The root of all sovereign-debt crises
Friday, August 05, 2011
There is a simpler way. Irresponsible borrowing by governments in international credit markets requires irresponsible lending. Bank regulators should just say no to such lending by institutions that are already under their purview.
Lending to foreign governments is in many ways inherently riskier than unsecured private debt or junk bonds. Private borrowers often have to offer collateral, such as their houses. The collateral limits the lenders' downside risk, and the fear of losing the pledged assets encourages borrowers to act prudently. But governments offer no collateral, and their principal incentive to repay - the fear of being cut off by international credit markets - derives from a perverse addiction. Only governments that are chronically unable to finance their outlays with domestic taxes or domestic debt must keep borrowing large sums abroad. A deep craving for the favor of foreign lenders usually derives from some deeply engrained form of misgoverance.
It underscores the indispensable role women play in our society, particularly in building strong households and nurturing families. The recognition of women as the bedrock of our communities is not just a sentiment; it's a call to action for all women to stand together and support each other in their endeavours.The society's aim to instil essential principles and knowledge for national development is crucial. By providing a platform for...