Notes on the Problem of International Debt
A typical oration on the debt problem usually starts by outlining its alleged causes. Pride of place is almost certain to be given to the oil shocks of the 1970s. These produced an increased cost of imports, for many countries, and a simultaneous increase in the volume of financial assets owned by the oil exporters. Many of these assets were held as short-term deposits at Euromarket banks. The banks bid for these deposits in the open market to finance loans to many countries including the Latin American and Eastern European countries that stand high on everyone's list of large debtors.