“L’homme moderne est dans bien des cas plus enclin à la dépense que ne l’étaient ses ancêtres” (F. H. Speth, La divisibilité du patrimoine et l’entreprise d’une personne, Parijs, L.G.D.J., 1958, 10)
Our society is credit driven. Consumers and companies borrow against future earnings to finance actual spending. Banks borrow for a living. The Government borrows to pay for social peace, pushing the bill towards future generations. Money for nothing only exists in pop songs. Credit eventually has to be paid by somebody, be it the debtor or society as a whole.
The International Monetary Fund recently publised a report on the proliferation of private sector debt. The report can be consulted here. It makes interesting reading.
Law’s attitude towards debt has changed profoundly over time. The days that creditors (or their relatives) could be captured (or worse) and imprisoned are behind us. Today, in many ways, debtors enjoy legal protection. Creditors find it increasingly hard to enforce their (rightful?) claim. This change reflects a shift in perspective from corrective justice to distributive justice (see, M. E. Storme, Dikè, Hydra, Zeno in het insolventierecht, Antwerpen, Intersentia, 2013, vi + 50 blz.; B. Oppetit, “L’endettement et le droit” in Mélanges en hommage à André Breton et Fernand Derrida, Parijs, Dalloz, 1991, 295-310). Sooner or later, however, the pendulum will swing back.
Corporate Finance Lab 