GOVERNMENT DEBT AND SOLVENCY
Sanford Pinna, M.D.
In Dubai, today, we are seeing a small country,
whose leaders were literally insane for the last
decade, face the fact that borrowing money has
a life threatening side.
Borrowing money is like a person taking
cocaineÃ¢â‚¬”take a little and you are euphoricÃ¢â‚¬”
take a lot and you are dead.
Borrowed money must be repaid. Repaying by
borrowing more, only postpones the inevitable
Almost every country in the world has
borrowed unbelievably large sums of moneyÃ¢â‚¬”
from banks, businesses and individuals.
Governmental financial leaders have
gloated about the fact that they oversee dossiers
of these vast mounts of debt. They do not
refer to the debt in numerical terms; but
rather, as a percent of the nationÃ¢â‚¬â„¢s GDP.
Ã¢â‚¬Å“Oh, our debt is only 30 percent of
The implication is that the GDP can
only grow, and, of course, the debt will
be paid off.
But, do GDPÃ¢â‚¬â„¢s always grow?
What happens when they fall?
The 30 percent can become 300
or 3000 percent!
THE WORLD FACES REALITY
Dubai is the tiny canary chirping in
the coal mine: Ã¢â‚¬Å“I smell deadly gas.Ã¢â‚¬Â
The Ã¢â‚¬Å“minersÃ¢â‚¬Â of the world are awakening.
The global economic slow-down will
reduce GDPÃ¢â‚¬â„¢s everywhere.
Weak countries, such as: USA, U.K.
Greece, Ireland, Spain, Italy and many
Latin American countries, may watch,
like a mother seeing her children washed
away by a flooding river, as their GDPÃ¢â‚¬â„¢s
plummet in the rushing financial waters
of the Economic Rip Tide.
TOO MANY PEOPLE
There are seven billion people on
the Planet Earth.
That is seven billion mouths to feed,
but, also, almost fourteen billion hands
Rich countries have more workers than
they can use.
Poor countries are shipping their over-
abundant workers everywhere, seeking work.
We see millions of poor workers
thousands of miles from their homes.
These workers are in Dubai. But,
they are also flooding into the USA
and the UK and all other countries
with excess free capital.
These workers pay no taxesÃ¢â‚¬”and
being hungry, they will work for
Cheap labour means cheap prices,
which means a lower GDP.
Who will pay the governmental
Not the cheap labor. They will
not even pay taxes.
So, the governments must borrow
again, simply to pay the interest on the old debt.
HOW LONG CAN THIS GO ON?