Debt: Ethics, the Environment, and the Economy

Debt: Ethics, the Environment, and the Economy

Debt: Ethics, the Environment, and the Economy

Debt: Ethics, the Environment, and the Economy

Synopsis

From personal finance and consumer spending to ballooning national expenditures on warfare and social welfare, debt is fundamental to the dynamics of global capitalism. The contributors to this volume explore the concept of indebtedness in its various senses and from a wide range of perspectives. They observe that many views of ethics, citizenship, and governance are based on a conception of debts owed by one individual to others; that artistic and literary creativity involves the artist's dialogue with the works of the past; and that the specter of catastrophic climate change has underscored the debt those living in the present owe to future generations.

Excerpt

Peter Y. Paik

THIS VOLUME HAS its origins in a conference on the subject of debt that took place at the Center for 21st Century Studies at the University of Wisconsin–Milwaukee in late April 2010. The planning for the event began during the fall of 2008, under the shadow of the cataclysmic events that imperiled the entire global financial system. The sudden collapse in housing prices in the United States, triggered by a wave of foreclosures in the subprime mortgage market, wiped out the investment bank Lehman Brothers, which has proven to be the largest bankruptcy in history. The contagion threatened to spread to other financial institutions and was met by massive infusions of taxpayer money to prevent further meltdowns. The insurance company AIG, which had insured the risky securities that were backed up by subprime loans, turned to the Federal Reserve for emergency loans that amounted to the largest corporate bailout in history. The US government nationalized the mortgage buyers Fannie Mae and Freddie Mac, while arranging the takeover of troubled firms like Merrill Lynch and Countrywide Mortgage by Bank of America. The situation was no less dire across the Atlantic. Iceland, one of the wealthiest countries in the world, became the first developed nation since 1976 to turn to the IMF for help after all of its banks collapsed and the value of its currency plummeted, freezing its foreign currency reserves. In the United Kingdom, where the financial sector took up a greater share of the economy than in the United States, the cost of bailing out the failing banks was accordingly higher, but these rescue packages came with a stronger set of restrictions.

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