The global economic problem

Irresponsible Lending.

The problem is a banking and financial sector issue more than a global economic one, the amount of debt is really not the issue.

Everyone seems to criticise individuals/company's/countries for getting into all this debt, and as much as there is some personal responsibility in that, irresponsible borrowing is only facilitated by irresponsible lending.

So, since the banks lent the money to every tom, vladamir and stavros without really checking or caring if they could pay it back, then they should reap what they have sown. Unfortunately, since they are the ones actually controlling all the money....it ****s us all if they go down, so we are stuck with bailing them out.
 
It's all going pretty well really. Spain raised 2.1b by selling 10yr bonds at 6%. Whilst not ideal, it's a manageable level. Worry when they need to sell, and the percentage is above 7%.

Greece...well they were never big players. Whilst their fall will hurt, won't be enough to do major damage to the rest of us.

US - They'll just keep printing money until they run out of trees.
 
I blame the banks and the governments for allowing them to do it. I also blame people who lived way beyond their means.
 
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GrimsbyLAD said:
I wondered the same? We seem to be doing Okay at the moment.
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Didn't our economy shrink the last quarter? I don't hink we are doing ok. We have good bull artists who try and convionce us we are doing ok or we are seeing the green shoots of recovery. Sadly I have been hearing "we are seeing the green shoots of recovery" for about 4 years.
 
I blame wealth inequality and the sense of entitlement to earn a fortune from the hard working poor who in turn have to go cap in hand to the state to afford to raise a family.

The current system is effectively subsidising the rich business owners because they're not paying their employees at the bottom enough.
 
ennogs said:
Didn't our economy shrink the last quarter? I don't hink we are doing ok. We have good bull artists who try and convionce us we are doing ok or we are seeing the green shoots of recovery. Sadly I have been hearing "we are seeing the green shoots of recovery" for about 4 years.
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-0.3%

Not great, but nothing major. UK can still borrow at 1.6%. Compare that to Greece at 22-23%...
 
ennogs said:
Didn't our economy shrink the last quarter? I don't hink we are doing ok. We have good bull artists who try and convionce us we are doing ok or we are seeing the green shoots of recovery. Sadly I have been hearing "we are seeing the green shoots of recovery" for about 4 years.
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I blame the 'bull artists' who peddle doom and gloom to sell papers and who are destroying consumer confidence not only in the UK but across the world.

Still, you can't remove the underlying demand forever and when people let go the boom will be all the bigger for it (and yes, the following bust).
 
This is the programme you are talking about - http://www.bbc.co.uk/iplayer/episode/b01jrlsf/Surviving_Progress

I found it very thought provoking.

I knew about a lot of it already, so what sticks in my mind the most was the reaction by the Chinese tourist guide when his father started talking about the environmental cost of China's rapid progress - I couldn't tell if he was fearful of the Westerners possible reaction to what he was saying - and the impact on demand for tourism, the reaction of the Chinese government or what.

edscdk said:
there was a great program on TV recently about this (in the last week),

until Roman times it was common to have mass debt cancelling by the state and everyone just started again.

they talked about how we are no longer living on the "interest" produced by the planet but we are eating into the "capital", one example was years ago we relied on rain water for crops now millions of people rely on fossil water thats fast running out...

they talked about how in the past when one civilisation collapsed there were others that filled the gap and now due to globalisation there will be no one to fill in the gap...

then something about the big collapses were proceed by too much of the wealth going to too few people...

then I got too drunk and don't remember the rest... maybe it was actually rubbish and I was just drunk so it seemed good....
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Its basic, really basic economics, we supported the rise of the eastern nations and Africa (less so, but still relevant), of course this meant that business and intelligence moved as well, leaving us with little space to manoeuvre.

Then some moron back in the 80s/90s thought that derivation of money was a smart idea, then again they thought that giving every Joe, Jane and billy a mortgage without a care in world would go down fine as well. (2007/8 begs to differ)

Completely artificial, which is also happening in China as we speak, their housing bubble is very near to collapse, though whether they can solve that or not, i do not know.

Back to my point, basically as the money moves around, growth becomes pretty much impossible, which is why we have stagnated for the last year or so, if the developing countries have to grow, then we have to do the opposite, its nasty irony that all those "£3 to sponsor a child" ads and aiding governments has actually ended up ruining our economy, as a side effect (exaggeration, but it certainly does not help us grow, helps them though.)

Frankly, if we continue to aid countries who we are in a war with (capitalist wise anyway) we will lose, indefinitely.
 
usa trigged the euro debt bomb as the euro was becoming a threat to the dollar as reserve currency, was also reason why they went after iraq as saddam wanted to sell oil in euros not dollars.

no reserve currency = no usa monetary power.
 
Some very good replies so far,

Nice to consider different viewpoints (even those I may disagree with).

An interesting talk from TED regarding some of the benefits (economic & social) from reducing income inequality.

 
badcompany said:
usa trigged the euro debt bomb as the euro was becoming a threat to the dollar as reserve currency, was also reason why they went after iraq as saddam wanted to sell oil in euros not dollars.

no reserve currency = no usa monetary power.
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The Euro was a good idea in theory, but with such a vast array of countries with very different economies, it was bound to falter eventually.

The Euro will survive, but it needs to drop some dead weight first. Greece/Ireland will go. Spain has to be saved though, they are a large economy after all. The 2.1b Spain made selling 10yr bonds at 6% isn't going to last long, so the IMF will be knocking doors looking for spare change. If they are forced to sell bonds at +7% then it's time to worry. The knock on effect from that will cost the UK many billions.
 
I don't know enough about other nations economy to really make a good guess. In the UK however I honestly think a significant amount of the problem stems from the size of the government.

As the government does not make money but spends money made by the private sector, for growth to occur by the private sector simply has to be bigger. With the enlargement of the public sector taxes have had to rise (indirect tax, see Browns pension taxes etc) and so consumer spending power has been reduced. Consumption generally accounts for roughly 2/3's of GDP in the UK so even a small reduction in the consumers spending power has a large impact.

The conservatives have had some good ideas in the reduction of quango's etc but i'm not convinced they're doing the best of jobs.

At any rate i'm out of my depth with only an A level in economics under my belt.
 
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