Word: debtors
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...reward for lending money. Lenders to the Government could just as easily lend elsewhere. But most economists agree that the U.S. Government's huge demands for credit have raised interest rates generally. More and more of those interest payments go to foreigners, now that the U.S. is a net debtor to the rest of the world. But most interest payments are still to Americans. The national debt is around $10,000 a person, or $40,000 for a family of four. If your bond portfolio is bigger than that, you may be a beneficiary of this social-welfare program...
...their loans to about 55% of assets and invested the remainder in government bonds and low-risk corporate instruments. But those loans now make up uncomfortably close to 70% of assets. Today both sides of the credit equation are less willing to take a chance: the debtor doubts that the money he borrows to invest will pay off in higher profits, while the lender is dubious about the borrower's ability to repay...
...good news is that booming international trade is spreading wealth around the world. The bad news is that the U.S. was the world's largest creditor in 1980 but went into the red in 1985, and has become the world's largest debtor. Its trade deficit runs about $150 billion a year. Foreign holdings in the U.S. now amount to $1.5 trillion, compared with $1.2 trillion in U.S. assets abroad. And meanwhile, the grinding poverty of the Third World, by now $1 trillion in debt, has not improved in the least...
...order for the Brady Plan to be more than just an idea, in order for it to work, the decision of the banks ((to reduce debt)) must not be voluntary. The U.S. Government should modify certain banking regulations to facilitate the concessions that the debtor countries are asking...
...What must the Latin American debtor nations themselves do as part of this process...