Debt! Whose Debt?

Why is it that politicians and economists bang on about debt continuously, if you look at one country it’s the end of the world, at another it’s almost an irrelevance. Is debt so important and the level of debt as critical as politicians put forward?or is this more to do with their personal agenda?

Most countries are hovering around the 100% of GDP, but the cost of servicing the debt is dramatically different. If this was the only criteria for forcing countries into austerity measures, then Japan would be at the fore-front of economic down turn. Why then all of these problems for the P.I.G.S.? well no one has to trade with them, they are all tourism and agricultural based economies, discretionary products, you do not have to buy them. But Japan, which has exported its metal bashing industries, has kept all the production of high-tech, high value items inside their internal economy.

If you are in the automotive, defence or aircraft production industry, you need Japanese technology and components. You have to trade with Japan, it is high-tech production that keeps certain economies prosperous, not debt worries. Japan with national debt at 228% of GDP is way off the scale but it only costs them 1.7% to service.

If the P.I.G., countries wish to advance they have to change the structure of their economies not worry endlessly about debt, they have to trade, then the market will solve the payments problem.

In the UK, a politicians economic obsession with reducing debt looks like causing a double dip recession while the rest of the world is enjoying economic growth of 5 plus %. If you slam the brakes on too hard all you do is stop. In 1967 a balance of payments crisis caused the pound to be devalued. £800m pounds, to put it into todays values, that is how much Britain spent on printer ink last year, so values change. The cost of bailing out the financial institutions was £1600bn, 100% of GDP but at least there are assets which can be recouped when the balance sheets of these banks are fully restored, so perhaps our debt isn’t so bad, perhaps it’s time to look at a different economic model George.

About michaeldouglasbosc

I am retired and live with my wife on a small olive finca in the middle of a forest in the mountains of Spain in Catalonya. I served 9years in the armed services, am an engineer and because of my love of navy sailing ships a naval historian of the 1700-1800's, plus the author of 10 books. When I retired I started writing adult books my first being A Soldiers Wind. Then came Stanley's story again adult books such was his life. Another book on life in the 1950's this very much an adult book. I have now returned to my love of the sea and my latest navy book 'A Plymouth Story' follows the life of Dr James Blackstock. But Clearing In The Forest is an historical fantasy set in the middle ages at the end of King Johns reign. All the books are published on Kindle and Create a Space in paperback. I have worked all my life and for relaxation I sailed a coastal yacht for many years, but deep inside me was a writer waiting to get out. So when I retired I started writing I find story telling both relaxing and - for me - a pleasure.
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