dollars that the proposed international unit of account--originally
the bancor and in its etiolated modern form, the Special Drawing Right--faded
into insignificance. Today, the dollar is the world's reserve currency,
and the international position of the United States depends on this.
So long as the world is willing to take and hold U.S. assets, including
liquid dollars, this system works--and shamefully to the interest of Americans.
The resulting high value of the dollar means that we consume comfortably,
and in exchange for very little effort, the products of hard labor by
poor people. We live on the interest skimmed from the meager living available
to factory workers in São Paulo, in exchange for providing otherwise
unavailable liquidity to the world system. (Our situation is akin to that
of, say, Australia in the late 19th century when gold fields were discovered,
except that, in our case, no actual effort is required to extract the
gold.) And meanwhile, we are not obliged to invest unduly in maintaining
our own industrial base, which has substantially eroded since the 1970s.
We could afford to splurge on new technologies and telecommunications
systems whose benefits were, to a very great extent, figments of the imagination.
And even when the bubble burst in those sectors, life went on, for most
Americans, substantially undisturbed--at least for now.
But for how long will the system of dollar hegemony endure? There can
be no definitive answer; the few economists who have worried about this
issue are far from being in agreement. On one side, it is argued that
the dominant currency holds a "lock-in advantage"; that is,
there are economies associated with keeping all reserves in one basket.
The United States in particular is in a strong position to oblige foreign
central banks to absorb the dollars that private parties may not wish
to hold, at least within elastic limits. Control of oil by U.S. allies
and satellites will require other importers to buy dollars in order to
buy oil, though it is not obvious that such control requires anyone to
hold those dollars very long, except as a hedge against price increases
or home-currency devaluations.
Against this, the question remains: Will foreigners be willing to add
to their holdings of U.S. assets at a rate consistent with the U.S. current
account deficit at full employment? The amount to be absorbed is in the
range of half a trillion dollars per year. This was easily handled when
asset prices were rising, but now that they are falling, dollar assets
are not as safe as they once were. If foreigners are not willing to absorb
them at the requisite rate, and if asset prices do not quickly fall to
the point where stocks appear cheap, dollar dumping is, sooner or later,
inevitable. Otherwise, the United States must slow the rate at which liquidity
is issued by restricting its imports, which it can only do by holding
down economic growth and keeping incomes well below the full-employment
level. In that situation--which may already have arrived--the United States
joins Brazil and other developing nations as a country effectively constrained
by its debts. Indeed, the world prognosis from that point forward becomes
grim, since high levels of American demand have been just about the only
motor of growth and development (outside, perhaps, of China and India)
in recent years.
The United States as a Debtor Nation
There are economists who advocate dollar devaluation, believing that the
richer countries of the world would quickly rally to purchase increasing
quantities of made-in-America exports, thus reversing the manufacturing
decline of the past 20 years. But this is very unlikely. Exports to the
rich regions may not be very price-sensitive.
And exports to the developing regions are very sensitive to income and
credit conditions, which would get worse. At least in the short and medium
term, there is no foolproof adjustment process to be had by these means.
Where a high dollar provides U.S. consumers with cheap imports and capital
inflows to finance domestic activity, a falling dollar would have opposite
effects. A falling dollar would raise the price of imports into the United
States, especially from the richer countries.
Meanwhile, a declining dollar would hit at the value of developing countries'
reserves, and so work, on that account, to diminish their demand for our
exports. The most likely outcome from a dollar devaluation is therefore
a general deepening of the world slump, combined with pressure on American
financial institutions as global investors seek safer havens in Europe.
This "elasticity pessimism" (very much shared by Keynes in his
day) and the specter of financial vulnerability mean that for the United
States, the combination of falling internal demand, falling asset prices,
and a falling dollar represents a threat that can best be described as
millennial. (My colleague Randall Wray has called it the "perfect
fiscal storm.") The consequences at home would include deepening
unemployment. There would be little recovery of privately financed investment,
amid a continued unraveling of plans--both corporate and personal--that
had been based on the delirious stock market valuations of the late 1990s.
The center of the world banking industry would move, presumably to continental
Europe. Over time, the United States could lose both its position as the
principal world beneficiary of the financial order and its margin of maneuver
on the domestic scene. This would be not unlike what happened to the United
Kingdom from 1914 to 1950.
It is not obvious that senior financial policymakers in the United States
have yet grasped this threat, or that there is any serious planning under
way to cope with it--apart from a simpleminded view among certain strategic
thinkers about the financial advantages of the control of oil. Instead
it appears that the responsible officials are confining themselves to
a very narrow range of debt management proposals, whose premises minimize
the gravity of the issue and whose purpose is to keep the existing bonds
of debt peonage in place as long as possible.
A paper issued this year by the Derivatives Study Center, a Washington-based
study group, outlines three major proposals for dealing with the problems
of sovereign debt. One of these is the work of Anne Krueger of the IMF;
the second, Treasury Undersecretary John B. Taylor; and a third, a group
of private economists associated with the global debt relief campaign
headed by Kunibert Raffer.
The IMF and Taylor proposals provide alternative ways of addressing a
very narrow issue in debt negotiations, namely the incentive for renegade
creditors to resist a write-down of their own assets and so to hold out
for full payment. This is a classic free-rider issue, since the possibility
of paying off any one creditor at face value rises as other creditors
accept smaller payments. The IMF would deal with this problem via a new
formal restructuring mechanism that would bind all creditors to terms
acceptable to a majority. The Taylor proposal would accomplish much the
same thing (though in a much more distant future) by providing that new
debt contracts carry a collective action clause permitting the will of
the majority of creditors to bind the entire group.
Neither the IMF nor the Taylor proposal addresses the systemic problem
of excess and unpayable debt. Their thrust is merely to prolong the present
prebankruptcy stage of financial relations for as long as possible--shaving
and stretching out debt repayments so as to match the ability to pay to
the willingness of foreign capital to acquire developing-country assets
through liberalization and privatization. In this way, they implicitly
assume what has already proven to be impossible, namely, that private
capital markets will eventually produce "development" to which
poor countries aspire. Nothing in either protocol would protect the populations
or the public programs of any developing country.
The Raffer proposal makes an effort along these lines by proposing the
creation of an international adjustment mechanism akin to the municipal
bankruptcy proceedings available under Chapter 9 of the U.S. bankruptcy
code. This proposal for "restructuring with a human face" would
give citizens of debtor countries a legal right to be heard in debt negotiations,
and so would permit countries to protect some of their social services
and core infrastructure investments from disruption in the restructuring
process. This proposal has an undoubted claim to enlightened sympathy,
and would very materially ease the burdens of adjustment on poor countries
in debt restructurings. But no more than the other proposals does it address
the larger problem facing the world economy today, namely, the breakdown
of a functional finance in support of the development process.
But if, as a result of a widespread diversification away from the dollar
as a reserve asset, the United States runs a risk within, say, a decade
or two, of joining those countries for whom the discipline of the international
monetary order means continuous debtor adjustment, a new element will
enter the picture. It would become part of the national interest of the
United States, if not necessarily that of its financial industry, to collaborate
in the reconstruction of a global order that serves the interests of debtors
at least as well as creditors. It will become the American interest to
switch sides in the debt wars and join forces with the developing countries
whose interests lie in rebuilding a multilateral international monetary
structure, thus providing a safe path to the orderly liquidation of the
dollar overhang and the restoration of autonomy to growth-oriented national
development policies.
What would this mean in practice? In broad terms, it would mean that the
negotiations antecedent to Bretton Woods, so admirably recounted by Skidelsky,
would have to be recreated. But this time, the United States would have
to take the role that Britain, anxious to protect its national autonomy
in difficult financial conditions, took in 1944. (In that environment,
Britain spoke for all the habitually indebted nations of the world in
favor of a global order that would force creditors to bear the burden
of adjustment.) The role played by the United States would be taken on
by the world's emerging creditor power, the European Union.
There is every good reason to think that the outcome of such a revisited
negotiation would be more favorable to the world's beleaguered debtors
than was the case in 1944. The United States remains today a dominant
diplomatic and military force, which the European Union is not. And the
U.S. economy is far more globalized, with more natural links of trade
and investment to the developing countries, than are the Europeans. Should
the United States one day switch sides in the global financial struggles,
remarkable things might happen in a fairly short time.
Such a change is difficult to imagine today. The political processes of
the United States would first have to be thoroughly overhauled--the money
changers once again would have to flee their positions in the temple.
But circumstances have a way of dictating political position, sooner or
later. It has only been a bit more than a century since the U.S. did in
fact stand as the world's premier representative of debtor nations. It
was only some 70 years ago that Franklin Roosevelt inaugurated the Good
Neighbor Policy, acknowledging the sovereign right of Latin American countries
to escape from the burden of unpayable debts. It may not take that long
before we come full circle once again, if motivated by practical necessity
in the pursuit of full employment. Perhaps the oncoming clash between
Brazil's people and the global financial order will help motivate ordinary
Americans to rethink on which side we should now stand.
References
Andrews, Edmund L. 2002. "Fears That Lending to Brazil May Dry Up."
New York Times, August 21: C2.
Derivatives Study Center. 2002. Sovereign Debt Restructuring. Primer. Washington, D.C.: Derivatives Study Center, Economic Strategy Institute. www.econstrat.org/dsc%20sovdebt.htm
Krueger, Anne O. 2002. A New Approach to Sovereign Debt Restructuring. Washington, D.C.: International Monetary Fund. http://www.imf.org/external/pubs/ft/exrp/sdrm/eng/index.htm
Raffer, Kunibert. 1990. "Applying Chapter 9 Insolvency to International
Debts: An Economically Efficient Solution with a Human Face." World
Development 18:2: 301-311.