Process Of Indebtedness Research Articles

Link between private debt and public surplus in Spain

Throughout recent history, the Spanish economy registered a fiscal surplus only between 2005 and 2007. Analysts agree that this surplus was a product of the extraordinary economic growth, but they often fail to notice that it was based on similarly exceptional growth in private debt, which was a necessary condition for achieving fiscal surplus. This finding can be illuminated from the vantage of sectoral balances: in economies that usually run a current account deficit, such as Spain’s, a public surplus can be achieved only in situations characterized by a credit bubble. To verify this idea we examine the impact that the Spanish real estate and credit bubble had on public accounts, and we also estimate an econometric model of autoregressive vectors. The results corroborate the working hypothesis: Spain’s only fiscal surplus in recent years was achieved thanks to the largest private indebtedness process in the country’s history. This evidence could have important implications in terms of economic policy, because economies with regular current account deficits such as Spain could have difficulties in achieving their fiscal goals without experiencing credit booms.

Reshaping the Economic Structure in Argentina: The Role of External Debt during the Macri Administration (2015–2019)

Argentina’s right-wing shift in the 2015 presidential election concluded twelve years of center-left rule. The elected president, Mauricio Macri, claimed that the economy would experience normalization of existing imbalances and recover its strength in a “new political era.” However, the new administration quickly restored the dominance of neoliberal economic policies through a comprehensive set of initiatives, which centrally included the return to international financial debt and equity markets and submission to the International Monetary Fund’s (IMF) rules. This article analyzes Argentina’s external-debt-growth process and discusses its objectives and long-term effects. This paper posits that the indebtedness process carried out by the Macri administration—and its modality—not only increased the relevance of financial capital in the Argentine economy but also structurally conditioned any future nonorthodox alternative path of development. This outcome cannot be understood without taking into account the deliberate role of the United States, the IMF, and the top companies that operate in Argentina, as well as the complicity of many political sectors. JEL Classification: H63, F34, F63

Indebted by dispossession: The long‐term impacts of a Special Economic Zone on caste inequality in rural Telangana

AbstractThis paper contributes to a growing scholarship examining the ways in which dispossession in neoliberal India is reinforcing and reconfiguring agrarian social hierarchies. Existing studies have focussed on the differential successes of villagers in Special Economic Zone (SEZ)‐generated real estate markets, incorporation of land losers into stratified labour markets and the caste‐based politics of dispossession. Few studies, however, have systematically explored the long‐term implications of state‐orchestrated dispossession on agrarian credit and debt relations. Based on long‐term fieldwork on a village partially expropriated for a SEZ in the South Indian state of Telangana, this study shows how dispossession has led to a sharp rise of over‐indebtedness within the land losing population. Dispossession deprived villagers of land and livestock; low compensation was inadequate to obtain replacement assets; and labour inside the SEZ was insufficient to ensure the reproduction of most households. The result was a cascading process of indebtedness for consumption smoothing that was generalized but the greatest among former untouchables (Scheduled Castes, SCs) and Lambadas (Scheduled Tribes, STs). Since dispossession precluded these historically marginalized groups from access to institutional credit, their reliance on largely upper caste moneylenders—whose land was spared expropriation—was deepened. Thus, I show how dispossession for neoliberal projects has reinforced this traditional caste‐based form of exploitation.

Budgetary-financial erosion of social rights in the Constitution of 1988.

Throughout the three decades of the Federal Constitution, normative and fiscal redesigns were introduced by the Union in the guarantees of solidary federative organization and of social rights costing, under the pretext of safeguarding the intertemporal sustainability of the Brazilian public debt. In order to equalize the tension between economic stability and the effectiveness of social rights and their repercussion for the indebtedness process, the health and education minimum spending and the social security budget were gradually mitigated, which operated both in the symbolic field and in the pragmatic, as a kind of fiscal balance to the need for allegedly unlimited cost for monetary and cambial policies. Unlink taxes, reduce the scope of minimum spending regimes and restrict the interpretative scope of intergovernmental equalization transfers of federative distortions has become a strategy, assumed - directly or indirectly - by the Union since the early 1990s, of macroeconomic stabilization policy, above all, monetary. Thus, a long and still ongoing process of budgetary and financial deconstruction of social rights has been undertaken, which restricts the structural identity of the FC/1988, under the pretext of increasingly demanding fiscal consolidation of the reduction of the size of the state.

Debt patterns of the peripheral economies of Europe: from the increased growth post-implementation of the Euro to the Great Recession

<p>The main purpose of this article is to outline the specificities of the indebtedness process of each country of the European periphery — Greece, Italy, Ireland, Portugal, and Spain — that guided the behavior of the demand and the indebtedness of the domestic economic agents from 2000 to 2017. The main results indicated that from 2000 to 2008, all of the countries had foreign sector surpluses (current account deficits), which characterized distinct indebtedness processes of the domestic economic agents. The reversal of these processes was accompanied by larger public deficits and the replacement of private debt with public debt. With the exception of Ireland, the positive impacts on the economic performance of these countries between 2009 and 2017 came from the foreign sector through the devaluation of the euro in the period.</p>

Guerra y finanzas en la crisis de fin de siglos: 1895-1900

Entre 1895 y 1898 España realizó un importante esfuerzo financiero para obtener los recursos que exigían las guerras que tuvo que sostener en defensa de los restos de su imperio colonial. Recurrió fundamentalmente al uso del crédito en sus diversas formas, en particular al empleo de la deuda del Tesoro. Los gastos de la guerra de Cuba corrieron inicialmente a cargo del Tesoro de la isla, hasta que mediado el año 1896, el agotamiento de los recursos y la economía de Cuba obligaron a recurrir al Tesoro peninsular. Entonces se realizó un empréstito interior orientado a obtener recursos y también a garantizar la permanencia en el poder del gabinete. Tras la muerte de Cánovas los liberales no introdujeron novedades en los instrumentos financieros empleados. Fracasaron como los conservadores en su intento de despertar el interés del capital extranjero, ahuyentado por las dificultades del Tesoro, el creciente proceso de endeudamiento, la depreciación de la moneda y la caída de los cambios. Finalizada la guerra, pese a que España no quedaba obligada a asumir las deudas coloniales en el Tratado de París, razones de naturaleza financiera impusieron su reconocimiento.

"Con una llaga abierta para regar toda la tierra": financiación, crédito y fórmulas de endeudamiento de la casa de Medina Sidonia (1536-1648)

This article analyzes the indebtedness process suffered by the Lordly House of Medina Sidonia. We will pay special attention to the mechanisms that produced such a result, some of them protected by positive law –censos with royal license– and some not. According to this case study, not all the forms of indebtedness were equivalent, nor did respond to the same parameters and origins. In the conclusions, we offer an attempt of classification of the different procedures of indebtedness based on the deep causes and the apparent justifications. We also pay attention to the diverse seigneurial response to the financial problems.

‘We will never escape these debts’: Undergraduate experiences of indebtedness, income-contingent loans and the tuition fee rises

This article critically examines how undergraduate students in a red brick university in the North of England have experienced the threefold rise in tuition fees since 2012, with particular attention on how they have begun to understand and negotiate the process of indebtedness. Drawing on a corpus of 118 interviews conducted with a group of 40 undergraduates across their whole student lifecycle, analysis is directed toward examining how students have variously sought to respond to the policy, reconcile the debt with their decision to study at university and, begin to negotiate a life of everyday indebtedness. The findings are located in the context of wider neoliberal policy trends that have continued to emphasise ‘cost-sharing’ as a mechanism for increased investment within the higher education sector generally, and individual fiscal responsibility specifically. Given the lack of any other viable career pathways for both lower and higher income students, they had to accept indebtedness as inevitable and take what comfort they could from the discourses of ‘foregone gain’ that they had been presented with. Evidently, and as the students in our sample well recognised, whether those discourses actually reflect the future remains to be seen. There is also no evidence within our data that students anticipated the subsequent changes to the repayment terms and conditions – a fact that is likely to compound feelings of economic powerlessness and constrain their capacity for financial agency yet further.

Zadłużenie jednostek samorządu terytorialnego jako uwarunkowanie absorpcji środków unijnych

The aim of the research is to outline the influence of the debt of the selected local government units on obtaining EU funds. In order to meet the objective, two hypotheses have been raised. The first one implies that the volume of the local government units’ debt has an impact on the absorption of EU funds, whereas the other hypothesis states that local government units slow down the process of indebtedness towards the end of the financial perspective in the years 2007-2013 in order to prepare for obtaining EU funds for the years 2014-2020. The examination covers 46 municipalities of the Lublin voivodship, both of urban-rural (26 municipalities) and of urban nature (20 municipalities, including four city counties). The conducted analysis has not supported the first hypothesis. The other hypothesis seems correct to some extent, since over half of the cities reduced their debts before the period of the new EU perspective.

Social Bond Development Through Continuous Indebtedness

The state of being indebted arises when someone borrows money and later on pays it back. Continuous indebtedness is when a person incurs several loans in a row, such as from banks, credit companies and relatives, without paying off the previous ones. The aim of this paper is to investigate how continuous indebtedness changes the structure of social relations. The Theory of the Gift provides a framework to analyse social bonds among people. A qualitative approach was used to conduct in-depth interviews with 19 indebted households. Findings point to four structures of social relationship trajectories that occur as a result of the continuous indebtedness process. These are Positive Gift Relationship, when the debt reinforces a social bond; Negative Gift Relationship, when a social bond is broken; Selfish Gift Relationship when a person wants to get out of a social bond and Vampire Gift Relationship, when the debt arises due to the debtor’s desire to attract people of a certain reference group. Understanding how the continuous indebtedness process changes social relationships might help in the development of an action plan to avoid extreme financial situations.

Indebtedness of the Tourism Sector in Mediterranean Countries

Although the economies of Mediterranean countries were very negatively affected by the global and financial crisis, little attention has been devoted to their sector-specific performance, especially tourism. Tourism is a key sector in these countries, so the consequences of the crisis should be explored and tools to improve the sector's performance provided. This paper therefore focuses on the influence of the indebtedness process on tourism sector performance in selected Mediterranean countries (Bosnia and Herzegovina, Croatia, Greece, Italy, Macedonia, Montenegro, Portugal, Serbia, Slovenia and Spain). Using data from firms' financial statements for 2006–2010, the tourism sector is compared to all non-tourism sector with a focus on the indebtedness process and the functioning of the financial accelerator as the key obstacle to future performance. Furthermore, the paper investigates investments in core activities and financial assets as the main drivers of debt accumulation in the boom and bust periods.

The European Debt Crisis: Causes and Consequences

A common explanation for the European debt crisis has been that the introduction of the euro in 2001 caused interest rates to fall in those countries where expectations of high inflation previously kept interest rates high. Bond buyers assumed that a bond issued by any government in the European Monetary Union was equally safe. As a result, the interest rates on Greek, Italian, etc. government bonds were not significantly different from the interest rate on the German government bonds. Governments responded to the low interest rates by increasing their borrowing. However, data do not endorse this explanation, as is shown in the paper. An alternative explanation has been that the European debt crisis was just a consequence of the American subprime one. Again, data do not entirely support this hypothesis although the connection between both crises is explored in the paper. A third argument states that the introduction of the euro, and its effects on external competitiveness, triggered mounting disequilibria and debt accumulation in the noncore countries or periphery. This argument seems to be valid to a certain extent just in the cases of Greece and Portugal, but not for the rest of the countries involved in the crisis where other factors seem to have played a major role. A distinction is made between a first group of countries whose debt problems have roots before 2007 but did not worsen significantly after that year and a second one of ‘’new’’ highly indebted countries. Finally, Spain appears as a special case. The development of the indebtedness process in these three different types of countries allows isolating the factors which were determinant in each case. The conclusion is that the European indebtedness process does not accept a unique explanation and its solution will necessarily require resource transfers from the richer to the poorer countries of the euro-zone.

Spanish hotel industry: indebtedness determinants

This article analyses the indebtedness of the companies belonging to the Spanish hotel industry. The internationalization process of Spanish hotel companies requires a new approach to their financial strategies. The form of expansion chosen in this process has an impact on the pace and volume of the funds needed for it. Other items are incorporated to observe different behaviour among hotel companies in relation with their indebtedness process. Among analysed factors, we can observe the importance of solvency, liquidity, and asset structure. The hotel industry's means to explain individual indebtedness is also relevant, demonstrating the fact that firms usually follow the sector's benchmark when determining the level of indebtedness. Studies such those of Grinblatt and Titman (2003) or Frank and Goyal (2009) confirm this same hypothesis.

GEOSTRATEGY OF ECONOMIC SPACES: Innovation and Change in Latin America Territorial Administration

In this essay we analyze the geostrategy of economic spaces in the sphere of new links in the global economy, placing Latin America in the scenario of the new world order. The geostrategic dimension of economic spaces includes spatial redefinitions as a result of new global strategies of the major transnational corporations. This is, therefore, of a space-time configuration of scenarios in the articulation between the importance of the place, action site, and expression of power. Territorial administration adopts new outlines, sharing and is linked to the logistics of market interests. In the new configuration of interests of global economics, the spatial barriers are set aside and global places are created, representing fragmentations of territorialized space. Territorialization of global productive spaces represents deterritorialization of national spaces. Forms of power and influence of power radiate from them in all directions. Power and administration of territory in the large complex economic and political organisms – regional blocks – confront each member’s historic reality, the inequalities of the rates of development, culture and social levels. These realities are hard to harmonize and eventually categorize hegemonic centers of power and a national fringe of dependence. Global geostrategy, therefore, takes over, redefines and reorders productive circulation spaces, establishing new relations of power and administration of territories. Historically, Latin America continued to depend heavily on the economic order established by the colonizing countries and this dependence gradually shifted to the world financial supremacies. This dependence intensified the indebtedness process that today characterizes the so-called market of foreign debts, with significant reflections on the internal social order.

Debt and Structural Adjustment in Central America

An in-depth treatment of foreign debt in Central America requires consideration of the structural characteristics of the economies of these societies. Contrary to what is often thought, the problem of foreign debt in the region has been developing over several decades and is not in any way the exclusive result of inappropriate macroeconomicpolicies. The first proposition is that the process of indebtedness in the region has been historically associated with the needs and contradictions which marked the process of modernization of dependent capitalism in Central America. This has been true of the economic process in the region, even during the boom of the 1 960s and 1 970s. The empirical evidence is conclusive: Between 1960 and 1970 the public foreign debt of Central America multiplied thirtyfold (CEPAL, 1986a: 53-54). Ultimately, these contradictions are explained by the unique qualities of the process of consolidation of the bourgeois order in Central America. Here the transition from an initial exporting stage toward an industrially based economy following World War 11 was an imperfect process, incomplete and subordinate to foreign capital. Many of the oligarchic features of this relationship of domination spread without incurring any fundamental changes (Torres-Rivas, 1987). The consolidation of the essence of fundamental accumulation with respect to the foreign sector, and to a lesser degree the captive domestic market distorted by the extreme concentration of income, impeded an alternative structuring of the economic fabric which would have prioritized intersectorial cohesion, internal equilibrium, and the reproduction of dynamic comparative advantages.

Crisis, the Burden of Foreign Debt, and Structural Dependence

Since 1982 the problems of Latin America's foreign debt have been headline news. Prior to that, indebtedness was a cause for pride among political and business leaders because they believed the growing debt reflected the confidence of international banking in the apparent soundness of Latin America's economies. At the present time the debt is not only a daily reality, it is also a cause of growing preoccupation. Everyone is beginning to make the connection between the payment of the debt and the deteriorating conditions of their life and work. This article attempts to advance the study of Latin America's external debt. It analyzes the historical process of indebtedness, the causes and factors conditioning its origins and rapid growth, the internal utilization of the loans obtained, and the impact of debt service on economic growth and the accumulation of capital. Although several of the hypotheses set forth in this work are applicable to Latin America as a whole, they are mainly founded on the Mexican case.