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Darrell Delamaide.

Toronto, Lester & Orpen Dennys, c1984.
280pp, cloth, $19.95.
ISBN 0-85619052-5.

Grades 12 and up.

Reviewed by Thomas F. Chambers.

Volume 12 Number 6
1984 November

Debt Shock was written to be an inter-national best-seller about the credit crisis of 1982-83. It is published simultaneously in Canada, the United States, and Great Britain with a special introduction to each edition. The topic is current and fascinating and many people are likely to buy the book because the size of the prob­lem Delamaide describes is incredible.

Delamaide is described as a financial journalist. He was a Fullbright scholar and has written for Barron's and The Financial Times. In Debt Shock, he writes in a way which makes international debt a subject for the lay reader. He knows that many people cannot comprehend vast sums of money. Billions and trillions are jusl so many zeros. But when the billions are converted into jobs, things be­gin to make sense. Mexico's debt crisis, for example, hurt American exports to that country and threatened 250,000 jobs a year. Even the powerful American economy could not tolerate that for long.

High finance, according to Delamaide, is much like quicksand. Once bankers get their feet in, there is no turning back. The power of the quicksand is so strong, no banks or governments can resist it. As a result, those who lend money to risky client countries, lend more and more. To refuse is to risk losing everything to the bottomless pit of badly managed, nearly bankrupt governments. Banks have a reputation as secure, conservative insti­tutions. This image is less than accurate, and many who read Debt Shock may de­cide that a sock in a mattress makes more sense than the traditional bank deposit.

The 1982-83 period saw the near bank­ruptcy of Poland, Mexico, Argentina, and Brazil. Of the Latin American countries with huge debts, the case of Brazil is par­ticularly interesting. It is considered to have great economic potential and was able to borrow large sums of money from western banks to develop its resources. The future looked so good, the banks could not resist the temptation. Unlike other debtor nations, Brazil had healthy industry. It earned more from car exports than coffee, but the world-wide recession of 1982 hurt auto sales, and Brazil had a recession too.

This is exciting stuff. There is no es­pionage, but there is a great deal of sus­pense. Will the banks come through or won't they? There is always some doubt, but in the end, they do, and the world community continues to stick together. Whether it does for much longer is a sub­ject of speculation not far from the reader's mind.

Delamaide tries to shock readers, not only with stories about third world bank­ruptcies, but also with examples of cor­porate ones such as that of Chrysler and stories about the potential bankruptcy of the United States because of huge budget deficits. This is really too much for one book. The succession of horror stories tends to pall. There is enough material here for several books. Each particular episode is a crisis in itself and only related to the main theme of the book because each involved a large sum of money.

Thomas F. Chambers, Canadore College, North Bay, ON.
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