The Jubilee Act "Evil Bankers 3"

The Jubilee Act for Responsible Lending and Expanded Debt Cancellation (HR 4405) cancels impoverished country debt, prohibits harmful economic and policy conditions on debt cancellation, mandates transparency and responsibility in lending from governments and international financial institutions, and calls for a U.S. audit of debts resulting from odious and illegitimate lending.

Beginning in the 1960s it was decided that everyone in the world should have a good standard of living.  To that end, government-backed low-interest loans to third world countries came into vogue.  These loans were given and taken based on advice from international consultants.

The consultants came in and advised countries that they could make a good return for infrastructure developments.  A dam would supply power that could then be sold to the populace.  Roads would bring the countryside into the metropolitan commerce arena.  Airports can increase both commerce and tourism.  Add these benefits to low-interest loans and you have an opportunity that almost any governing body would recieve well.

The down-side was the cost over-runs and compounding interest costs.  Many of the governing bodies of these developing countries did not see the brick wall coming, until it hit them in the face.  Once the debt began to spiral out of control, for many nations there was no escape.

Some of the countries were run by dictators that used the money for their own personal benefit.  Many of the citizens of these countries never had a shot at a better life as a result of their government's greed.  However, many of the other country's governors were doing their best to give a better life to their countrymen.

The capitalist in me thinks that anyone lending money for the express purpose of the return, deserves their return.  However, when you send in used-car salesmen (no disrespect meant to those few in the profession that maintain their honor and dignity) in fancy suits to overstate the expected value of an investment, maybe you should get a haircut on your return. 

After a defeat by neglect in the Senate in 2008, the bill was re-introduced on December 17th, 2009 with actual bi-partisan support.  Just like so many Americans that owe more than their asset is worth due to the current mortgage crisis, I feel that some of these scammed countries should just walk-away from their debts.  This solution is good enough for the citizens of America, so why not for the third world countries?

I guess I just don't understand why the government feels the need to pass a law forgiving debts that some countries should just walk away from.  Perhaps they are creating a moral platform that they can use when we have to walk away from our own soon-to-be unserviceable debt.  Or just as likely, it is an attempt to be viewed as generous in the face of a situation that otherwise has no upside at all.  Either way someone decided to make the loan with the knowledge that their investment could be "at risk."

If we take the risk out of the market, will the rewards also be taken away?