Sunday, December 11, 2011
The battle between creditors and debtors
The debt crises around the world is just a continuation of the battle between debtors and creditors except everyone cannot be a winner in this war. Debtors through at optimism take on too much debt. When their optimism is not realized, they would like to a redo and relieve. That may be fine except the creditors want their money. It is that simple and it has been occurring for centuries. This was problem with the Greta Crash. It was a problem with the oil price shocks. It was an issue with Bretton Woods. It is the focus of all bubbles. (see Paper Promises: Money, Debt, and New World Order by Philip Coggan)
The debtor/creditor battles are not just fought in the banks and in the courts. It is also inherently political. There will usually be more debtors than creditors. the money interest who serve as creditors will be vilified. The rules will have to change to allow for debtors to gain their footings. This is the true nature of populism in elections. We see this being played out in the US with occupy Wall Street and the demonstrations in Europe. The solution will lead to a new order especially with the governments being the ones who are the debtors. The battle of creditor and debtor will be played across the globe between nation-states which will effect the state of globalization.