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IMF Warning of Public Debt Levels

Discussion in 'The Economy' started by pcj821, 22nd Apr, 2010.

  1. pcj821

    pcj821 Member

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    http://www.abc.net.au/worldtoday/content/2010/s2878923.htm

    I wonder if it is realistic for these governments to actually make these types of tough political decisions that the IMF wants. Even if a government does decide to bite the bullet and cut spending the population will probably never support it and therefore there is a good chance that enough cuts won't happen. As far as I know (could be wrong) this is part of the situation that the Greek government is currently encountering.

    It seems to me that our recent attitude (last 60 years or so) of passing our personal responsibilities over to the government (returned in the form of welfare and safety nets), so that we may instead direct our resources and time towards luxuries, could be a serious problem when it comes to cutting costs. We all know that when you get used to having something nice for a long time, you don't want to get rid of it and will most likely fight to keep it.

    So in my opinion, I think that some of these countries won't ever be able to solve their debt problems and for the ones that do, it will probably be a very drawn out process to get back into the black again. By which time of course Asia’s economies will no doubt have overtaken the western ones.

    Just my two cents

    Cheers,
    Paul
     
  2. Chris C

    Chris C Well-Known Member

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    Tragedy of the Commons.


    Yep - massive social issues in Greece at the moment.

    You have to understand that most of these people are not ready to be "unplugged". And many are so hopelessly dependent on the system, that they will fight to defend it. - Morpheus, "The Matrix".


    Also known as economic convergence, with the balance of power being in favour of the east given the larger population.
     
  3. GunnerGuy

    GunnerGuy Index & Property Investor

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    The simple truth is .....

    During an election each individual generally acts in their on self interest not surprisingly and votes for themselves. Thus the party that offers tax cuts gets the 'rich' vote and the party that offers more public spending gets the vote of the poorer people ..... generally.

    In order to get in to power obviously the party needs as many votes as possible.

    Thus ......

    The party that ends up winning is ..... the party that offers tax cuts and public spending ......

    Thus ..... The deficit increases

    Thus ..... Soverign debt increases

    Thus we are were we are

    As they say you get what you vote for and for the last I don't know how many years the electorate has got what it voted for - deficit

    Yes some countries have run surpluses for a while including Australia, and even the US during Clinton, however these never last.

    The purpose of the politician is to stay in power and thus has to do whats nice for the people to keep their support. Unless like the UK you have just come to power and with 5 possible years of Government you can maybe hit the deficit hard in the first 2-3 years and then let loose and gather support from the electorate with some give aways before the election.
     
  4. fundies

    fundies Member

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    Time has come , for peoples to realise that you CAN have what you want, but you must save for it first.
     
  5. TDFawaz

    TDFawaz Tony

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  6. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    The concept of delayed gratification is completely foreign to most people who have been taught to make the most of today and let tomorrow take care of itself.
     
  7. Chris C

    Chris C Well-Known Member

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    There is nothing wrong with paying for it later - but you can't get buyers remorse otherwise your future interest rate payments will go up when it looks like you are not worthy of lending money to.

    Note - Greece.

    But of course if you are paying for it later it helps if what you are buying will actually help increase your income in the future (aka an investment).

    Note - so no pork barrel spending to win votes to lines the pockets of friends.