Category Archives: Economics

>Are our debts sustainable?

>We’ve talked before about the Austerity-Stimulus debate, but a lot of it lies in the sustainability of our debts. According to economists D.Miles & A.Scott:

 “the sustainability of the public debt is a function of the size of the stock of debt, its average maturity, and the relationship between the average interest rate and the rate of growth of GNP.”
So saying, are the debts of the developed world sustainable?

>Is charity worth our while?

>Have you ever heard anyone tell you that it’s a waste of your time and effort to give money to someone on the street, or even for us to give to charities at all? Right wing movements say that charity creates dependency. Does it? If so does that mean we’re better doing as African author Dambisa Moyo says and weaning countries off of aid? And is it right to talk about charity for individuals and countries in the same conversation? Or are they so different that such comparisons are a waste of time?

>A general Economics discussion

>Here’s a few questions to start a discussion:

  1. Has the global recovery taken hold or are we heading for a double dip recession?
  2. If we are in a recovery, have economic policies contributed?
  3. If economic policies have contributed, is that due to fiscal or monetary policies?
  4. Should governments now consolidate and excercise austerity, or add more stimulus?
  5. If more stimulus is needed then what form should that take?

P.S. Sorry about not updating the site for so long. The only computer I’ve been able to access in the last few weeks has been my parents, and from that I can’t log onto the site (no idea why).

>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?

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