ABSTRACT
This paper deals with the U.S. interest in the world debt problem. According to the author, the debt problem (1) affects the profitability and even the stability of the U.S. banking system; (2) is a part of the U.S. trade crisis, and (3) is a major foreign policy stake in the debt crisis in that debt collection brings about social and political instability. The author shows the debt facts and the origins of the debt problem analysing the major problem of debtors. In the general framework named “transfer problem” is discussed the problem of debt service where the author presents a case study of Mexico and Brazil. He concludes showing five alternative solutions to the debt problem: an improved world macro-economy, a facility, debt-equity swaps, a reversal of capital flight, and Bradley-style debt relief.
KEYWORDS:
External debt; capital flows; debt crisis