When It’s Better To Owe A Thousand People And Not Just One

If you have many small credits, no single creditor can make a significant demand.

We know that the borrower is subject to the lender. That’s natural law. It thus seems better to owe a thousand people one Naira each than to owe one person a thousand Naira. Because if at all a creditor would make a significant demand, particularly in a near default, they’d have to negotiate with the others to make headway. If you owe a single country, then you might have created a threat to you national security. Because there’s no one else to help reduce their negotiating power.

Banks owe very many people; people not likely to make demands at the same time; people who will not demand all that they’re owed.

This is what it comes down to: negotiating power. However if the can all agree, you would still have likely bought yourself some time (during their negotiating period). It might be terrible short though, but there’s always that chance (and hope) that they would argue and squabble for a ‘long’ time, giving you some room to breathe.

If you find out that you owe too much to one country, diversify. Many normal companies try to diversify their product portfolio as in insurance measure. Diversify your debt portfolio such that one single country cannot try to claim your land without another crying foul.

This might be good news for China if the US can (or if they will ‘let’ the US) pull it off, because they can rid themselves of some of the, maybe, toxic debt stock they hold. On the other hand, it means China buys more from the US than they sell to them.

How is that going to happen?

It is possible, but I doubt that China would sit idly by.

What can other countries do?

Buy from others even though it might me more expensive. In the long run, you might actually save your country from its inability to not import certain goods and/or improve her overall balance of payments.

We sometimes do this at a micro level, buying from someone/somewhere for the emotional value of doing so when we had an equally easy option of buying the same thing cheaper from another.

PS:
In a popular Mafia, crime boss, loan shark scenario, what is the likelihood that one of the creditors would count their losses and ‘kill’ the debtor? Will the others sit by and let someone kill the hope of the return of their monies and get away with it?

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