Debts

[Eza 5]

Governments, banks and companies thrive on debts. Most governments in the world spend more than they gather. Probably some people think that spending more than is earned is a good thing. It is possible to earn more money mixing own money with money from other resources. And maybe lots of people think that governments spend the money they possess in a useful way. An exception is China. The people and the government of China earn more than they spend.The style of ruling a country and international business life seem to be to get succes with loaned money. Banks accept loans from other banks to keep their bank business going. Governments make huge government debts to pay their activities.It seems that governments, a part of the people and some companies have something in common. They want a life style that they can't afford. When the expenses are cut down to match the income the possibilities to spend money may have been reduced greatly. Governments have to admit that there is no money to pay all the plans that are made. Executing officers of companies have to admit that they are not able to get high revenues each year.When the expenses are put down to the level of the income lots of things are not in the financial reach of some people, governments and companies any more. Probably that is not a bad thing. The bad thing of spending too much is the risk, that the future generation is not able to pay back all the debts that were made earlier in history.

[sheepdog 10]

Well, I will certainly agree with you that spending more than you have is indeed a very bad thing. Unfortunatly, it seems to go on from the bottom all the way to the top of society. From the people with low paying or no jobs who think they should be intitled to drive a late model car, and watch satalite TV on a big screen, to our government who thinks they should spend money and squander it like mad by funding riduculous projects, like wars, or useless government organizations. My better half's father had a saying, "If you want something and you have the money to buy it, go ahead and buy it. If you don't have the money to buy it, get over wanting it as fast as you can." It's a shame more people don't take this to heart.

[iAssistant 1]

The solution for that is budgeting. You should know, how much money you have and you should budget it to your needs and wants. If you have limited budget, you can look for discounts. It is a matter of being resourceful and if you want something that is very expensive, you have to think first on how to raise money to afford it and don't just get a loan and get yourself in trouble.

[sheepdog 10]

Budgets work great for people who are on a more or less stable income. Unfortunatly the only thing stable around here are the expences! My problem is I never know how much money I will make in any given period of time. And it can fluxuate drasticly. So it makes using an actual budget nearly impossible to do.

[Harlot 2]

The different between China and...lets say the United States, is that in China people and private corporations wield less political influence. China is not a democratic society, so they can make smart and reasonable decisions without thinking about the next election. I am not saying that less democratic societies are better, but all people have interest and they tend to use the democratic system to push for their interest in government. It may be a corporation buying votes in the Senate and House of Representatives in order to maintain tax breaks or citizens organizing and marching against cuts in Social Security and Medicare. In China, which is much less democratic, politicians only have to worry about is maintain a cozy relationship with Communist party leaders. In other words, there is more political stability in China in relations to cooperation because the government has no repercussions for making sensible laws that conflict with individual and corporate interest. Even if you look at the recent debt debate in Washington, it was just two parties dancing to their political supporters rather than making sensible decisions to slash the country's deficit and fix the economy. The Republican for example, stuck to their ideological stand on taxes instead of facing reality and realizing that tax cuts on the wealthiest citizens should be revoked. Their argument that it would hurt the economy is moot because taxes on the wealthiest citizens under President Clinton, and the economy was stronger than ever and there was no deficit. The Democrats are also stuck on the ideological stand that programs of social uplift should not be touched. I will give President Obama credit for putting those programs on the table, but there were many Democrats who would not budge. Another reason why more democratic nations have issues with getting stuff done is because representatives are usually not much smarter than voters. Most people vote for those who they can relate to. If a representative is saying no more taxes, they will bite and vote for no new taxes without even research on if that is a good policy or not. There are some exceptions where representative lie to the voters, and then have enough sense to do the opposite. However, the politician who get elected and actually believe in their campaign promises will reflect the beliefs and ideologies of those who voters them in, and most voters are dumb. I hate to judge, but mankind is really stupid. For example, a recent presidential candidate said that she would make gas prices go down to $2, but she was never asked how she would do it. This was the same candidate who called President Obama a socialist, but it seems a bit socialist to control gas prices. No one pointed that out. There was another incident when I was in class and a student began to bash America for being a socialist nation. I refuted the idea that the US was a socialist nation with the exception of education and public safety. He went on to say that those two sectors alone was too much socialism, and after I pointed out that he was attending a public university he shut up. So if our college students don't even know that America isn't socialist, then how can we expect them to not stick to ideological points that has been driven into their heads from birth when it is does not serve as a benefit to the country?The debt problem won't be handled until people become educated and leave their ideological safe ground. Either that, or there will have to be a new generation of politicians who are willing to get voted out for making the right decisions. However, most politicians tend to make choices that benefit their careers rather than the well being of the country and people. I don't know much about European politics, but it seems to be a similar situation. I heard that in many countries in Europe, college education is largely a public purpose. Therefore, it would be reasonable to assume that they are stuck under a similar situation of uncontrollable government spending and political pressure that prevents cutting the budget because they don't have the money to fund social programs anymore.

[Ananya 0]

Debts are the most worrying stuff in our present economy and definitely an important reason of escalating commodity prices.Government initiates a project of building roads/ building anything in the name of public welfare.First they fix up a deadline of a stipulated period and aims to finish up the project within that prefixed period.For some/other reason that deadline period gets stretched and government officials fail to complete the project within thatperiod.This elongated period amounts to increase in the budget apart from the delayed completion.Mostly corruption is thekey reason of such deadline extensions.Government officials delay the project and in the process they suck money from the system as much as possible.If say suppose government allocates Rs 100 for a purpose.Hardly Re1.00 remains when that money reaches to the grass root level.The huge price we have to pay for such callous actions of government officials is inflation.The budget deficiency that occur in the due course is also being paid by increasing taxes.When after following all these measuresgovernment still remains debt-ridden,now government has to seek help of IMF.These loans too remain as future debt to be paid off.This vicious cycle of debt goes on and on.As a whole it affects the economy worldwide.

Edited May 25, 2012 by Ananya (see edit history)

[Quatrux 4]

On the other hand all debts are fictional, because money is largely fictional too. Yes, people and governments agreed to use useless paper as a mean to exchange work/products, but in the end, when money will fail, something else will replace it.Just look at the not far history and see how much currency changes, how many countries have defaulted on their debts (Russia, Argentina, etc). External market recovers, because internal market recovers. If you haven't destroyed your land, you can always grow crops, have domestic animals, someone will have to build means of transportation, tools, etc and etc.Of course where is big money, there is political power and control, which won't easily allow you to "escape". Just look at current situation in European Union. On one side you have strong economy (or economies, it depends on your point of view), o n other side you have governments which have cheated and created easy life based on loans. The stronger economy (Germany in this case) has to keep investing/pouring money onto cheaters (Greece in this case), because they want their earlier loans back and put pressure to regulate their finances. This causes political struggle in Greece and rise to power can be done by other politicians that promise better/good liveliness, which in reality can't be supported without more loans. Germany can't let them go, because in the end they might fall too because of this. It would cause a chain reaction for whole south Europe. After Greece it would come time for Spain. Portugal, Italy (they have huge debts), then France and in the end Germany, Scandinavian countries and you can wave good bye to Euro ;]If people are sensible, there will be no war, but then again, you can never tell... As history showed us, everything will repeat once again.What I wanted to tell, is that in the bigger scheme of things, none of this debt business matter.

[Ananya 0]

The stronger economy (Germany in this case) has to keep investing/pouring money onto cheaters (Greece in this case), because they want their earlier loans back and put pressure to regulate their finances. as pointed by Quatrux

Its something like when you owe 100 dollars to the bank then the bank has you in its power but when you owe 100 million dollars to the bank the bank has you in its power.

[Quatrux 4]

Its something like when you owe 100 dollars to the bank then the bank has you in its power but when you owe 100 million dollars to the bank the bank has you in its power.

Could you elaborate your point? Because right now it looks like "bank has you in power when you owe to the bank 100 or 100 million dollars". Or do you mean that "you have bank in your power because you borrowed 100 million from the bank"? ;]