Debts of developing countries

This paper deals with the U.S. interest in the world debt problem. Accordingto the author, the debt problem (1) affects the profitability and even the stability of the U.S.banking system; (2) is a part of the U.S. trade crisis, and (3) is a major foreign policy stakein the debt crisis in that debt collection brings about social and political instability. The authorshows the debt facts and the origins of the debt problem analysing the major problemof debtors. In the general framework named “transfer problem” is discussed the problemof debt service where the author presents a case study of Mexico and Brazil. He concludesshowing five alternative solutions to the debt problem: an improved world macro-economy,a facility, debt-equity swaps, a reversal of capital flight, and Bradley-style debt relief. JEL Classification: H63; F34.