Our government (grand coalition) promised to get the debt growth under control. They failed (not because of the economic crisis; they didn't get their expenses under control).
They launched a law to limit the ability of future governments to add net debt ... and I had hope.
This new F.A.Z. graphic is outright scary.They launched a law to limit the ability of future governments to add net debt ... and I had hope.
It shows the projected rise in official public debt 65.9 to 82 % BIP (~ GDP).
I'm not sure about their definition of public debt (especially not about the "verdeckte Schulden" - concealed debt, on the right side), but the general direction is realistic.
History has proved again and again that fiscal health is important. States that spend several per cent of their GDP on servicing debt are weakened in social, economic and defence matters.
Sun Tzu already wrote about the importance of state finances, and the Romans regularly struggled with the financing of their army.
European wars depended more on money than anything else from about the age of Crusaders till the French revolution. national population and industry became important afterward, but those aren't exactly great strengths of ours any more as well.
Public debt equal to 82% GDP would cost us much more annual interest payments than we've got defence expenditures. The economic arguments about public debt are split, but even the pro-debt faction doesn't advocate such massive amounts of debt.
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Public debt is the most visible phenomenon of a more general problem:
Organizations (like states) accumulate problems and restrictions over time. They become more and more rigid. Only major events can break this trend till it makes itself felt again.
That's one of the reasons why large companies change their strategy and re-organize so often.
States don't reform themselves in a five-years rhythm - they keep accumulating problems.
Public debt is such an accumulated problem, and the debt levels are quite distressing.
Organizations (like states) accumulate problems and restrictions over time. They become more and more rigid. Only major events can break this trend till it makes itself felt again.
That's one of the reasons why large companies change their strategy and re-organize so often.
States don't reform themselves in a five-years rhythm - they keep accumulating problems.
Public debt is such an accumulated problem, and the debt levels are quite distressing.
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The response of Britain and France to Hitler's re-armament was in part so slow because these states were still weakened by the burden of the Great War debt. Germany had been relieved of that huge debt by a disastrous hyper-inflation in the 20's.
Such a surprise inflation might actually happen soon as well, but that's another topic.
The public debt situation is deteriorating, and I consider that as a more distressing problem for national security than those misguided assholes who can't even match random lightning strikes in lethality statistics.
Such a surprise inflation might actually happen soon as well, but that's another topic.
The public debt situation is deteriorating, and I consider that as a more distressing problem for national security than those misguided assholes who can't even match random lightning strikes in lethality statistics.
Sven Ortmann
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Sven, nice post. I'm in complete lockstep on everything you said. However, if your debt situation is nothing compared to ours. Can you loan us a dime?
ReplyDeleteIsn't that exactly what we did for the past three or four decades?
ReplyDelete