First  Prev  1  2  Next  Last
Post Reply Debt by countries
27705 cr points
Send Message: Send PM GB Post
27 / M / TX
Offline
Posted 6/30/15 , edited 6/30/15
I been seeing a lot on Greece debt crisis that they are closing banks and limiting how much and when you could withdraw money from a atm.
http://www.bloomberg.com/news/videos/2015-06-29/greece-imposes-60-euro-limit-on-atm-machines
The US debt to China can we ever pay it off if they call it up. With so many countries in debt is there a solution or is everyone just living on borrowed time?
What will happen if countries start failing?
http://www.economist.com/content/global_debt_clock/
Tell me what do you think?
27824 cr points
Send Message: Send PM GB Post
24 / M / Ohio, USA
Offline
Posted 6/30/15
Eventually all currency will probably become useless. If selling slaves wasn't illegal (I hope it is at least) than we would do that.
Posted 6/30/15
Crowdfunding lol.

Solution? "Never let a good crisis go to waste"
http://www.bbc.com/news/world-asia-china-33322911
3119 cr points
Send Message: Send PM GB Post
18 / M
Offline
Posted 6/30/15
I don't think the world will crumble, but I would imagine there will probably always be more crises like in Greece. I don't think the leading countries such as the US, China, or EU countries are silly enough to let a world depression happen.

And what I mean by that is China wouldn't call for all debt owed by the US to be paid anytime soon. I believe it's just a little more complicated than that to begin with, and if that could happen, that would cause world depression. And a world depression wouldn't help anybody in power.
37144 cr points
Send Message: Send PM GB Post
Offline
Posted 6/30/15 , edited 6/30/15
Debt between the US and China is not the same as the debt you have to a bank, or the debt that Greece owes. Saying that the US is "in debt to China" is very misleading. Yes there is "debt", but it's all accounted for. We could, theoretically, "pay it off" any time. It really just means that China is heavily invested in the US. This is a good thing. As long as we are invested in each other there is a low risk of serious conflict.

International finance is not my specialty so I don't feel qualified to speak too much on it, but if you have the image of the US "owing" China money you should do some reading.
18489 cr points
Send Message: Send PM GB Post
M / Los Angeles
Offline
Posted 6/30/15 , edited 6/30/15

Stay_Night wrote:

I don't think the world will crumble, but I would imagine there will probably always be more crises like in Greece. I don't think the leading countries such as the US, China, or EU countries are silly enough to let a world depression happen.

And what I mean by that is China wouldn't call for all debt owed by the US to be paid anytime soon. I believe it's just a little more complicated than that to begin with, and if that could happen, that would cause world depression. And a world depression wouldn't help anybody in power.


Uhhhhh.... I wouldn’t say that. Its already happened. The 2008 Financial Crisis that happened in the US, negatively effected many other countries' economies.
27705 cr points
Send Message: Send PM GB Post
27 / M / TX
Offline
Posted 6/30/15

kinga750 wrote:

Debt between the US and China is not the same as the debt you have to a bank, or the debt that Greece owes. Saying that the US is "in debt to China" is very misleading. Yes there is "debt", but it's all accounted for. We could, theoretically, "pay it off" any time. It really just means that China is heavily invested in the US. This is a good thing. As long as we are invested in each other there is a low risk of serious conflict.

International finance is not my specialty so I don't feel qualified to speak too much on it, but if you have the image of the US "owing" China money you should do some reading.


I should have made it more clear yes the US owes China but they are not the only country the US is in debt to.

As for low risk of conflict I wouldn't be so sure hotheads often lead to disastrous results and foreign policy wise we haven't made many friends lately. Sure war isn't good for any citizens of a country but I worry that if some block head in Washington decides if we go to war with a country we don't like it wipe away anything we owe said country. While admittedly chances are low I would never rule out anything unless I know for certain that all that will be done is just barking.
As for reading I been comparing several sources heres some if your interested "personally I find it fascinating to see how different countries are approaching their debts" Such as limiting immigrants, to cutting money donated to the UN. To even capping how much certain jobs can pay.

http://www.foxnews.com/politics/2012/09/04/who-do-owe-most-that-16-trillion-to-hint-it-isnt-china/
http://www.npr.org/sections/money/2011/03/01/134159785/the-u-s-owes-china-1-2-trillion
http://www.cnbc.com/id/29880401/page/1
https://en.wikipedia.org/wiki/National_debt_of_the_United_States
Right now i'm looking at several articles from 2010 to 2015 although to be fair i'm finding very few for this year supposed I have to wait to the end of the year to find any relevant information
Posted 6/30/15 , edited 6/30/15
It'd be hilarious if one day China called us and was like "Hey...umm...this is awkward. But we need all that money back."

We'd have to do a whole lot of bake sales and car washes.
27705 cr points
Send Message: Send PM GB Post
27 / M / TX
Offline
Posted 6/30/15

AiYumega wrote:

It'd be hilarious if one day China called us and was like "Hey...umm...this is awkward. But we need all that money back."

We'd have to do a whole lot of bake sales and car washes.


y u put that image in my head X_X I found one of nancy pelosi but no human should be subjected to that image
35035 cr points
Send Message: Send PM GB Post
F
Offline
Posted 6/30/15 , edited 6/30/15
First things first: a distinction between debt and deficits. A deficit represents the amount of receipts against the amount of outputs as expenditures in a particular year, while debt refers to the aggregate amount of all previous deficits (plus interest) against the aggregate amount of all previous surpluses. This is an important distinction to make, because a long-term strategy to reduce debt might involve running temporary deficits, or a strategy to eliminate deficits might not be at all interested in eliminating debt.

Now, nations borrow money not by sending a loan application to foreign governments, but rather by selling bonds to whoever will buy them. Foreign governments, local and state governments, private firms, private individuals, and even parts of the federal government hold treasury bonds (yes, debt can be and is held internally). These bonds do not function like the loans you obtain as an individual, and it is neither possible nor desirable for entities like the government of the PRC to simply call in the USA's debts. To a great extent having treasury bonds sold out to foreign governments, local/state/provincial governments, firms, and individuals is actually more reflective of the total amount of global investment in your government than it is what you owe them and who "owns" you.

A key thing to look at while assessing the health of a nation's finances is the extent to which individuals, firms, local/state/provincial governments, and foreign national governments are willing to continue to purchase the bonds it issues, and at what rates of interest. Demands for higher interest rates on bonds is reflective of a lack of confidence in the long-term stability of a country's borrowing habits and ability to return on the investments they've made in it. Another pair of things to look at are the rate at which the national economy is growing and the government's ability to keep up with its interest payments. If people are willing to buy bonds (especially at low rates of interest), the economy is showing strong growth figures in terms of GDP, and a government is able to keep up with its interest payments a nation's finances are perfectly in order. When nations are not in perfect order, when economic growth dips occur (and they inevitably will) as long as investors don't perceive this as indicative of the government's long-term financial instability and balk at deficits run to correct for drops in private demand and investment, provide for those who become unable to sustain themselves, improve/maintain infrastructure so that economic activity may continue and expand, and so on in the face of hard economic times there's nothing to worry about. It's only when investors start demanding extraordinarily high interest rates and/or jumping ship en masse (that is, not short-term downward ticks in bond purchases or sales of one's bond holdings, but a genuine mass exodus which sticks) that you need to start sweating about a nation's long-term financial stability and start looking at ways for it to improve investors' confidence.

Going from there, we must next ask ourselves whether it is productive to seek to eliminate debt outright. This would, after all, send a signal to investors that a nation is fully capable of meeting its financial obligations and bolster far greater confidence in bond purchasing decisions. It would even drive down the interest rates people were willing to accept on their bonds. Here's the rub: part of eliminating debt entirely is refusing to issue as many bonds as before. People are more willing to buy, but debt hawks are less willing to sell. Instead spending is slashed to change deficits into surpluses (you must run surpluses to pay down the debt), and borrowing (that is, bond issuance) is lessened to prevent accumulation of further interest. So not only are you paying more in taxes than you otherwise would be for the sole purpose of eliminating debt (a purely symbolic victory as Andrew Jackson quickly discovered the one time the US paid off its national debt), you're also blocking investment in the government's operations and contracting secondary markets based upon bond transfers. So all that improvement in investor confidence that you're producing by showing your financial muscles and paying down debt? It's worthless. No one can invest in you, because you're scared of debt and want to drive it to and keep it at zero or run surpluses forever.

Debt hawking is therefore pointless and destructive, but at the same time that doesn't mean borrowing is always constructive and deficits should be run without regard to what you're dropping money into. Ideally what you do is ensure that you're covering your interest payments and directing government money toward things which will improve economic growth such as infrastructure, healthcare, education, food provisions (yes, they generate growth), and so on. These sorts of things are worth running deficits for, and particularly in hard economic times since they generate substantial positive externalities (which helps the economy grow faster) and improve standards of living. Wars of national survival, such as the first and second world wars, are worth running deficits for since you can't exactly have healthy national finances when your nation no longer exists. The key is targeted spending.
9551 cr points
Send Message: Send PM GB Post
18 / M
Offline
Posted 6/30/15

AiYumega wrote:

It'd be hilarious if one day China called us and was like "Hey...umm...this is awkward. But we need all that money back."

We'd have to do a whole lot of bake sales and car washes.


Theyd just stop lending us money.
Posted 6/30/15

megahobbit wrote:


Theyd just stop lending us money.


I still would imagine we'd have a huge bake sale.
9551 cr points
Send Message: Send PM GB Post
18 / M
Offline
Posted 6/30/15

AiYumega wrote:


megahobbit wrote:


Theyd just stop lending us money.


I still would imagine we'd have a huge bake sale.


Hey Britian want some cookies.
37144 cr points
Send Message: Send PM GB Post
Offline
Posted 6/30/15

BlueOni wrote:



Thank you for that. This was my understanding but I didn't have the words to express it properly.

35035 cr points
Send Message: Send PM GB Post
F
Offline
Posted 6/30/15 , edited 6/30/15

kinga750 wrote:

Thank you for that. This was my understanding but I didn't have the words to express it properly.


You're quite welcome. It's a complicated subject, and paring it down to its bare bones while still getting everything one needs to get across out there is tricky business. I probably could've pared it down a bit more, but this seems serviceable. The paper upon which a large part of my discussion of debts and deficits here is based is located at:

http://scholarship.law.gwu.edu/cgi/viewcontent.cgi?article=1025&context=faculty_publications
First  Prev  1  2  Next  Last
You must be logged in to post.