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The World And Debt

Anja Merret
 


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The latter part of the 20th century and now the 21st century has seen a global economy that required annual growth to keep the system running smoothly. This growth is engineered by the consumption of more and more goods and services. Provided this consumption is high enough, it will ensure economic growth at the right percentage, which in turn will ensure that the world’s economy shows certain positive indicators, such as reasonable inflation rates, solid property values, currency strengths, subdued unemployment figures and more. To ensure this growth in consumption however, the consumer has to spend at a certain rate regardless of whether the consumer’s earnings are up to the task.

Global trade feeds on this need for consumption. Economies will no longer grow at the required rate, if local consumption is the only driving force. This has forced countries into promoting global trade. It seems however that countries find it difficult to balance these trades and the imbalance of the costs of the imported goods to the exported goods, in many countries, is huge. The United State’s trade deficit, that is they spend more money on imports than they receive on exports, is in sums that are not comprehensible anymore.

Not only do countries find it difficult to balance trade budgets internationally, but they are unable to balance their internal budgets. Governments discuss their country’s budget mentioning huge figures that they will be short every year. That means government, which supposedly represents its citizens and should act as a good example, is unable to balance its budgets. The monies that come into the government coffers via taxes, customs and other state revenue are not sufficient to cover the expenses the government has. Every year, the short fall of revenue towards expenses increases. This forces governments to borrow ever increasing amounts while at the same time having to cut its offer of benefits to its tax paying citizens and in many cases increasing the tax burden to the individual and companies.

Of course local government such as county, provincial or state, juggle budgets in the same way and as inefficiently as the others. Local taxes add to the burden of the individual and companies. And whatever the budge, it seems that local government officials, are as incapable of balancing the revenue coming in with the expenses that are required to be paid out.

Likewise, companies borrow huge amounts of money to build new factories, develop and manufacture new products or buy out other companies, which they think could add value to their organisations. Many times companies borrow money just to be able to pay salaries. The larger companies post some extraordinary losses, for instance currently the American motor industry is again having a difficult time. One actually wonders how they manage to fund those levels of losses. After all, that loss means that the company did not earn enough money to pay for its expenses and had to borrow the money. It is surprising to see how willing financial institutions are to lend out large sums of money such as these.

With other words, everything runs on debt. Countries, governments both national and local and businesses, are unable to contain their spending within the revenue they receive. Is this all part of the consumption based economy? Or is this a particular malaise of the past two or three generations, where instant gratification has led to this kind of accumulation of debt which seeps right through society, touching everybody. Possibly it really started with the big wars, or the great recession, where people realised that all could be lost in a matter of years/months or even weeks. Why work and save for something if bombs could wreck your property, or you had to leave your home due to political and personal safety circumstances. Or you lost your house because the bank that holds your mortgage has had to close its doors. Whatever the reasons, the sums involved in terms of global debt whether for countries, business or individual are beyond comprehension.

Anja Merret lives in Brighton, UK. She has recently started a blog and writes on issues that interest her from self-improvement to tech stuff for amateurs.

Anja has had a varied and interesting career journey. She started as a high school teacher, changed professions to become an admin manager at her late husbands law firm because this allowed her the flexibility to look after her small children at the time. After many years she left this position to try her hand at an art gallery, moved across to public relations and finally found her niche in education again managing a computer training centre for many years. During this time she also involved herself in writing standards and qualifications in the new media field.

10 months ago she moved from South Africa to join her younger daughter. She now writes a blog and also looks after the business interests of her daughter who is a Flash and Accessibility expert. She has BA (Hons) MBA degrees and on rare occassions she feels like a frustrated wannabe academic. That passes quickly though. http://www.anjamerret.com

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