IOU: The Debt Threat and Why We Must Defuse It

IOU is a book by Noreena Hertz about third world debt, she discusses the different methods countries acquire debt, how those methods come to be and the downsides of each one. She then goes on to talk about why the developed world should care – and there are selfish reasons as well as to be a “do gooder” She finishes off with her blueprint for the way to solve the debt crisis.

As a whole the books is very well written – economics doesn’t sound like the most interesting of subjects yet Hertz manages to keep the readers attention with her writing style. There’s not really any jargon or hugely complex economic theories in the book, the writing is very accessible. She even managed to make me laugh a couple of times. You can tell that Hertz really believes in what she writes.

One thing that the book has aplenty though is damning statistics – “for every $1 donated to the developing world $9 is paid to the developed countries in debt interest”

I feel that this book has taught me much about the economic state of the world, what happens when a country goes bankrupt and the methods in which countries acquire debts. The sad thing is, that in many cases the developing world didn’t need the loans, however they were gave them cheaply and encouraged to buy arms from the lender as part of the cold war. After the cold war ended, so did the supply of cheap credit. That’s when the commercial banks stepped in.

The one minus point is the opening chapter, which is about Bono and his struggles to get 3rd world debt cancelled. I feel that this is a bit gushy and overly fawning of Bono but you quickly forget as you progress through the book.

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