Why did US intervene and support dictators in Latin America in the 1970s? Same with Iran? Justfied?
I am going to try and answer this in general terms rather than specific. During the Cold War it was determined by most administrations (Jimmy Carter being THE notable exception) that being anti-Communist was more important than being (strictly speaking) a working democracy. That meant we dealt with some pretty odious characters. However, as bad as some of these “authoritarian” leaders were, the Communist alternative was ALWAYS worse for the citizens of the countries we supported. Communist suppression meant more political prisoners, harsher torture, and more “enemies of the people” liquidated (murdered) then the American backed counterparts. The American backed dictators allowed some form of free market economy which ALWAYS led to a better standard of living, even in otherwise suppressive surroundings. And in some cases the American influence led to working democracies (Taiwan and South Korea come to mind). When Jimmy Carter institutionalized the American disengagement from the Cold War and instituted a policy based on human rights instead of containment he immediately offended practically everybody (including both the Shah of Iran and the Ayatollah Khomeini). He was directly responsible for the fall of Iran to militant Muslims and Nicaragua to Communists. These two events set off the Iran/Iraq Gulf War and the Civil War in El Salvador costing millions of lives. Abandon, most of our erstwhile allies in Central and South America who quickly found themselves being challenged by Soviet backed insurgents, and without the US moderating influence that had kept a lid on some of the more sever abuses during the Cold War, these dictators overreacted by launching “dirty wars” that not only targeted Socialist/Communist agitators, but everyone who was in opposition to the government. Carter could have prevented all of this. Were mistakes made during the Cold War? Probably, but look what happened when we turned out backs on anti-Communist dictators in the 70s. The whole world had better luck while we were trying to keep a lid on things.
Communists: How did they gain power and what is their leadership style?
Communists gain power by appealing to the poor and lower class (a.ka the proletariat). They promise the poor people a system that will give them everything they need and deliver them out of poverty. That's why the United States participated in massive foreign aid programs during the Cold War, like the Bretton Woods agreement and the Marshall Plan. Because they knew that the recipients of this aid were the poorest and the most vulnerable to communistic influence. Communists societies think communism is the best way because the rich people don't exploit or oppress the poor people and everyone's needs are satisfied. I'm not saying I agree with communism. I'm just explaining how it works.
Why would Keynesian Economics work?
Only everything. Actually, Keynesian Economics has NOTHING to do with taxation. It has to do with getting out of a recession, of which taxation is a detriment. Hence no wide scale tax raises have occurred recently. Keynes simply wanted government to take up the slack in economic spending that individuals and businesses were no longer doing. That's it. Neither business nor individuals can prime the economic pump during a recession. Edit: Huh? Tax cuts? Really? You have to have income to tax for there to be cuts. Last I checked cutting the tax rate on zero income is still zero income. AND it's SPENDING that's the problem in a recession. In a recession, money kept from a tax cut will more likely be SAVED, instead of spent. That feeds the recession. kind of hard to have productivity WHEN EVERYONE IS OUT OF WORK!!!! Again, Keynesian model has nothing to do with how to get out of recession with taxes. Put ALL taxes to ZERO, knock yourself out. The recession will still carry on. It would have no real effect.
What happens if a country refuses to pay back its national debt?
First things first. Any country can default on its debt either because it can't pay (e.g. Argentina every few years) or because it decides not to pay (e.g. revolutionary China).What happens then? Well it kinda depends on the contractual position with the debt but some things will pretty much always happen.The first is that the debt markets will then close. No more borrowing for that government for a while. The biggest problem there is that while government spending is usually quite smooth over the year (it's mostly welfare cheques and staff costs usually) tax receipts are lumpy (sales tax/VAT is usually quarterly, corporation tax annual). That means governments borrow to cover the time gap between spending and tax receipts.When the next payment on the debt becomes due and is missed the credit ratings agencies will declare the debt to be in default at which point CDSs (financial bets on debt default) will pay out.What else? As companies based in a country can't (usually) have a higher credit rating than the government the credit ratings of the companies will be cut. That will increase their borrowing costs substantially so some will go bust and many others will be forced to retrench workers. That will mean substantial hardship for many workers with government unable to fill the gap with welfare payments.Next ‘vulture funds’ will buy up the debt cheaply and try to force the government to pay back some or all of the debt by legal means. Most government debt is issued under English law so the funds will go to the English courts to try to have assets seized to make back some of the unpaid debt. In this way a hedge fund once managed to have an Argentinian warship impounded for a time. More usually the assets seized are cash held abroad by the government or state owned companies.Memories are short so in time people forget about the bad debt and will lend once again to the bad debtor until the next time it defaults.