A bankrupted nation

[Team Leith Training]

I am not sure where to post this, but thought here was as good as any as going forward there are times when it could effect business people on this forum.

We all know what happens when an individual goes bankrupt, the assets are liquidated, house, car, assets etc.
But but does it mean for a country and its citizens.
Greece for example, what exactly would happen to the nation and its people if it did default on its debts and go into bankruptcy? Does it effect business (hence why i am posting this here) if so how?

Apologies if this has been posted elsewhere?

 

[DarrenTSO]

Typically what would happen is that the value of the currency falls through the floor, so imports become very expensive. If you have a business that relied upon cheap imports or source materials from foreign countries, you would struggle to be able to pay your suppliers (unless you sold your good denominated in a foreign currency).

It's work reading up on what happened to Argentina ~10 years ago for an example.
http://en.wikipedia.org/wiki/Argentina_default

 

[Team Leith Training]

Ouch, now given this could not only happen to Greece, but Portugal, Ireland and now even the USA. That could really be painful.

I was wondering why the shuttle program was closed, now i see why. America must be hurting with all its committments.

 

[Cornish Steve]

It's so frustrating watching this play out in the US. Here is a president who has added HUGE amounts (several trillions) to the national debt now claiming that he's going to fix the problem. And this is before additional trillions are spent on the highly unpopular nationalization of healthcare. His party hasn't come up with one single proposal, not one. Every time his political opponents come up with a plan, he complains about unnecessary cuts and his party rejects it. Worse, they insist on raising taxes to sustain their current profligacy. I read a news article yesterday about how "austerity" is the new buzzword in Europe - yet it's taboo in the US government circles. Polls in the US confirm that the population wants major cuts in spending, but the government just doesn't seem capable of delivering.

What is the likely impact in the US? Even if they come up with a last-ditch agreement to raise the debt ceiling, the credit rating agencies are likely to downgrade US debt. This will be catastrophic. Instantly, interest rates will rise, which will make the debt even more unsustainable, which could lead to an even lower credit rating. Bank and credit card interest rates will have to rise, banks won't risk lending to small businesses, and unemployment will go even more through the roof (it's already at record levels and still climbing). Given the uncertainty, large corporations will hoard cash and not invest in new ventures. The political arguments will drag on until the next presidential election; by then, they will have reached fever pitch - and there's a danger of an extreme reaction.

The basic argument is simple: Families must live within their means. States must live within their means. Neither has the option of printing more money. Why can't federal government live within its means? Why is it so difficult?

Last week, it came to light that the US government is funding research into the effects of ***** size on gay sex. Countless other government projects of this type have been publicized over the last year, and everyday citizens are furious it. Of course, the amounts wasted on such projects are miniscule compared to the national debt, but it's symptomatic of an attitude to spending that has to change.

 

[crossdaz]

I feel your pain Steve - you've gotta get rid of that black guy even if it means bombing the economy back to the stoneage.

Check you history back 10 years or so.

 

[billie1]

Let's not forget President Obama inherited this mess from the baffoon 'George Bush'. It was not President Obama who fought an illegal war, killing innocent people and spending billions in order to get oil. This is what has left America and many parts of the world in debt.

 

[vvaannmmaann]

There is this,all 59 pages of it.
http://www.fas.org/sgp/crs/natsec/RL33110.pdf

From the report.

If Congress also approves the FY2012 war funding request of $132 billion, cumulative war
funding would then reach $1.415 trillion total including:​

•​

​

​

​

$823 billion for Iraq (63%);​

•​

​

​

​

$557 billion for Afghanistan (35%);​

•​

​

​

​

$29 billion for enhanced security (2%); and​

• $6 billion unallocated DOD costs (1/2%) (see Table 1)

 

the amount spent on phoney wars is mind boggling, the us and uk can not keep spending money like this .

 

[virtuallysorted]

The basic argument is simple: Families must live within their means. States must live within their means. Neither has the option of printing more money. Why can't federal government live within its means? Why is it so difficult?

Totally agree with this - and the thing which I find most frustrating is that whilst the cuts are being made which affect us all, we're still spending money on foreign aid which frankly we can't afford. We can't afford to be seen as a major power - we really need to get over our imperial neurosis.

 

[Team Leith Training]

Eitherway, i just hope the globe learns one vital lesson in all this.

Stop this live now pay later culture.
If you do not have the funds for what you want, save for it.

i am wholeheartidly suprised that USA is in so much mess. As indeed i also sympathise with the nations people. As i do with every nation which is in such a mess. Does seem to me this recession is certainly global.
Lets hope we see the light at the end of the tunnel soon.

 

[directmarketingadvice]

Eitherway, i just hope the globe learns one vital lesson in all this.

Stop this live now pay later culture.

That would be good... but the problem is that we eventually forget the lessons and go back to behaving like the good times will never end.

Steve

 

[alexlowe]

"...And this is before additional trillions are spent on the highly unpopular nationalization of healthcare"

Unpopular with who?

Wealthy, middle class (white) americans who already have healthcare...

 

[Bruvver]

This question maybe naive, but I still have to ask it........

If America owes, UK owes, France owes, Greece owes, Portugal owes............to cut it short, everybody owes more than their income.

Who do they owe it to ?

 

[FaerieB]

This question maybe naive, but I still have to ask it........

If America owes, UK owes, France owes, Greece owes, Portugal owes............to cut it short, everybody owes more than their income.

Who do they owe it to ?

Yeh ... why don't we all go bankrupt together and start again x

 

[Bruvver]

Yeh ... why don't we all go bankrupt together and start again x

I see you are as silly as me then

I don't understand how it works, but if everybody has borrowed off of somebody else, and owe them, but nobody has any money, and they can't pay it back, who are they borrowing from.
(Rapidly turning into a Monty Python sketch)
Who did we all borrow from ?
Is it is all owed to China, or is it all interest ?
If it's all owed to the likes of the IMF or The World Bank or whatever, don't we all contribute to the fund ?

Somebody must be clever enough to give an idiots guide to world debt, step up and educate me please.

 

[MASSEY]

It looks to me like America are even more screwed than the UK. Problem is america owe the uk about half a trillion pounds i remember seeing. If they start defaulting on debts then we are going to be hit by these idiotic yanks who cant see the wood for the trees.

 

[MASSEY]

I don't understand how it works, but if everybody has borrowed off of somebody else, and owe them, but nobody has any money, and they can't pay it back, who are they borrowing from.
(Rapidly turning into a Monty Python sketch)
Who did we all borrow from ?
Is it is all owed to China, or is it all interest ?
If it's all owed to the likes of the IMF or The World Bank or whatever, don't we all contribute to the fund ?

Somebody must be clever enough to give an idiots guide to world debt, step up and educate me please.

America owe it to nations mainly China UK Etc

The Uk owes it to anyone who buys bonds.

 

[FaerieB]

It looks to me like America are even more screwed than the UK. Problem is america owe the uk about half a trillion pounds i remember seeing. If they start defaulting on debts then we are going to be hit by these idiotic yanks who cant see the wood for the trees.

But surely this is just like the banks but on a bigger scale ... does the money actually exist :| x

 

Totally agree with this - and the thing which I find most frustrating is that whilst the cuts are being made which affect us all, we're still spending money on foreign aid which frankly we can't afford. We can't afford to be seen as a major power - we really need to get over our imperial neurosis.

Of course we can afford foreign aid.

What we can't afford is a new BMW every year.

10 million are in danger of starving to death in the horn of Africa.

Now thats what I call being bankrupt.

Maybe what we can't afford is the huge military spending .

This is the type of nonsense thats at the heart of our problems.IMHO

http://news.bbc.co.uk/1/hi/uk/8593788.stm

Earl

 

[MASSEY]

No the heaart of the problem is too many silly public sector workers being over paid to send a pair of boots to ireland via an 800 pound courier.

 

[Cornish Steve]

There is this,all 59 pages of it.
http://www.fas.org/sgp/crs/natsec/RL33110.pdf

From the report.

If Congress also approves the FY2012 war funding request of $132 billion, cumulative war
funding would then reach $1.415 trillion total including:​

•​

$823 billion for Iraq (63%);​

•​

$557 billion for Afghanistan (35%);​

•​

$29 billion for enhanced security (2%); and​

• $6 billion unallocated DOD costs (1/2%) (see Table 1)

So, considerably less than the amount doled out by this president to the banking community and wasted on useless 'stimulus' projects within his first six months. Expecting President Obama to reduce the deficit is like expecting a turkey to vote for Christmas. Sadly, he believes the answer to everything is spending - while taxing more heavily those who generate jobs.

Given how people view each other's leaders, I have a solution: Let European leaders (minus the French) take over the US (we need the focus on austerity) and let President Obama become president of Europe (since you all seem to believe he's such a great guy). Problem solved!

 

[Cornish Steve]

Totally agree with this - and the thing which I find most frustrating is that whilst the cuts are being made which affect us all, we're still spending money on foreign aid which frankly we can't afford. We can't afford to be seen as a major power - we really need to get over our imperial neurosis.

I agree with you about foreign aid. It should be cut completely. Instead,

- Encourage outsourcing. It boosts our economy, creates better jobs that those exported, and is by far the most effective form of foreign aid.

- Give private citizens a tax incentive to donate to charities that deliver foreign aid. Agencies are far more efficient than government bodies and (usually) don't play politics.

 

[Bruvver]

No the heaart of the problem is too many silly public sector workers being over paid to send a pair of boots to ireland via an 800 pound courier.

Is this part of the explanation or another Monty Python sketch ?

 

[Cornish Steve]

"...And this is before additional trillions are spent on the highly unpopular nationalization of healthcare"

Unpopular with who?

Wealthy, middle class (white) americans who already have healthcare...

We've argued about this before: Virtually no one goes without healthcare in the US; it's all a question of who ends up paying for it. A good proportion of those without insurance are illegal immigrants. Others are young people who choose not to get insurance. Those who cannot afford it but need it are never turned away at hospitals - which absorb the costs.

The healthcare bill is unpopular among all age groups, all parts of the country, and among people of all incomes. Indeed, it has greater support among white elites than among the country's poor (a case of the elite classes supposedly knowing what's best for the masses). It's one of the most unpopular pieces of legislation ever passed in the US. Undoing this law will go a long way towards fixing the country's long-term debt problem.

 

[FaerieB]

Is this part of the explanation or another Monty Python sketch ?

Are we even allowed to say "Monty Python Sketch" any more x

 

[Cornish Steve]

This question maybe naive, but I still have to ask it........

If America owes, UK owes, France owes, Greece owes, Portugal owes............to cut it short, everybody owes more than their income.

Who do they owe it to ?

Ironically, we owe very large amounts to some countries to which we still send foreign aid. How nonsensical is that?

 

I agree with you about foreign aid. It should be cut completely. Instead,

Living in the US ,I wouldn't tell China that.

Earl

 

[Cornish Steve]

Of course we can afford foreign aid.

What we can't afford is a new BMW every year.

10 million are in danger of starving to death in the horn of Africa.

Sorry to go for the jugular, Earl, but:

- What model car do you drive?
- How much did you donate this year to those suffering in the horn of Africa?

These are personal decisions that must start at home. As Ronald Reagan stated: "Government is not the solution; it's the problem." The actions that you and I and millions of citizens take: they are the solution.

 

[thebigIAM]

Thanks to CornishSteve for shedding some light on why US politicians might choose to vote for a default. Here in the UK, our Chancellor is contorting himself into a strait jacket, fearful that any talk of a Plan B might upset the rating agencies. He is doing everything but everything he can to convince that Britain will never default, so the idea that the US might actually vote to do so is almost incomprehensible. You have helped to explain, however.

Here's another cry in the dark for us to be charitable to those in the Horn of Africa.

 

[Cornish Steve]

Here's another cry in the dark for us to be charitable to those in the Horn of Africa.

And, just so Earl doesn't believe I'm only picking on him: Why do we need government for this? How much have you given?

We view government spending as someone else's money, but it's actually yours, and it's wasted in terrible ways. Far better that the government cut taxes (so you keep your money) and encourage you to donate much more to those in need. This would have several benefits:

- It would establish a personal link between you and those in need.
- The money would go to agencies and not to wasteful governments.
- The money would go to the place of need, not to corrupt foreign leaders.
- Lower tax rates often result in increased tax revenues, which can be used to pay down debt.
- Lower tax rates would spur small businesses to grow and hire more people.

 

[FaerieB]

Steve ... why are you always invisible :| x

 

[MASSEY]

They could not lower tax and encourage people to donate. I know i would not be donating to countries like india an pakistan for a start. All they do is spend it on their army which is probably better than our own now.

 

[Cornish Steve]

Steve ... why are you always invisible :| x

Because I don't really exist.

 

[Cornish Steve]

What I find useful is thinking about national debt in terms of a family. We do well when we make the best use of all our resources, when members of the family are productive and contributing. It also helps when we don't waste money and keep our costs to a minimum - which includes buying only what we can afford. If a family member doesn't contribute, it's hard for everyone else to take up the slack.

At a national level, isn't it just the same? High unemployment means lower productivity. Free-riders means unnecessary costs. Big government means large and unnecessary overhead. To get serious about national debt, we need greater productivity (which means more people working and fewer welfare payments), fewer costs (which means increased competition, smaller government, and lower tax rates), and fewer constraints on our options (which means fewer regulations and less government interference).

In the end, it's rather like business: Higher productivity, lower costs, and spending within our means. If we can do it, why can't our government?

 

These are personal decisions that must start at home. As Ronald Reagan stated: "Government is not the solution; it's the problem." The actions that you and I and millions of citizens take: they are the solution.

Well for a start when an appeal is made to the general publis ,history will tell us that the amounts donated are derisory.

http://www.bbc.co.uk/news/uk-14132721

People in general don't give a toss about humans that are not in there immediate clan.

Hence why the coloured peoples of the world are the least cared about by western societies.

I mean whats the chance of europe allowing the situation in the Horn of Africa happening in France.?

P.S I drive a comfortable car and suspect I have quite a few pigs named after me.

Earl

 

[directmarketingadvice]

Thanks to CornishSteve for shedding some light on why US politicians might choose to vote for a default.

There's another reason why the republicans may choose to vote against raising the debt limit: the President can go ahead and raise it anyway.

That way, they get to posture to their voters, while absolving themselves of any responsibility for what happens in the future.

Steve

 

[Cornish Steve]

There's another reason why the republicans may choose to vote against raising the debt limit: the President can go ahead and raise it anyway.

That's an open question. With the separation of powers, the president depends on Congress for funding. Now, he's ignored that separation by continuing a war in Libya without Congress voting for the funding. His party has also ignored the responsibility by not passing a budget since they came to power even when President Bush was president (which is quite amazing - there has been no budget for years!). It's revealing that the current president recently "demanded" that Congress attend meetings in the White House to resolve the debt crisis when Congress has equal power and members don't answer to the president. (There was an amusing news report about the Leader of the House not answering his phone when the president called him. Frankly, he was making a point about the separation of powers.)

So, some claim the president can raise the debt limit; others say he cannot. If they fight about it, it might be taken to the third of the three equal powers: the Supreme Court. Now, it would all be so easy if there was a supreme dictator who could just make a decision, but that's not how government works in the US. The three independent branches of government - executive, legislative, and judicial - must operate within the confines of the Constitution. Sometimes, it's messy - but so be it.

There's increasing public support for a constitutional amendment that would require a balanced budget. This is long overdue and would stop all the bickering about whether to continue spending beyond the country's ability to pay.

 

[Bruvver]

There's increasing public support for a constitutional amendment that would require a balanced budget.

What ????........

Tell me this is from Monty Python please.

 

[thebigIAM]

I have given about one sixth of my normal weekly income. Not as much as I would like, but money's tight right now.

 

I have given about one sixth of my normal weekly income. Not as much as I would like, but money's tight right now.

Thats pretty spectacular as the average UK citizen donates about 0.8 % of there income,of course the better off donate a lower percentage as one would expect.

Most donations go to uk charities.

Earl