13-07-2011, 11:03 AM
(05-07-2011, 10:38 AM)Yorkie Wrote: The amount - together with a line of credit - was $4.34 billion with a 2% interest rate, originally intended to be paid back over 50 years beginning in 1950, so it should have been paid off by 2000, but wasn’t until six years later, when - in December 2006, a £43m remittance paid it off. Some critics, including the noted economist Lord Keynes, saw the loan as a means used by America to subjugate Britain after the war. If so, it seems to have worked! As it was, keeping up the payments was often difficult. There were six years when Britain deferred payment as a result of economic crises and pressure on the official reserves.
I believe most of the revenue from North Sea oil went to paying off the war debts to America. Arguably, the current financial crash was a result of the paying off of the debt. It went this way.....
We were paying off the debt using oil dollars, this kept the price of oil low as the Americans wanted to get the most oil for their dollars as they could. When the debt was paid off in 2006 the price of oil 'bounced' and this caused some manufacturing processes and goods in America to be more expensive and therefore uneconomic. This caused a lot of blue collar workers on temporary contracts to be made redundant. This made them to default on their 'sub-prime' loans and mortgages which caused the loans to be called in. This caused the collapse of Fannie Mae and Freddie Mac. The risk had been sold to other companies, banks etc. in countries such as Britain and Iceland etc. The debts had to be honoured which brought the whole financial house of cards crashing down.
For more information, check out Fannie Mae on Wikipedia.
TimR
