- Debt Crisis in The Third World (quicktake.wordpress.com)
- Notes On Deleveraging (krugman.blogs.nytimes.com)
- The U.S. Debt Limit (quicktake.wordpress.com)
- Macroeconomic Stabilization Policy: Should Have Listened To The DFHs Edition (delong.typepad.com)
- The World’s Biggest Debtor Nations (mint.com)
- U.S. Debt Now Greater Than Last Year GDP (politicalwire.com)
- Budget gap widens; above $1 trillion for third year (huffingtonpost.com)
- Total US Debt Update: $14.86 Trillion; $162 Billion Increase In Three Days; 98.9% Debt/GDP (zerohedge.com)
- Quote du Jour: U.S. private debt decline in perspective (investmentpostcards.com)
- Debt Crisis in The Third World (quicktake.wordpress.com)
- Time for Congress to do right (money.cnn.com)
An Indian problem
Now one of the problems of India, having English as an important language, is the amount of swill, garbage and propaganda that we are subjected to.
In spite of being less than anybody, British media can be pretty biased.
One example was a post by Ian Campbell on Japan’s economic problems. He says,
Japan has … has the worst debt to GDP ratio among major economies … But the interest yield on Japanese government bonds is … not much more than 1 per cent, so the debt is not yet so problematic – and might not seem an obstacle to still more spending. … In just five years, even assuming the economy grows, debt might climb to 230 per cent of GDP … the hideously large debt would finally drive the fiscal deficit far higher and become intolerable.
Japan’s only route then would be drastic fiscal reform or, more probably, huge resort to the printing press, as Latin America did in the old days and Zimbabwe in more recent times. (via Nokia’s billion-dollar man).
Sad Brits …
Campbell, a British journalist, compares Japan with Latin American and African Governments who have printed a lot of money.
But surely he knows that Western Governments – under the leadership of Ben Bernanke printed much more than Africa and Lat-Am could and did! Why is Campbell not talking of British, European and American printing presses?
Is there a racial smell and smear somewhere? Did I hear him say ‘These irresponsible Blacks, Latinas, Browns, Yellows …’
Now Japan’s problems are minor – because they have solid, well run, high tech companies, whose products are in demand all over the world.
Off their peaks, these Japanese firms still have mean clout in business world. Japanese interest rates being so low will not change Governmental economics by much. So, why compare Japan with Latin America or Zimbabwe?
Of course, you cannot compare Japan to Spain – where prostitution is a national industry. Or Ireland, or Greece, which have lived on handouts for the last 100 years.
Maybe you should look at British debt my dear sir!
Is it wishful thinking Mr.Campbell? Balanced your judgment is not. Or is it just plain malarkey? Methinks, it is ‘White’ noise!
Ian Campbell, who has “recently returned to the UK, where he is writing a book on rural Mexico.” could utilize his time much better writing about rural Britain, which depends on huge subsidies from a nation groaning under 500% Gross-National-Debt (GND-that is Govt.+Corporate+household).
Now British GND (no hindi puns intended) is a much-more-hideous. Than Japanese at 500%. We both know that British exports are going nowhere!
Let us look at British economy
First the biggest sector of British corporate sector is about digging, extracting and selling natural resources.
A historical legacy – with little value-addition. Royal Dutch Shell, BP, North Sea Oil, XStrata, Anglo American, Rio Tinto Group, BHP Billiton, BG Group, National Grid, Scottish and Southern Energy, Centrica. That is 10 of the top 30 British companies. These companies mostly have their assets abroad – and if push comes to shove, you know these companies will go where their bread is buttered.
The second leg on which British industry stands today is cracked leg of banking and insurance – HSBC, HBOS, RBS, Lloyd’s TSB, Barclays, Standard Chartered, Aviva and Prudential. The British part of the business of these 8 financial firms is in mess. The international business is subsidizing the British business. How long do you think this will last?
The third wobbly leg is pharmaceuticals made up of two companies. Glaxo-Smithkline-and Astra Zeneca. Both are in doldrums due to competition from generic Indian companies – and may look good to beery British journalists boozed in a pub. Now these are the three legs of British economy. We know that three legged stools are always prone to topple over.
That was lesson No.1 for you Campbell.
Lallu has a few things to say here
Lesson No.2 is what our colourful former Railway Minister said, “इस हमाम में सब नंगे हैं” (meaning “everyone in this bathhouse is naked”).
No offense to colour black, but then black pots must not call yellow kettles names.
It is plain bad journalism!
- Our Government Is Now So Huge That It’s Choking The Private Sector (businessinsider.com)
- Dollar hits 15-year low vs yen, jumps vs euro (seattletimes.nwsource.com)
- China Buys More Japanese Debt Than Ever Before (businessinsider.com)
The Organisation for Economic Co-operation and Development (OECD) has warned that the world’s 30 leading industrialized economies will see their indebtedness grow to 100% of output in 2010, a near doubling from the percentage 20 years ago. (via Public debt imperils world economy – International News – livemint.com).
Till the fat lady sings
The debt spiral is not ended yet.
Like the Dubai crash shows, the world economy is not yet out of the woods. Struggling firms, in the face of a weak consumer and industrial markets, may just keel over. A domino effect may set off yet another round of closures, bankruptcies, mergers, and defaults.
More importantly, are Western Governments. With public debt (read that as Government debt) exceeding 100% of GDP for every Western Government – Ireland at more than 1000%, Britain at nearly 200%, US at more than 100%, they are the vulnerable soft-spot of the global economy.
I want more
The shopping bill for Western welfare state is not going away – except up. Welfare bills are getting more ambitious – and the domestic lobbies want more ambitious schemes. High cost economies are being protected by barriers and stockades.
Run … hide … but you can’t turn your back
The political constructs of the West have hit a wall – and there is no way but down! Since the West is busy hiding elephants in the room, the need for a different political ideology remains unaddressed.
- Moody’s puts Japan debt ratings on review (theglobeandmail.com)
- Chinese public debt: Coming clean (economist.com)
- Moody’s reviewing Japan rating for downgrade (seattletimes.nwsource.com)
- How to illustrate U.S. public debt? (ask.metafilter.com)
- Japan disaster may hurt world economy (politico.com)
- Debts, Debts, Debts (businessinsider.com)
- Moody’s Threatens To Warn About Cutting US Debt Rating (businessinsider.com)