Debt crisis

Debt crisis is the general term for a proliferation of massive public debt relative to tax revenues, especially in reference to Latin American countries during the 1980s, and the United States and the European Union since the mid-2000s. As well as the Chinese debt crises of 2015.

Current and recent debt crises

Europe

European debt crisis

The European debt crisis is a crisis affecting several eurozone countries since the end of 2009. Member states affected by this crisis were unable to repay their government debt or to bailout indebted financial institutions without the assistance of third-parties (namely the International Monetary Fund, European Commission, and the European Central Bank). The causes of the crisis included high-risk lending and borrowing practices, burst real estate bubbles, and hefty deficit spending. As a result, investors have reduced their exposure to European investment products, and the value of the Euro has decreased.

Other European debt crisises

Latin America

Latin America is the group of territories and countries in the Americas where Romance languages are spoken. The term originated in 19th century France to include French-speaking territories in the Americas within the larger group of countries that speak Spanish and Portuguese. It is therefore marginally broader than the term Iberian America or Spanish America, though it excludes French-speaking Quebec. Latin America consists of twenty sovereign states and several territories and dependencies which cover an area that stretches from the southern border of the United States to the southern tip of South America, including the Caribbean. It has an area of approximately 19,197,000 km² (7,412,000 sq mi), almost 13% of the earth's land surface area.

As of 2015, its population was estimated at more than 626 million and in 2014, Latin America had a combined nominal GDP of 5,573,397 million USD and a GDP PPP of 7,531,585 million USD. The term "Latin America" was first used in 1861 in La revue des races Latines, a magazine "dedicated to the cause of Pan-Latinism".

Latin

Latin (ⁱ/ˈlætᵻn/; Latin: lingua latīna, IPA: [ˈlɪŋɡʷa laˈtiːna]) is a classical language belonging to the Italic branch of the Indo-European languages. The Latin alphabet is derived from the Etruscan and Greek alphabets.

Latin was originally spoken in Latium, Italy. Through the power of the Roman Republic, it became the dominant language, initially in Italy and subsequently throughout the Roman Empire. Vulgar Latin developed into the Romance languages, such as French, Italian, Portuguese, Spanish, and Romanian. Latin and French have contributed many words to the English language. Latin – along with Greek – roots are used in theology, biology, and medicine.

By the late Roman Republic (75 BC), Old Latin had been standardized into Classical Latin. Vulgar Latin was the colloquial form spoken during the same time and attested in inscriptions and the works of comic playwrights like Plautus and Terence.Late Latin is the written language beginning in the 3rd century AD and Medieval Latin the language used from the ninth century until the Renaissance which used Renaissance Latin. Later, Early Modern Latin and Modern Latin evolved. Latin was used as the language of international communication, scholarship, and science until well into the 18th century, when it began to be supplanted by vernaculars. Ecclesiastical Latin remains the official language of the Holy See and the Roman Rite of the Catholic Church.

Crisis

A crisis (from the Greek κρίσις - krisis; plural: "crises"; adjectival form: "critical") is any event that is, or is expected to lead to, an unstable and dangerous situation affecting an individual, group, community, or whole society. Crises are deemed to be negative changes in the security, economic, political, societal, or environmental affairs, especially when they occur abruptly, with little or no warning. More loosely, it is a term meaning "a testing time" or an "emergency event".

Definition

Crisis is the situation of a complex system (family, economy, society) when the system functions poorly, an immediate decision is necessary, but the causes of the dysfunction are not known.

Latin American debt crisis

The Latin American debt crisis was a financial crisis that originated in the early 1980s (and for some countries starting in the 1970s), often known as the "lost decade", when Latin American countries reached a point where their foreign debt exceeded their earning power and they were not able to repay it.

Origins

In the 1960s and 1970s many Latin American countries, notably Brazil, Argentina, and Mexico, borrowed huge sums of money from international creditors for industrialization; especially infrastructure programs. These countries had soaring economies at the time so the creditors were happy to continue to provide loans. Initially, developing countries typically garnered loans through public routes like the World Bank. After 1973, private banks had an influx of funds from oil-rich countries and believed that sovereign debt was a safe investment.

Between 1975 and 1982, Latin American debt to commercial banks increased at a cumulative annual rate of 20.4 percent. This heightened borrowing led Latin America to quadruple its external debt from $75 billion in 1975 to more than $315 billion in 1983, or 50 percent of the region's gross domestic product (GDP). Debt service (interest payments and the repayment of principal) grew even faster, reaching $66 billion in 1982, up from $12 billion in 1975.