The working day
begins for one of the men who in Spain are as
legendary as they are infamous. Debt collectors in tails have
been around for 30 years. The company’s heyday was
during the 2008 financial crisis, when thousands of
Spaniards went bankrupt. In the worst cases, debtors
are confronted on the street. Today, the whole world
is in the same position as the Spaniard who can’t pay. Private individuals,
companies and whole countries have been struggling with steadily
rising debts for over 15 years. The problem has been
severely aggravated by the Corona pandemic
and the war in Ukraine. Does this mean
the world is about to collapse under a
huge mountain of debt? The world’s total debt currently
exceeds 300 trillion dollars. That’s a colossal number
with 14 zeros. To pay off this debt,
everyone in the world would have to work three
and a half years without pay. To find out what’s
going on in the world, we decide to explore the
stories behind global debt. We want to find out what’s
happening away from the headlines. We visit people in
debt and learn about the dramatic impact
it has on their lives. And we go to countries with
vast levels of national debt. We want to find out how the lives
of ordinary people are affected. Is the situation hopeless? Or are there any ways
out of the debt trap? After the financial crisis of 2008,
many states fell into debt. Back then, after a phase of
unbridled lending in the USA, a property bubble burst. Major banks went bust and
the stock market collapsed. The US government had to take on
staggering debts to save the economy. The debt crisis in the USA triggered a global chain
reaction that still resonates. To trace the long-term
impact of the 2008 crisis, we travelled to a country where
money seems to be no object. The Emirate of Dubai. There we meet Sajjad Maroof,
an estate agent, who wants to show us
something exquisite. A map of the world
consisting of artificial islands. In 2003, a state-owned corporation
began constructing The World Islands and selling them to investors. They wanted to build
retreats for the super-rich, palaces like this one. Welcome to Sweden Beach Palace,
welcome to the home of Vikings. Only the kings are
allowed to stay over here. The palace provides
an astonishing refuge from the outdoor temperatures
topping 45 degrees Celsius. Scandinavian people
they have a tradition to take sauna to open
up the body pores. So we have a sauna over here. We can make it as
a dry or a steam room. Then immediately, when sauna is
done they have to take an ice bath. So we have our own snow room. That's how you enjoy the snow. So the idea was this: How to
bring the whole world to Dubai. So that’s Spain, you can see Portugal
over there, and that’s France. We try to follow
Mr Maroof’s logic, but we find it difficult to make out
the outlines of European countries. The sharp contours
have eroded away. Since 2008, the project called
“The World” has lain dormant. Nevertheless, one man still wants to keep building on the artificial
islands and create a mini Europe. Josef Kleindienst,
an Austrian businessman, has wound up here
in the Persian Gulf. Part of his grand vision
can already be admired. Welcome to see our
Heart of Europe project. I want to point out first the
location, where we are right now. We are here in the roof of
Sweden Beach Palace number one, overlooking the Germany island,
32 villas on the beach and pool. And you can see the “Strandkörbe”
already waiting for tourists. You see here our main island,
Europe, hosting our hotels. Monaco Hotel was
our first hotel to open, and it is a party hotel: 24/7 party. This is typical of Dubai,
the epitome of abundance. A Switzerland
beneath palm trees welcoming anyone who wants
to take their wealth to the emirate. Postmodern towers
soar up into the sky. They include the tallest
building in the world. The Burj Khalifa skyscraper was originally going
to be called Burj Dubai. But the prestigious building
had to be renamed after the ruler of Abu Dhabi,
Sheikh Khalifa. The powerful neighbor helped Dubai
out with an emergency loan in 2008. The emirate with relatively little
oil was on the verge of bankruptcy. Half-finished buildings bear witness to the credit-leveraged
madness a few years ago. Instead of lavish real estate, it would have been better to
invest in more sensible things, says sovereign debt
expert Christoph Trebesch. When the inevitable crash
hit Dubai’s real estate market, many international
investors pulled out. They included some who’d invested in
the painstakingly created world map. Some went bankrupt,
others were left with piles of sand
whose value plummeted. One even committed suicide
during the debt crisis. The other Europeans,
they did not have the trust to stay, or maybe they ran out of
money or out of funding, and it was not easy in 2008. And then we realized
there are chances. When 40 others run away, you have a chance to take over
part of their business, for example. Even though “The World” keeps
stalling, life is creeping into it. Recently, another investor
began building on the island that
represents Argentina. Despite its past as a debtor,
Dubai’s image hasn’t been tarnished. The emirate was lucky
to get help so quickly. At the southernmost
end of the world lies the undisputed bankruptcy
champion of our planet. Argentina has been
bankrupt nine times. Sometimes international
financiers stepped in; sometimes no aid was received. We can see here what happens
when a state has too much debt to meet its obligations
to the poorest people. The slum called Villa 31 spreads beneath the motorway
bridges in central Buenos Aires. Thousands of Argentines
rely on charities. A century ago, Argentina was one of the five
richest countries in the world. It has mineral resources and
a well-educated population. How could such a country
fall so low? Alejandro Bercovich is an
economist and radio journalist. He’s been studying why
Argentina can’t escape the debt trap. The result is ever
higher deficits. And being so badly in debt, Argentina
can’t always borrow money abroad. But it still has to pay pensions
and unemployment benefits, so it uses a trick. Argentina simply prints large
amounts of its own currency, the peso. As we can see here, there’s a money
supply that can be used to buy goods. In order to meet the costs of the
state, more and more money is printed. But the quantity of
goods remains the same. People can buy more
with the new money. Retailers respond to higher
demand by raising their prices. Inflation takes hold. Many Argentines can’t
afford everyday items. So people meet up to barter. Meetings are arranged on
Facebook and WhatsApp and then the group meets here. Instead of money, they use points
to determine the value of each item. Clothes, for example,
can then be swapped for personal hygiene items and food. Bartering looks set to
persist for a long time. In Argentina, there’s no
end in sight to the price spiral. Inflation is now a serious problem
in the northern hemisphere, too. In wealthy Germany,
more and more people are suffering from price rises
for energy and food. The share of income that low
earners spend on living costs is disproportionately high. That’s why the poorest people
fall into debt especially often. Duisburg is a city with many
over-indebted people in Germany. 16% of its inhabitants
are on the debt register, compared to not even
half that many in Munich. Frank Wendler,
a local jack-of-all-trades, knows first-hand just how bad
it is to be hopelessly in debt. For decades,
Wendler sold gas cannisters. But the business had its pitfalls. Fate took its course. After a tax audit, he owed
a large amount of back tax. Like its citizens, Duisburg is
also struggling with a debt trap. Starting with the crisis in the
steel industry in the mid-1980s, things went downhill. And the once affluent city now
has an army of unemployed. Germany has been
systematically saving for decades. The debt level is low... but the result is potholes, bridges in
need of repair, and rundown railways. With Duisburg’s drastic
cuts now behind it, a Consolidation Pact
has been introduced to make the city more
attractive for investors. Nearly half of its debt
has been paid off, partly thanks to the development
of Duisburg as a logistics hub. The Port of Duisburg is the
biggest inland port in the world. It lies at the end of
the Northern Silk Road — a branch of a huge trade
network being set up by China to connect with
the rest of the world. In Duisburg, money is being
pumped into the debt-laden budget by cooperation with China. But Chinese collaboration isn’t always
this beneficial for its partners. This map shows hard-up countries that built infrastructure
for the Silk Road by taking out huge
loans from Chinese banks. China expert Thomas Heberer is aware that China’s loans can
also have a positive effect. This is how economic
growth is created in Africa. However, China grants
loans without assessing whether the recipients can
manage the money properly. Heberer finds this problematic. In the US, where people think big,
debts are breaking all records. During the Covid pandemic, the
country’s obligations skyrocketed. The debt clock currently stands
at over 33 trillion dollars. This amount is still rising and has
serious consequences for society, says banker Richard Vague. Growth in debt increases inequality. The reason is
that the top 10% of most economy, certainly in the United States, own 60 to 70% of the real estate
and stock in that economy. Increase debt levels,
increase the value of real estate, and increase the value of stocks. Financial expert Sandra Navidi
understands the impact of unequal wealth distribution
on US society. The economically weakest
in society suffer the most. Mississippi has the highest
proportion of poverty in the USA. Known debtors make
up 29% of the population, 7 percentage points higher
than the national average. For Annita Husband, severe debt
led to drastic repercussions. Years ago, me and my husband, we were
going through financial difficulty. He wasn't working.
I was working. I was in between pay cheques, because I started a new job
as an office manager. One morning I came in to work,
my truck was being repossessed. Another coworker came in and she
said 'I'm gonna tell you what to do'. She said: 'Write a check
for John Doe. For 365. Get the cash, then when
you get paid, replace the cash'. Okay, so I did that.
And, um, payday comes and, of course, you know,
I have a million other bills, so I didn't replace the cash back. So, you know,
I'm thinking in my head, okay, this is pretty easy!
So, I started, um... I guess forming a habit. I would keep my pay cheque
and I would pay my light bill with the fake cheques or
the fraudulent cheques. Altogether, Annita
embezzled $13,000. Her larceny was found out. She was sentenced
to five years’ probation and had to pay back the money. She was in a mess
because she lost her job. Her husband suffered a stroke
and was confined to bed. Annita regularly reported
to a probation officer. In return for his services,
he expected fees. They have what they call
a supervision fee. We have to pay 60 dollars a month.
I didn't have it. I didn't even pay on the
13,000 dollar restitution. You know, no one's working.
So the probation officer said: 'Well, if you don't have it, that
is a violation of your probation, because you have
to report and pay.' So, I'm not going to leave my basically paralyzed husband,
three little kids home, so I'm not gonna come back. Annita was arrested and
put in a restitution center. This means a debt prison
in Jackson, Mississippi, where prisoners serve time until
they have worked off their debts. These debts might be
damages owed to victims of crime or overdue court costs. Even for trifling amounts
below $1,000, people can end up in
this converted motel. But it has nothing to do
with holiday accommodation. It's barbed-wire,
just like a jail. When you get in, they go through your
stuff, just like a jail, a prison. They strip search you,
just like a prison. And I'll never forget this:
They brought me there on a Friday. Mother's Day was on a Sunday.
So. They allow me one call. I called my son, my oldest son, and the first thing he said was
'Happy Mother's Day, mother!' And that was so heart-breaking,
because I'm not gonna be there. Besides the prison-like
conditions in the restitution center, Annita was in for another shock. She was charged 11 dollars
a day for board and lodging, which was added to her debts. Inmates even had to pay when the center was seeking
employment for them, no matter how long it took. Annita was relieved
to get a part-time job at Church’s Chicken,
a fast-food restaurant. Annita remembers that she had
high hopes of escaping the system. By doing additional tasks,
she earned valuable bonus-points that could be used to
reduce her time in custody. But she had a rude awakening. I was, you know, scrubbing vans. I was working in the cafeteria,
I was doing everything. Got my merits, so I went to the Warden
and she read my sentencing paper. Now, here I'm thinking all I had to
do was get, you know, so many merits and I can go back
to my normal life. She said: 'No, you have to stay here
until 13,000 dollars is paid off'. With a part-time hourly wage
of $7.25, less detention costs, Annita’s release was
a distant prospect. It became apparent
that she’d have to serve the maximum term
of five years in Jackson. Mississippi is joined by states
like Iran, Egypt and Afghanistan that also imprison debtors. Nowhere else does being
in debt lead to incarceration. We’re interested in finding out
what sort of people employ debtors, like Annita from
the restitution center. Businesswoman K.K. Kent
has several decades’ experience of such temporary workers. When I was 19, I bought
my first rental properties and a lot of them had to
be excavated, remodeled. And it was hard to find labor,
especially labor that was sober. So the restitution center opened up
here in Greenwood when I was 19. And I used to go and get labor to help
me do all my day-to-day operations: Handle my livestock, cows, horses, load hay, unload hay,
load feed, unload feed. Just stuff you have to do
every day when you're on a farm. But the staff she recruits from the
restitution center cause her problems. I may go through four or five before I find one that I'm
compatible with and I can work with. Because a lot of them
think they're entitled. And as soon as you pick
them up, they start asking, Can I use your phone? Will you stop at the store
and buy me a drink? Will you buy me some cigarettes? And there's been some
that I've picked up and hadn't even driven a half a mile, that just, their demeanor has — I didn't approve of it and I turned
around and took them right back and sent them back in
and got two more. Some are very appreciative.
Some are thankful. Grateful for everything
you do for them. You know, I've had some of them say, you know, if I had a
mom like you growing up, you know, my life would
have been totally different. I don't try to cure them. I just tell them, you know,
you need to pray about yourself. You need to figure out
your own self-discipline and do something about yourself. You don't need to look
for other people, because it's not other people's
problem, it’s your problem. Annita Husband was in over
her head with her problems. She had to think of something. Otherwise, given the
amount of money she owed, it would be years
before she was released. 13,000 dollars! With a minimum
part-time paying job. I said: Annita, you need a plan.
You know, you need a plan. I just took my chances and ran. But the challenges were huge. She was only allowed
to leave to go to work. She was strictly
searched twice a day. And she only got $10
a week for personal use. They used to give us a roll of
quarters, you couldn't have dollars. So, every morning I would
wear my hair in a pony tail. I would put the roll
of quarters in my hair, cause you know, in
between the pony tail. I would leave with
a roll of quarters. Come back, I would change
the quarters for dollars. I would roll the dollars or
two fives, put it in my hair, cause I can get change at work. I hand-washed my clothes, you know, stuff that I would
take the ten dollars for, I would, you know, do without. So I saved up
enough for a bus ticket. This one particular day I planned to
leave, I had on my Church's uniform, but had on a pair of
blue jeans and a shirt under my Church's Chicken uniform. So I got a friend to take
me to the bus station and I got on the bus
and I came to Biloxi. Eventually, Annita
was arrested there and had to serve part of her suspended
sentence in an ordinary prison. After nine months,
she was released. Her debts were cancelled. She doesn’t have a good word to say about the system
of restitution centers. My debt was pretty large, but
there has been people that spent, at the restitution center
with maybe a 2,000 dollar debt, and three years later
they're still in the restitution. You say, well, one day I'm gonna
get to go home and, you know, be with my family,
but you don't know when. I felt like restitution centers
should be wiped out. It is just an undercover of slavery. The systemic discrimination
of Black people after slavery
continues to this day. It’s not just the neglected
cemeteries of the freed slaves — like this one in New Jersey —
that bear witness to this. More than a quarter of Blacks
can’t get loans at all, compared to just 17% of whites. And in Black neighborhoods, debt collectors pursue debtors
especially often and hard. Court cases are more
frequent than for whites. Differences in the USA concern not
only skin color, but also generations. In the majority-white middle class, twenty-somethings are groaning
under tuition fees which are higher than ever. The cost of student loans
in the US is rising sharply. In 2006, American students owed half a
trillion dollars in student loan debt. This figure has since
risen to $1.7 trillion. If the government
taxes individuals, it means those individuals
are able to spend less. And a government
uses that to pay off debt, the government itself is not using
those tax dollars to spend more. So the math is obvious. The folks being taxed spend less.
The government spending the same. GDP shrinks. So tax where you repay debt
actually contracts GDP and creates the opposite
effect that you want. But what about starting
with government spending? Couldn’t states just save like mad until their debts
have disappeared? Much of what looks like a
solution can actually be harmful. If so, how can we get control
of the global debt problem? Perhaps there are old ideas
outside the world of finance? This leads us to a
synagogue in Brooklyn. Sandra Navidi meets
rabbi Emily Cohen. So I guess you could say that
debt isn't anything new in society. If we go back all the way
to some of our earliest texts, you find this discussion of debt. So, there's a concept called shmita. And what shmita is,
is a” land rest”. It's this idea that for
six years you plant grain, you plant your crops, you harvest
them as you normally would, and then in the seventh year,
you don't plant anything. It's a time where the land is
supposed to get a chance to reset. And as part of that process,
as part of that reset, there's also remission of debt. So there's this idea that
any debt that you have that you've taken on during the six
years leading up to the shmita year is released in the seventh year. It’s unlikely that this debt remission
was ever implemented to the letter. But the ideal of this,
the ideal of saying that people sometimes
will be in debt, that there will be people who
are in need, and that ultimately, that can't be something
that continues forever, I think that that ideal is
something to strive for, even if we haven't
figured out how yet. Critics claim that debt
remission might be an invitation to get recklessly into debt. But financial experts disagree. So the moral hazard argument is
the one that is always advanced. If we give an inch,
borrowers would take a mile. Irresponsible behavior
will proliferate. And yet when we examine the facts,
we see that that's not the case. Bankruptcy is a miserable experience
in the best of circumstances, for the average
individual borrower. It's not something
they go into lightly. And, in fact, when we
examine bankruptcy, it relates to just two or three
key things most of the time: unexpected health emergency,
unexpected job loss, and divorce. If those are the things that
constitute almost all bankruptcies, that's not evidence that there's
folks out there purposely (saying) ‘Listen, I'll lose my job or
I'll have a health care emergency in order to get out of my debt.’
It just doesn't happen. Debt cuts for individuals are
often advisable out of compassion. But they also make sense
for the general public. We’re back in Duisburg,
the stronghold of debt. One of those who’s undergone
personal bankruptcy is Frank Wendler. The pop singer and failed gas retailer
was overwhelmed by a mountain of debt. Eventually, he contacted
debt counsellor Adam Carfora, who helped him file
for personal bankruptcy. After three years, Frank Wendler
will be debt-free. He’s found a new rewarding job
as an ambulance driver. And in his private life, too, things
have taken a turn for the better. But even if all the debts in
the world were written off, how could the endless cycle of over-indebtedness snapping
shut every few years be stopped? Is it possible to imagine a world in
which much less debt is incurred? In the African neighborhood
in Paris known as Goutte D’Or, they’re looking for an answer. Aita Magassa, who runs an
estate agency for homes in Africa, believes in a traditional solution. Her clients, all French citizens
of African origin, had problems investing in Africa. The banks refused to get involved. “Tontines” are traditional
African savings schemes where women join together and
pay in a fixed amount at each meeting. Each time, the money collected
is distributed to one of the participants, who
can spend it as she chooses. Aita Magassa applied
the centuries-old system of tontines to property purchases. It states that Aita’s clients
must pay in ?250 every month. In turn, ?5,000 will be distributed
to each of the 20 group members to finance a house
or land in Africa. None of her clients has
to go into debt for a home. This is an unbeatable advantage
over the usual financing system. We learn that the
principle of tontines also works in Europe
at Fily Sidibe’s hairdressing salon. Aitia visits the resourceful lady, for whom a bank loan was never
an option to finance the shop. These two women show how our financial system can
become more people-friendly. But a world without any
debt at all might be illusory. Perhaps it’s not even desirable. Not everyone benefits
from our system, and debt has become
a trap for many. The world must act —
in everybody’s interest. Because behind all debts are
human beings and human destinies.
