World Financial Crisis: Warning Contains Context and Analysis

Generali

.....the modest efforts of stronger governments — including, yes, the Obama stimulus plan — were, at best, barely enough to offset this forced austerity.

The US national deficit was $1,000,000,000,000 in 2008, $1,900,000,000,000 in 2009 and $1,700,000,000,000 in 2010. The US Governments between them spend almost 47% of GDP between them and tax only a little over 30% of GDP. They are borrowing over a third of what they spend and that's not enough?!

The problem was and remains that people and Governments have borrowed more than they can afford to repay and are insolvent as a result. The only way of resolving insolvency is for a partial or total default by definition.

You cannot borrow your way out of having too much debt and you most certainly can't borrow your way out of insolvency.

http://www.usdebtclock.org/

Conrad

Generali wrote: »

The US national deficit was $1,000,000,000,000 in 2008, $1,900,000,000,000 in 2009 and $1,700,000,000,000 in 2010. The US Governments between them spend almost 47% of GDP between them and tax only a little over 30% of GDP. They are borrowing over a third of what they spend and that's not enough?!

The problem was and remains that people and Governments have borrowed more than they can afford to repay and are insolvent as a result. The only way of resolving insolvency is for a partial or total default by definition.

You cannot borrow your way out of having too much debt and you most certainly can't borrow your way out of insolvency.

http://www.usdebtclock.org/

By instict I'm a debt cutter, but the counter argument to your is that a nation can spread the debt repayment over decades, as we did following WW2. As such a default is surely not inevitable.

The US will grow it's way through this, but thus far thier politicians (and ours) have yet to dive headlong into the unrelenting task of getting business growing again. Currently nowhere near enough focus on this.

kabayiri

Generali wrote: »

..
The problem was and remains that people and Governments have borrowed more than they can afford to repay and are insolvent as a result. The only way of resolving insolvency is for a partial or total default by definition.
..

When the individual gets into that situation they go bankrupt or the equivalent. They suffer the consequence long term.

What gets me is where was it written that the state (and its' citizens) had to take on the burden of a casino gambling finance industry ?

It's like we wanted a capitalist system when it suited us, but we don't want it when it doesn't.

Banks should have gone to the wall in 2008, and those who risked their shirt would now be sunburnt. There has to be risk and consequence in every system.

Generali

Conrad wrote: »

By instict I'm a debt cutter, but the counter argument to your is that a nation can spread the debt repayment over decades, as we did following WW2. As such a default is surely not inevitable.

The US will grow it's way through this, but thus far thier politicians (and ours) have yet to dive headlong into the unrelenting task of getting business growing again. Currently nowhere near enough focus on this.

The US is insolvent. They have unfunded liabilities of approximately $145,000,000,000,000 from memory. The chances of this being paid are basically nil.

kabayiri wrote: »

When the individual gets into that situation they go bankrupt or the equivalent. They suffer the consequence long term.

What gets me is where was it written that the state (and its' citizens) had to take on the burden of a casino gambling finance industry ?

It's like we wanted a capitalist system when it suited us, but we don't want it when it doesn't.

Banks should have gone to the wall in 2008, and those who risked their shirt would now be sunburnt. There has to be risk and consequence in every system.

The bailout was aimed squarely at the rich and the top end of the middle class by poorer taxpayers. It is morally outrageous what has happened. Iceland should be roundly applauded for saying 'helvitas fokking fokk' to the foreign rich and forcing those that benefited to pay the price, that being people that chased yield while ignoring risk, and the bank directors:

Two former employees of Kaupthing bank are being held liable for a loan they took from the bank to fund stock purchases in the Kaupthing bank; the loans had previously been written-off by former CEO Hreidar M!r Sigurdsson following the financial collapse of 2008.

and

An order to freeze asset belonging to Kaupthing bank worth ISK 154.8 million has been approved; the order is part of a litigation procedure against two former employees of Kaupthing bank, former director of Kaupthing in Iceland Ing!lfur Helgason and former managing director Steingr!mur P. K!rason.

purch

but the counter argument to your is that a nation can spread the debt repayment over decades

Whilst adding more and more debt.

The US will grow it's way through this

Don't hold your breath :eek:

purch

Warning Contains Context and Analysis

However, not from the OP :eek:

geneer wrote: »

Worth reminding ourselves what the housing bubble has really cost us.

But surely it was all about supply and demand some will say?
Apparently not :rotfl:

Ark_Welder

purch wrote: »

Whilst adding more and more debt.

Not necessarily. New debt can be issued to replace maturing debt but with a lower issuance amount. Weaning the addict off the drug bit-by-bit is going to be better than trying cold turkey from a high dose - that can be done once the dose is lower. More likely to have a relapse (i.e. issue more debt and/or print money) by going turkey.


And remember that future liabilities are not today's debts. Otherwise we would all as individuals be insolvent from the day we were born.