How Wall Street helped turn poor countries into permanent debtors

Like many Americans, most countries are in a lot of debt. How Wall Street helped turn poor countries into permanent debtors The global debt crisis works like your credit card - but much, much worse. Sara Herschander is a fellow for Future Perfect , Vox’s section on making the world a better place. She writes about global health, philanthropy, labor, and social movements. Developing countries, alone, carry nearly $31 trillion worth of debt . Enough debt to give everyone in the world a check for $3,750. Or to pay for Jeff Bezos to throw a $50 million wedding in Venice every weekend for the next 11,900 years. Or, at least in theory, to solve world hunger with trillions to spare. But instead, many countries across Africa, Asia, and Latin America are saddled with so much debt that today more than 3 billion people - over one-third of humankind - live in nations that spend more on interest payments than they do on health care or education. This is nothing new. But it’s gotten far worse in recent years as part of a vicious cycle that will be all too familiar to most Americans who’ve ever fallen behind on a credit card bill or a student loan payment. You take out a new credit card to pretend you can pay the old one. No matter how much you pay off each month, somehow the amount you owe seems to grow larger each year. And if a disaster strikes at the absolute worst possible moment - be it a hurricane or a medical emergency - then forget it. Key takeaways Low- and middle-income countries are in a lot of debt. So much debt that many now spend more on interest payments than they do on education or healthcare. Once you’re stuck in a debt spiral, it’s almost impossible to climb out. It’s gotten even stickier in recent years as interest rates rose, climate disasters piled up, and the composition of creditors changed to include more private lenders and China. Who benefits from the debt spiral? Wall Street lenders tend to charge the highest interest rates, meaning some have gotten rich off of lending to developing countries. There’s no silver bullet to fixing the global debt trap. But proposed laws in New York and London, where most sovereign debt is issued, could help prevent the worst abuses. And anything that makes restructuring debt easier could help countries escape the cycle faster. For poor countries, as with people, debt twists into a financial hole with no end in sight. “It’s like the Hotel California,” said Penelope Hawkins, senior economic affairs officer at the United Nations focusing on debt and development finance. “You can check out any time you want, but you can never leave.” And when the crisis gets deep enough, indebted countries stop building hospitals , just like deeply indebted Americans forgo health care and trips to the dentist. The nations defund their schools . Their economies slow. And their credit rating tanks...

Preview: ~500 words