Debt Shock: The Full Story of the World Credit Crisis

Stephen J. Kees was Chief Librarian, Niagara College of Applied Arts and Technology, Welland, Ontario.

There must be very few of us who are not in debt in some way or other. We have all incurred obligations for which we are not able or willing to pay immediately. In this respect, nations are no different.

As an experienced financial journalist who specialized in this area, the author relates how it happened that a number of developing nations, especially those in Central and Latin America, got themselves so deeply into debt. Much of the money they borrowed was OPEC oil money recycled through North American and European banks. Enter the world economic downturn of the early 1980s. The ability of these countries to meet their obligations disappeared. The crisis came to a head when Mexico informed the banks that it was not able to meet its obligations, and so the first rescheduling of obligations got under way. The magnitude of the indebtedness was such that if any country had completely defaulted the whole world banking system would have collapsed.

Besides a study of how all this happened, we are given a view of some of the principal people involved and of some of the organizations such as the International Monetary Fund, which had been established to prevent this type of happening. This is a frightening scenario that could affect all of us. The facts, which can be verified, have been revealed in part before, but have not been put together in such a comprehensive form.