The world economy and debt

[Graham E]

I was wondering...
We're in debt. Lots of it (680m - 2.2t, depending on who you listen to). Europe is in debt (various, but lots), America is (2.1t?), of course the developing world is generally in debt etc etc.

So, who isn't? Is there a group of nations that have effectively got lots of cash in the bank? At one time, you;d be mistaken for thinking Dubai would be rich, but it's up to it's eyeballs as well.

Is the world net debt zero, or have rising asset prices effectively meant that the world has done an ocean finance, remortgaged from a silly valuation, and is now in trouble?

I have onfidence that someone somewhere on PH knows the answer to this =)

[jbi]

China and Japan both have huge reserves of currency, and thus they can not allow the dollar to fail. They will keep lending under the whole lot collapses.

[s2art]

Plus some of the oil-rich middle eastern states.

[Zod]

If the world's total debt is not netted to zero, we must owe trillions to aliens.

[MX7]

jbi said:

China and Japan both have huge reserves of currency, and thus they can not allow the dollar to fail. They will keep lending under the whole lot collapses.

I think Japan has a huge debt. China certainly has massive reserves, but that doesn't necessarily mean that they aren't in debt. I think most countries exist with some debt.

Zod said:

If the world's total debt is not netted to zero, we must owe trillions to aliens.

The Olympic mascots are bailiffs?

Edited by MX7 on Thursday 20th May 18:24

[MX7]

anonymous said:

[redacted]

"The International Monetary Fund (IMF) has urged Japan to start cutting its massive debt burden from next year. It said Japan should start increasing consumption tax to tackle its debt, which at nearly 230% of GDP, is the highest of any industrialised nation."

Am I missing something? Perhaps we're using different measures, but I though it had been suffering, as you say for the last 20 odd years?

anonymous said:

[redacted]

I agree. We never really know about China.

[supersingle]

There is as much debt as there is money in the World. Hth.

[supersingle]

anonymous said:

[redacted]

True, the harder you look at money the more difficult it becomes to see what it is.

The fact remains that it comes into existence when someone takes out a loan. Most people see money and debt in concrete terms. They are actually dynamic. It's possible for everyone to be net debtors. Weird. Does anyone really understand it. I must admit I don't. O:

[whit3star]

http://www.guardian.co.uk/business/dan-roberts-on-...

I think there is more debt than money in circulation(?)

[anonymous-user]

Graham E said:

I was wondering... debt

So, who isn't?

us.

the private net financial wealth of the uk is roughly 6000bn quid.
that includes roughly 2500bn housing wealth net of 1200bn mortgages.
and 1000bn mythical public sector pensions.

leaving a real net private sector financial wealth of roughly 2500bn in cash, stocks, bonds and real pension savings (also in cash, stock, bonds)

Edited by fbrs on Thursday 20th May 20:08

[s2art]

As a matter of interest, lets see the PH view of this;

http://www.cobdencentre.org/2010/05/the-emperors-n...

[Mermaid]

Zod said:

If the world's total debt is not netted to zero, we must owe trillions to aliens.

That's a good point. For a quick fix, what we really need is a Man from Mars to settle the debt of everyone, with assets from outside earth. The we can do it all again....

Otherwise, nose to the grindstone...

[rypt]

So back on topic, who is all the money owed to?

[The Excession]

rypt said:

So back on topic, who is all the money owed to?

Chinese peasant farmers/workers

[rypt]

anonymous said:

[redacted]

How exactly have they managed to have trillions worth of dollars to lend out

[Graham E]

Fbrs,


You're right, but I realise that. I was only referring to governments (I was ambiguous here) when i said countries - not the citizens of said countries. What I was ultimately pondering was: If a government foreclosed, and was unable to pay - would that country effectively become an asset of it's creditors? That would essentially be a capitolist conquest of said country..
Or, would Greece have to sell national assets (colloseum, acropolis, Dana International's bits in a jar) to the highest bidder, in order to settle that debt?

[MX7]

whit3star said:

http://www.guardian.co.uk/business/dan-roberts-on-...

I think there is more debt than money in circulation(?)

That's a great link. Thanks.

[Jimbeaux]

jbi said:

China and Japan both have huge reserves of currency, and thus they can not allow the dollar to fail. They will keep lending under the whole lot collapses.

Japan's debt is about 100% of their GNP; are you sure you have that right?

[Jimbeaux]

fbrs said:

Graham E said:

I was wondering... debt

So, who isn't?

us.

the private net financial wealth of the uk is roughly 6000bn quid.
that includes roughly 2500bn housing wealth net of 1200bn mortgages.
and 1000bn mythical public sector pensions.

leaving a real net private sector financial wealth of roughly 2500bn in cash, stocks, bonds and real pension savings (also in cash, stock, bonds)

Edited by fbrs on Thursday 20th May 20:08

If you count personal wealth only, many nations are in the black.

[paulrockliffe]

I read that article; I thought fractional reserve banking was limited to 10 x deposits?

It seems relevant to discuss fractional reserve banking in this thread, my understanding is that if I lend my bank £100 they pay me interest at <1%, then lend it out 10 times and ask for between 4% and 20% interest depending on how it is lent.

So there probably is a net debt, given that the banks seem to multiply money and lend it out.

Benefits of fractional reserve banking seem to be that it allows borrowing against future worth to allow people to build houses and factories etc.

Bad points seem to be that whoever was given permission to lend money gets incredibly rich.

Thoughts?