Erranter, a fiscal conservative, is in the comments attempting to justify the deficit reduction going on in the developed world:
But either way the fear of defaulting on debt is one of the main reasons for cuts, if not the reason. I think the UK is alright, mainly for historical reasons, along with Japan and the US, even if they went over 100 percent, but “newer” economies such as Spain and Greece don’t have as much credit history to back themselves up and are therefore making the cuts to show that they’re serious about fiscal stability.
Japan’s is one of the highest on Earth – it is ~216% of GDP. Has their bond rating been creamed yet, and have they been afflicted with mass capital flight? Are investors unwilling to invest in Japan and therefore not doing so? Of course not. So I wonder about all of this.
Erranter is right though. It’s the investors and bond markets who are calling the show here. The governments are making the cuts because they are afraid that if they do not, they will get hit by the investors via the bond markets. It’s not justifiable in the US or UK, it hasn’t happened in Japan, but I can’t speak of elsewhere.
Shall I point out what is going on here? The international investor class (the internationalist rich who are the enemies of every poor and middle class person on Earth) are ordering national governments around and telling them what to do. National sovereignty is gone. Nations no longer even rule themselves. They are ruled by the international elite rich who pursue their own interests.
So really what we have now is an International Dictatorship of the Rich, and all of world’s nations live under this dictatorship as subjects.
Apparently the dictatorship has told many world governments that social democracy is unsustainable and therefore needs to go. Not surprising, as they’ve always hated it anyway. And apparently governments are starting to obey. The rich, the world media and the elites could not be happier. They have hated social democracy since the day it was born and have spent the last century plotting ways to destroy it. Now maybe they found one.
What this points out, I think, is that capitalism sucks! I’ve been saying this over and over on this site, but few seem to listen to me. The World Capitalist Class has told the nations of the world that social democracy has to go. It’s actually blackmail. If you don’t get rid of it, we will cut off your loans and investment and drive you to the poorhouse.
So we can have one or the other, capitalism or social democracy, but not both. I don’t want to live in a world like that, and I don’t want to live under a capitalist regime like that.
Fuck it. I’m outa here. Try something else.
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To Rob:
Japan’s is one of the highest on Earth – it is ~216% of GDP. Has their bond rating been creamed yet, and have they been afflicted with mass capital flight? Are investors unwilling to invest in Japan and therefore not doing so?
Mass capital flight can occur when you have external investors (unlike the US) Japan has almost none. (And as with the US their debt is payable in their own currency…)
There are three very big differences between Japan and the US in regards to debt… around 50% percentage of US debt is held externally (mostly by foreign central banks so that the currencies of respective nations do not rise appreciably against the US dollar, it’s good to be the king until you are overthrown….) whereas almost all of Japan’s debt is held internally, the US has a substantial trade deficit whereas the Japan has run trade surpluses for years (even if the Japanese Yen were to go kaput Japan makes more products that the world wants than it buys), and the US is a net debtor nation whereas Japan is a net creditor nation.
The US has incentive to eventually renege on it’s debt either by outright default or by de facto default by printing money.
US debt held by foreigners:
http://www.ustreas.gov/tic/mfh.txt
Total US debt:
http://www.treasurydirect.gov/NP/BPDLogin?application=np
Note usually when we speak of US debt we speak of Debt Held by the Public as opposed to total US Public Debt which includes intergovernmental holdings. If we were to compare total US debt to GDP then the US would hit more than 100% debt to GDP ratio by next year.
http://en.wikipedia.org/wiki/United_States_public_debt
There’s another option to massive deficit spending…. raise taxes on fuel (70% is imported..) on consumer items (a huge chunk of which is imported —- exclude food, drugs, and clothing…) and on the wealthy (above 15ok for individuals…) and reduce our overseas military exposure. These steps would align the US more closely to the EU tax structure. I place the possibilities of the aforementioned in the near future (2 to 5 years..) as somewhere between Bob Hope and no hope but believe eventually all of the above will be adopted.
To Rob:
they will get hit by the investors via the bond markets….The international investor class (the internationalist rich who are the enemies of every poor and middle class person on Earth..)
I don’t know the break down of who holds UK Gilts (bonds…) but I have a pretty good idea of who holds most of the US Debt.
1) The left hand owes the right hand – that’s the meaning of intergovernmental debt.
2) Foreign central banks. Tell them FU and watch the price of oil (if we can still get it…) and other useful items (80% of the stuff in department stores..) go skyrocketing.
3) Pension funds like Calpers. Tell them FU and your Uncle and Cousin no longer get their pension checks.
4) US Corporations keep much of their cash in short term US Treasuries. Tell them FU and consider how many bankruptcies and layoffs we would have.