Banks often oppose higher equity asset ratios, because equity capital is more expensive than debt capital.

Many countries require capital inflows to finance investment or official debt.

Small peasants without capital were trapped in a vicious cycle of debt.

Nonetheless, we continue to transfer capital to rich countries to pay interest on our foreign debt.

But why would this be different from the pre 2008 capital inflows that fueled debt financed growth?

Moreover, every dollar added to a country's total debt generated 3 to 4 cents of extra capital flight per year in subsequent years, implying that capital flight was partly a response to the deteriorating economic environment associated with rising debt burdens.

The Fund also actively monitors capital market developments, and is implementing a more systematic assessment of debt sustainability.

They can lengthen their debt maturities by imposing controls on capital inflows, as Chile and Colombia have done.

Instead, they focused exclusively on US foreign debt, ignoring household debt (mortgage and consumer debt), public debt, business debt, and financial debt.

This is why equity capital held by financial institutions typically is more than twice as expensive as debt capital and why these institutions try to minimize its use.

In issuing contingent capital, banks would have to pay a higher interest rate than they would on ordinary long term debt, because debt investors will face the true cost of capital, not the government subsidized cost. Over time, however, the interest rate premium is likely to be small, because higher capital requirements and contingent capital should significantly reduce the likelihood of ever reaching the triggers.

The key is to reflect on six kinds of capital goods business capital, infrastructure, human capital, intellectual capital, natural capital, and social capital.

Debt

Since 1981, the US has been lucky in that inflows of capital from abroad financed the growth of government debt.

The country's high levels of debt put it at the mercy of foreign capital, making it more vulnerable to privatisation.

Capital flight, meanwhile, stems from free transfer of profits, debt payments, and the propensity of the elite to exile their assets.

Why bind up Chinese capital to finance America s debt consumption economy, they ask, when so many needs go unmet at home?

Many countries require capital inflows to finance investment or official debt. Global supply and demand largely set oil and gas prices.

Why bind up Chinese capital to finance America s debt consumption economy, they ask, when so many needs go unmet at home?

More debt relief encompassing more countries and more debt (including bilateral debt) is needed.

More debt relief encompassing more countries and more debt (including bilateral debt) is needed.

A country drowning in debt needs debt restructuring.

According to the European Commission, creating a single European capital market would reduce the cost of equity capital for EU businesses by 0.5 and lower the cost of corporate debt financing by 0.4 .

They did not lack that capital because they never had it, but because they paid out too much of their abundant earnings in previous years to shareholders, leveraging their operations excessively with debt capital.

In China, Brazil, Malaysia, and Mexico, foreign direct investment (FDI) accounts for 8 to 12 of gross fixed capital formation without generating debt.

With capital pouring out of the country, the Russian government was forced to restructure its debt, and the economy entered a deep recession.

The notable exceptions to this trend are countries that manage cross border capital flows, especially the corporate sector s exposure to foreign currency debt.

Capital Shrugged

Damming Capital

Capital flight

Unsustainable private debt problems must be resolved by defaults, debt reductions, and conversion of debt into equity.

If foreign debt matters more than public debt, the key variable requiring adjustment is the external deficit, not the fiscal deficit. A country that has a balanced current account does not need any additional foreign capital.

The country simply cannot keep on piling debt upon debt.

Debt Friendly Stimulus

China s Green Debt

Debt and Delusion

The Debt Delusion

Europe s Debt Wish

(d) Debt burden

What's your debt?

Yes, the principle of regulating bank capital seems sensible. Borrowing increases risk in any business you can t go bankrupt if you have no debt.

For a credible banking system remains the stuff of dreams external debt and corruption are as high as ever, and capital flight continues unabated.

Prohibiting the Chinese authorities from buying US debt would, of course, be tantamount to imposing capital controls, thereby breaking China s monopoly on such instruments.

But in bad times, when it is important to keep banks lending, bank capital would automatically be increased by the debt to equity conversion.

The typical bank is capitalized with equity, long term debt, short term debt, and deposits. Investment banks like Bear Stearns and Lehman Brothers got into trouble because they had too little equity capital far less than 10 .