The Great Debt Explosion

Abstract

Amidst the acres of newsprint about Mrs Thatcher’s Falklands trip last week it was barely possible to find a snippet to the effect that the major British banks had informed their international counterparts that owing to the present political difficulties surrounding Anglo-Argentine relations they did not feel able to join in the banking consortium faced with the problem of Argentina $43 billion debt. It was a very curious piece of news selection. The debt crisis of the less-developed countries (LDCS) and Eastern bloc is not only a far bigger story than any amount of Iron Ladies at Goose Green — it is the biggest story of all. If this crisis is going to bring down the international financial system it will be because the great banks of the West fail to maintain a common front — so a split in their ranks is news indeed. One can’t know when the chickens will come home to roost on this issue, but come home they eventually and certainly will.