perceptions_now
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Australian Politics
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Perth WA
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Andrei.Hicks wrote on Sep 16 th, 2010 at 10:39am: If you can't afford it, you can't have it Bobby.
The answer is never to provide things and pay for it by borrowing .That is why Left wing Governments fail all over the world like in Greece. Sooner or later debt needs to be repaid.If that means services or public spending has to be cut, then so be it. It's called budgeting. Andrei,
What a load of CRAP!
If everyone proceeded on that basis, then no one would buy houses or cars, no one would start businesses, governments would never be able manage their national or Global Economy. Not that governments are doing a particularly good job , anyway!
Debt is like Food, you've got to have it & it's fine in moderation!
In fact, if individuals, Businesses & Governments did not leverage future earnings, into what we do & use today, then the entire Global Monetary system & Economy would collapse. Now that may happen anyway, but not simply because of Debt/Credit!
The fact is that most individuals, Families, Businesses & Governments use Debt/Credit and have done so for quite some time and usually everything works just fine, where it is used in moderation and people properly budget their earning capacity, to their expenditure.
Where things go astray, is usually because peoples expectations exceed reality, either personally or collectively and sometimes this is beyond the capability of the individual to predict!
In terms of Government Debt, it is quite usual for governments of all persuasions to USE Debt in moderation, as is easily shown throughout the world, particularly as it has been used in the past, as a tool to smooth out bumps in the Economy, in light of Keynesian Economic practice (Stimulus).
In current terms, the Australian Debt to GDP ratio is well within past standard international parameters, which can not be said for many other nations around the world.
That said, we need to start looking outside the square, as on this occasion more stimulus & more Debt, will not make Demand rebound and the result will be ever increasing Debt, to the point where the Monetary , Economic & Political systems collapse.
So, Australia has so far avoided the effects of the current GFC, by incurring this additional Debt and in net Economic terms, we have probably lost on the swings (Debt), but made up on the roundabout (Economic Activity), but that was a temporary effect only and it will not continue.
As the Macro Global Economic factors continue to grind away Demand will continue to Decline and continued stimulus spending, in the face of Demand & Energy Declines, can only result in increasing Debt beyond safe limits, resulting in the collapse of National & Global systems.
If collapse is to be avoided, then we would need to stop trying to maintain the status quo and move quickly toward cutting as much fat out of the system as possible, whilst trying to maintain as much of the Public disposable income as possible, to support Demand & shift away from the current Energy sources, as quickly as possible.
Will we succeed?
Regrettably, I suspect the answer will be no!
Why?
Because the human condition, will most likely not allow us to attain enuff agreement to even start the process in time, let alone finish it successfully!
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