The Looming Threat of Debt Restructuring

Student's Name:
Instructor:
Subject:
Date:
Summary and Responses
The Looming Threat of Debt Restructuring
The paper by David Rhodes and Daniel Stelter reminds readers of the interplay between critical economic developments and scenarios in which entities should prepare and give suggestions that prudent firms might wish to prepare (Rhodes et al., 2011). The paper's primary focus is to address the problem of debt drowning the west companies. The challenge facing politicians today is to wipe out the debt hanging over their shoulders. In this case, politicians need to generate inflation and organize a systematic debt restructuring for the western economy, or the situation will worsen and spin out of control. Therefore, the debt problem can be handled through debt restructuring, saving and paying back, write-offs, creating inflation, and growing faster.
There is no simple resolution to the debt problem. However, sustaining low growth requires stabilizing the financial sector and coordinating efforts to rebalance global trade flows. Any solution to the debt crisis should encompass improving relative unit-labor cost competitiveness and introducing interest relief for weaker countries of the Eurozone to buy time for fundamental reforms. Other approaches include establishing a fiscal union and restructuring excess debt.
The Long History of Debt Cancellation
Olivia Schwob outlines the history of debt cancellation back in 2400BC when Hammurabi forgave his subjects debt four times during his reign. Throughout history, incidences of debt have led to incarceration and, eventually, a cancellation. For instance, in Connecticut, book debts controlled the local economy and later transformed into a commercial paper-based economy. The term debtor's prison describes the experience of punitive indebtedness that resulted in a systemic cycle of incarceration and reincarceration of people unable to clear medical bills and court fines (Olivia, Schwob, 2019). The abolition of the debtor's prison in the U.S. contributed to a more e...