>Has the bailout of multi-national companies put the existence of nation-states as the world’s dominant force at risk of collapse?
>Debt has moved from MNC balance sheets to Sovereign state balance sheets. Further exapserating the high public debt levels is the philosophy of the sovereign countries that they must spur growth with their own money, in order to save themselves in the long term.
This deficit level spending adds further fuel to the nation-state debt levels.
Although economic theory and experts agree that spending must occur to avoid a depression, will the final outcome be bankrupt nations?
Governments can only view the bailout as an investment, spend now to recoup later.
But MNC’s, the greatest beneficiaries, able to restructure their legal status and domiciles, it is quite likely that governments will not recoup their bailout money from taxes paid in future from MNC’s.
With the proliferation of off-shore structures and global tax avoidance schemes, even large national and local companies are starting to lessen their tax burden through inventive structures.
This could leave too large a burden on SME’s to help nation-states recover healthy economic footings, which may not be feasible.
If this occurs, could we see many OECD countries default and become bankrupt?
What would the ramifications of that be? Banana republics?