The concept of countries facing bankruptcy is not a new phenomenon, with several major nations throughout history experiencing financial crises that led to official declarations of bankruptcy. The Geneva Convention held between 1928 and 1932 in Switzerland marked a pivotal moment where major countries like the United States, Britain, France, Germany, Italy, Spain, and Portugal were allegedly pressured by bankers to declare bankruptcy to Illuminati banks to secure loans during a global depression[1].
United States Bankruptcy Declaration
The United States’ bankruptcy was highlighted in the Congressional Record of March 17th, 1993, where James Traficant Jr. of Ohio stated that the US Federal Government had been dissolved by the Emergency Banking Act of March 9, 1933. This act declared the government bankrupt and insolvent, leading to a shift in power towards international bankers through entities like the United Nations and the International Monetary Fund[1].
Did the United States Declare Bankruptcy in 1933?
It kind of did, in effect, but not really. Officially, the United States did not declare bankruptcy in 1933. Instead, in response to the Great Depression and to restore public confidence in the financial system, President Franklin D. Roosevelt signed the Emergency Banking Act on March 9, 1933. This act aimed to rebuild trust in banks by allowing them to reopen once they were deemed financially secure[6][7]. The act, combined with the Federal Reserve’s commitment to supply unlimited currency to reopened banks, led to a significant increase in public confidence. When banks reopened on March 13, 1933, depositors returned their hoarded cash, and within two weeks, Americans had redeposited more than half of the currency they had withdrawn[9][10].
Key Provisions of the Emergency Banking Act of 1933
The key provisions of the Emergency Banking Act of 1933 included:
1. Creation of the FDIC: The Act established the Federal Deposit Insurance Corporation (FDIC), which insured bank accounts up to $2,500 at no cost, aiming to restore public confidence in the banking system[11].
2. Presidential Executive Power: It granted the president executive authority to operate independently of the Federal Reserve during financial crises, allowing for swift responses to banking emergencies[11].
3. Bank Closure and Inspection: The Act mandated a temporary closure of banks for four days for inspection, ensuring that only financially stable banks were allowed to reopen, thereby boosting confidence in the system[11].
4. Expanded Presidential Powers: Title 1 of the Act increased presidential powers during banking crises, enabling supervision and control over various banking functions[14].
5. Office of the Comptroller of Currency (OCC): Title 2 extended powers to the OCC to oversee banks with impaired assets and limit their operations under a conservator’s supervision[14].
6. Secretary of Treasury Authority: Title 3 empowered the Secretary of Treasury to determine if banks needed additional capital and allowed them to procure it with presidential approval[14].
7. Federal Reserve Bank Notes: Title 4 permitted the Federal Reserve to issue emergency currency known as Federal Reserve Bank Notes, backed by commercial banks’ financial assets[14].
8. Effectiveness of the Act: The Emergency Banking Act successfully restored confidence in the banking system, evidenced by customers returning their withdrawn funds once banks reopened on March 13, 1933[11][14].
Examples of Recent Country Bankruptcies
1. Iceland: Faced bankruptcy in 2008 due to a banking collapse that caused a severe economic downturn but managed to recover steadily post-crisis.
2. Argentina: Declared bankruptcy in 2001 with a massive debt default due to economic shocks and financial mismanagement.
3. Russia: Historically declared bankruptcy nine times, with the latest in 1998 due to economic crises and debt issues.
4. Mexico: Defaulted on state loans worth $80 billion in 1982 following economic challenges and currency depreciation.
5. Lebanon: Defaulted on its massive debt in March 2020, leading to one of the worst crises globally with significant economic repercussions.
6. Sri Lanka: Became the most recent example of state bankruptcy after failing to repay foreign loans, admitting default in April 2020[1].
Global Implications and Financial Systems
The issue of sovereign insolvency raises questions about the lack of an international sovereign bankruptcy regime. Without such a system, nations facing financial crises are left with limited options for restructuring debts and managing economic challenges effectively. The absence of a global framework for sovereign bankruptcies can have far-reaching consequences on capital flows, economic stability, and human rights within affected countries[4].
In conclusion, understanding the historical context and contemporary examples of country bankruptcies sheds light on the complex interplay between financial systems, international debts, and the implications for national sovereignty. These events underscore the need for robust mechanisms to address sovereign insolvency issues at a global level to ensure fair and effective resolutions for countries facing financial distress.
Citations
[1] https://www.tbsnews.net/world/6-major-countries-went-bankrupt-recent-times-453426
[2] https://www.theguardian.com/environment/2022/nov/10/54-poor-countries-in-danger-of-bankruptcy-amid-economic-climate-cop27
[3] https://tradingeconomics.com/country-list/bankruptcies
[4] https://scholar.smu.edu/cgi/viewcontent.cgi?article=1301&context=til
[5] https://en.wikipedia.org/wiki/List_of_sovereign_debt_crises
[6] https://www.federalreservehistory.org/essays/emergency-banking-act-of-1933
[7] https://www.legis.state.pa.us/WU01/LI/TR/Transcripts/1997_0139H.pdf
[8] https://en.wikipedia.org/wiki/Emergency_Banking_Act_of_1933
[9] https://www.federalreservehistory.org/essays/bank-holiday-of-1933
[10] https://www.newyorkfed.org/research/epr/09v15n1/0907silb.html
[11] https://www.investopedia.com/terms/e/emergencybankingact.asp
[12] https://en.wikipedia.org/wiki/Emergency_Banking_Act_of_1933
[13] https://fastercapital.com/startup-topic/Emergency-Banking-Act.html
[14] https://corporatefinanceinstitute.com/resources/economics/emergency-banking-act-of-1933/
[15] https://www.federalreservehistory.org/essays/emergency-banking-act-of-1933