Must a Debt always be paid?

28 June 2012 by Daniel Gómez-Olivé i Casas


The author proposes that a public debt that has grown spectacularly since the start of the crisis should be considered illegitimate.

DANIEL GÓMEZ-OLIVÉ I CASAS (OBSERVATORY OF DEBT IN GLOBALISATION) / Translated by Robert Dyas.

Some would say that a debt must always be paid. Indeed, the payment of debt is also referred to as “honouring” of a debt. It is treated as more it seems than a simple return: it is treated above all as the keeping of ones word. However, in reality, the repayment of a debt (especially when dealing with a sovereign debt Sovereign debt Government debts or debts guaranteed by the government. ) should depend on the origin of that debt, to whom it was lent, under what terms and the potential benefit. It would be unjust to demand repayment from the people when they are burdened with a debt that they certainly did not borrow and/or where they would have no interest Interest An amount paid in remuneration of an investment or received by a lender. Interest is calculated on the amount of the capital invested or borrowed, the duration of the operation and the rate that has been set. in the repayment of that debt. Unjust and maybe illegitimate.

In the case of the Spanish public debt, as with so many other cases (see Greece for example, not to mention any of the poorer countries), it seems that we can identify parts that could be considered illegitimate (how much of which might be considered illegal is yet unknown). The term “illegitimate” is one that carries moral and ethical connotations which in themselves can sometimes hold more force than the weight of the law.

Illegitimate it is to cut funds devoted to education and health in the sum of 10 billion euros and just a few days later announce the bailout of Bankia, allowing the write off of nearly 4.5 billion euros and supporting the bank with more than 19 billion euros. Illegitimate it is to accept the nationalisation of debts accumulated by property developers, constructors and banks, who profited from property speculation, and not honour the payments of basic social services. Illegitimate it is to guarantee the payment of debts that were borrowed by those who brought us to bankruptcy simply because they are endebted to German, French or North American banks (guarantees Guarantees Acts that provide a creditor with security in complement to the debtor’s commitment. A distinction is made between real guarantees (lien, pledge, mortgage, prior charge) and personal guarantees (surety, aval, letter of intent, independent guarantee). that, in the case of Bankia, are estimated at nearly 30 billion euros) and not to guarantee the most basic social rights that we believed had been guaranteed for life. Illegitimate it is to allow Mr Blesa (Caja Madrid) and Mr Rato (Bankia) to operate in the property sector with their colleagues from the PP in a totally irresponsible manner (read Esperanza Aguirre, Juan JoséOlivas or Francisco Camps) and, now that the house of cards is falling, not demand that they take any responsibility whatsoever for this mess. Illegitimate it is that the government is mixed with and permeated by those that have their own personal economic interests and speak out now with the sole agenda of finding a way to help them clear up the mess from their party with our own money.

Coming to a realisation of all of this, a section of Spanish society is now demanding the unilateral suspension of payments, an audit of all the debt so that it’s origin is made clear, a rejection of all illegitimate debt and the charge of all those responsible (whether they be Spanish nationals of foreigners) for bankrupting the country. This part of civil society (organised under the Peoples Debt Audit Platform; We Don’t Owe, We Won’t Pay![Plataforma Auditoria Ciudadana de la Deuda ¡No Debemos, No Pagamos!]), is conscious of the necessity of a citizen centred movement that might change the orientation of power so a full audit of the debt would be possible.

As in other countries where the shock of debt has been felt for many years (the case of Ecuador for example), it becomes necessary that a full audit is carried out to expain how and why the public debt has more than doubled in just five years (surpassing 36% of GDP GDP
Gross Domestic Product
Gross Domestic Product is an aggregate measure of total production within a given territory equal to the sum of the gross values added. The measure is notoriously incomplete; for example it does not take into account any activity that does not enter into a commercial exchange. The GDP takes into account both the production of goods and the production of services. Economic growth is defined as the variation of the GDP from one period to another.
by 2007 and estimated at 80% of GDP by the end of 2012). An audit that can decide categorically whether it is legitimate and how much of the increase in public debt has been due to the saving of the financial system, helping the bank executives to avoid their responsibilities. An audit that could resolve as to whether it is fair and legitimate that, in 2012, the state will have to pay more than 28 .8 billion euros in interest accumulated on debt whose origin is unknown. An audit of the debt that would allow for the allocation of political and judicial responsibilities to those who enriched themselves illegally with public money. A citizens audit that would serve as a means of pressure and restraint to prevent the government transferring huge tranches of private bank debt to the public books (as happened in Argentina in 2001, Iceland in 2008, Ireland in 2010 and Portugal in 2011). A social audit to control the black hole of private Spanish debt. An audit of the debt as an excuse for the awakening of the consciousness and the politicisation of the populus with the aim that we make our own future and never again leave our destiny and that of future generations in the hands of corrupt politicians and bankers. Such is the situation, that this seems the only path the people can take to recover their power and economic, social and political sovereignty; in other words, the only path that would be truly “honourable”.

Fuente: Diagonal



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