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Richard H. Robbins

Interrelationships among money, debt, and economic growth create a financial system that provides a steady stream of income to banks and private investors— the proverbial 1 percent. However, because economists obscure these interrelationships, threats to the maintenance of the monetary streams of the elite are underreported. Consequently, increasing shares of national incomes must be appropriated to maintain those streams. This article reexamines the nature of and relationships among money, debt, and economic growth to understand austerity programs and why rates of economic growth must decline and how governments and elites adjust to this reality. It then suggests alternative ways of addressing the creation of money and the problems arising from the division of society into net debtors and net creditors.

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Debt, Peonage and Dependency in the kafalah System

Hadrami Migratory Experience in Kuwait

Abdullah M. Alajmi

Studies of immigrants in Kuwait focus on structural aspects overlooking sociohistorical elements and meso-level relationships that develop through migration. This ethnography shows that the immigrant's perspective and the history of the relationship between the receiving society and the immigrant community are both essential for establishing broader and thicker analyses of reality. It argues that because Hadramis and Kuwaiti sponsors were historically linked in personal exchanges originating in the Kuwaiti domestic realm, the meaning and practices of sponsorship comprise a unique migratory and work experience. Normally the immigrant–sponsor relationship is conveyed in terms of pseudokinship, yet references to moral debts and dependency reveal forms of exploitation and dominance. Hadrami–Kuwaiti relationships do not produce significant economic outcomes for the sponsor. Rather, Hadramis are symbolically valued within local hierarchies. This symbolic value has sustained a solid Hadrami presence in Kuwait and secured an income for retiring immigrants at home.

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Grave Matters and the Good Life

On a Finite Economy in Bosnia

Larisa Jasarevic

This article outlines how the good life and a decent death in contemporary Bosnia are underwritten and undermined by informal forms of debt. Such debts finance pursuit of a pleasurable life in a post-conflict, post-socialist economy but inspire daily anxieties, not least about dying indebted. The article runs through household budgeting, everyday splurges, bodily discomforts, ordinary death and a funeral marketplace, suggesting a 'finite economy' of vernacular practice incited and limited by an habitual fixation on existential finitude.

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The Debts of War

Bifurcated Veterans' Mobilization and Political Order in Post-settlement El Salvador

Ralph Sprenkels

This article examines mobilization by civil war veterans of the insurgency and the government army. These veterans became a major political force in postwar El Salvador. I demonstrate that the ascendency of the war veterans hinged on the combination of two types of mobilization: “internal” mobilization for partisan leverage, and public mobilization to place claims on the state. By this bifurcated mobilization, veterans from both sides of the war pursued clientelist benefits and postwar political influence. Salvadoran veterans’ struggles for recognition revolve around attempts to transform what the veterans perceive as the “debts of war” into postwar political order. The case of El Salvador highlights the versatility and resilience of veterans’ struggles in post- settlement contexts in which contention shifted from military confrontation to electoral competition.

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Empowering or impoverishing through credit

Small-scale producers and the Plan Chontalpa in Tabasco, Mexico

Gisela Lanzas and Matthew Whittle

This article examines the evolution of the credit market for small-scale sugarcane producers in the Plan Chontalpa development program in Tabasco, Mexico. The plan promoted neoliberal policies that transformed the existing credit market available to small-scale producers. The availability of credit was supposed to lead to increased efficiency. However, making credit available to low-income farmers can result in unintended outcomes. We found that many households had high discount rates and used the credit to supplement their household income. Thus, farmers are getting caught in a cycle of debt that often culminates in losing their land. We use a life history to consider the strategies the program has adopted to control credit as well as the counterstrategies the families have developed.

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Repaying the Debts of the Dead

Kinship, Microfinance, and Mortuary Practice on the Paraguayan Frontier

Caroline E. Schuster

Microcredit loans—most famously systems of group-based borrowing—are a key tool in global economic development frameworks. Building outward from microcredit programs in Paraguay, I explore the discontinuous materialities of both kin- and debt-based obligations, especially at their intersection. I argue that borrowers feel the life span of debts most acutely when mortuary practices anchored in kinship ties are bound up with the task of taking on the financial obligations of the dead. This analysis shows how the bonds between kinship, death, and indebtedness go beyond analogy, for collective debt is not ‘like’ a kinship relationship. Instead, microcredit social collateral provides a means for people to deal with the broader issues affecting the life span of individuals, objects, and commitments, as well as the human stakes involved with obligation.

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The emergence of the global debt society

Governmentality and profit extraction through fabricated abundance and imposed scarcity in Peru and Spain

Ismael Vaccaro, Eric Hirsch and Irene Sabaté

As a result of the financialization of household and national economies, indebtedness has become a system of domination shaping the making of contemporary subjects. Th is sort of governmentality through debt is a multifaceted phenomenon affecting people’s economic and political behavior in both the North and the South. Disguised and legitimized by the moral obligation to repay debts, and by promises of upward social mobility (for the working classes in the North) and of development (for the population of the Global South), indebtedness disciplines households and neutralizes political agency under finance capitalism, as our ethnographic examples on the mortgage crisis in Spain and on microfinance in Peru reveal.

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Brigitte Young and Willi Semmler

Only a decade ago, slow growth and high unemployment plagued Germany, but the "sick man of Europe" has now moved to outperform the Eurozone average growth since the second quarter of 2010. This confirms Germany's recovery and its status as the growth engine of the continent. This surely is a success story. While Germany (also Austria and the Netherlands) is prospering, the peripheral countries in the Eurozone are confronted with a severe sovereign debt crisis. Starting in Greece, it soon spread to countries such as Ireland, Portugal, and Spain. In the course of the debate, Germany was blamed for the imbalances in Europe. In short, German export performance and the sustained pressure for moderate wage increases have provided German exporters with the competitive advantage to dominate trade and capital flows within the Eurozone. Thus, Germany is seen as the main beneficiary of the EURO. This argument, however, is vehemently disputed within Germany. Many economists and political leaders reject this argument and point to the flagrant lack of fiscal discipline in many of the peripheral countries. Some prominent economists, such as Hans-Werner Sinn, even disputes that Germany was the main beneficiary of the Eurozone. The paper analyzes the two sides of the controversy, and asks whether we are witnessing a more inwardlooking and Euroskeptic Germany. These issues will be analyzed by first focusing on the role of Germany in resolving the sovereign debt crisis in Greece, and the European Union negotiations for a permanent rescue mechanism. We conclude by discussing some possible explanations for Germany's more assertive and more Euroskeptic position during these negotiations.

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Erik Jones

The bond markets turned on Italy during the first weekend of July 2011

as part of a wider loss of confidence in European efforts to manage the

sovereign debt crisis. On Friday, 1 July, the difference—or “spread”—

between Italian and German 10-year government bond yields was 178

basis points or 1.78 percent. The following Monday, 4 July, it was up

to 183 basis points and rising. By Friday, 8 July, the spread was 237

basis points. It remained above that level to the end of the year.1 The

center-right government led by Silvio Berlusconi attempted to head

off this change in sentiment by pushing through successive reform

packages to promote fiscal consolidation and stimulate growth. Bond

traders consistently shrugged off these actions as too little, too late.

Ultimately, the pressure became so great that the center-right coalition

fractured and President Giorgio Napolitano replaced Berlusconi’s

Cabinet with a technocratic government headed by Mario Monti. Even

this, however, was not enough to appease the markets, and the year

ended with Italian bond yields again rising..

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Stefano Sacchi

This chapter deals with two momentous structural reforms introduced by the Monti government in the social policy field: the pension reform approved in late 2011 and the labor market reform passed in July 2012. Alongside discussing the content of these two reforms and their plausible policy impact, the chapter places them in the context of the Italian sovereign debt crisis and shows how they were introduced due to pressures exerted by international and supra-national actors. The analysis focuses in particular on the policy-making process of the labor market reform, reconstructing the various stages it went through. All this took place in the context of a new policy style by the Monti government, which forced decisions in the shadow of hierarchy and even took unilateral action, pursuing its policy objectives under the legitimacy provided by the international actors and the sense of urgency stemming from the sovereign debt crisis.