Developing countries have taken on more debt than they can handle. That was less of a problem when interest rates were near zero, and the global economy was awash with easy money. But when the developed world started raising rates, investors pulled out — threatening to tip 37 nations into default.
The spectre of debt default is not simply a matter of high finance. An inability to pay back loans received from abroad has an effect on the whole economy and punishes the poor disproportionately. What are the real root causes of these crises and how can they be avoided?
