A Robust Doctrine: Break the Taboo on Odious Debts and their Repudiation
The Challenges for the European Left regarding Debt and the Banks
Date Written: 2019-01-23
Publisher: Europe Solidaire Sans Frontières
Year Published: 2019
Resource Type: Article
Cx Number: CX23255
An interview with Éric Toussaint, the author of The Debt System. A History of Sovereign Debts and their Repudiation. He discusses debt, illegetimate debt and the instances in history when debts were repudiated.
As for illegitimate debt, it can be defined in less constraining terms. Such debt is qualified as illegitimate beause it has been accumulated to promote the interests of privileged minorities and does not respect the general interest. For example, that is the case when public debt is contracted to bail out the major shareholders of banks, when in fact it is these same banks that are responsible for the economic stagnation resulting from a banking crisis. In that context, the debts accumulated since the banking crisis of 2007-2008 in countries like France and the USA are illegitimate debts. Research conducted by the CAC (Collectif pour un Audit Citoyen de la dette publique -Collective for a Citizen Audit of Public Debt) in fact determined that 59% of the debt claimed against France is illegitimate (see [in French] this article and this document). This debt mass corresponds in part to the banking bailout, but also to a whole series of fiscal gifts given to major corporations which do not conform to the principles of fiscal and social justice. Further, the Eurozone States’ refusal to finance state debt through the central bank and the marketing of that debt forces the States to pay higher interest rates than they would pay if they were able to get financing from the central bank. Therefore the amount of the accumulated debt resulting from that difference in interest rates should be deducted from the total.