G20 Economic Boost Will Add to National
Debt Woes
Last weekend the G20 met in Australia and the result was the global
economists want to raise the world's GDP by $2 trillion or just under 4%.
The G20 consists of Argentina, Australia, Brazil, Canada, China, France,
Germany, India, Indonesia, Italy, Japan, Mexico, Russia, S. Korea, South Africa,
Saudi Arabia, Turkey, the United Kingdom , the United States and the European
Union. Portugal and Spain have permanent 'guest' status. But, if China was
removed from the equation the G20 countries currently have more collective debt
than their collective annual GDP. In other words, the biggest debtors in the
world want to go further into debt by expending an extra $2 trillion to "help
the struggling global economy."
Shortly after the announcement from Australia, supported by U.S. Treasury
Secretary Jack Lew, President Obama announced a new $300 billion stimulus for
infrastructure rebuilding.
One of the problem's I have with the G20 scene is not everyone is equally
represented. If you notice, the EU gets a fistful of votes which usually go in a
bloc. If the EU is to be considered one giant economy then Germany, Italy,
France and the United Kingdom should not be allowed individual votes. If those
countries are considered to have independent economies, then the EU should not
have a seat.
But there are some other considerations to be looked at before any faith is
placed in the G20 pronouncements.
If you observe the rates of debt to GDP, almost all of the emerging
economies from 20 years past when the Kyoto Treaty was agreed to which imposed
environmental limitations of the growth of economic activity for developed
countries, have much lower ratios than those countries who were hit by
environmental concerns. Also, the United Kingdom which reneged on all
outstanding national debt in 1948, should be disbarred from any vote on economic
proceedings that could affect other countries until they acknowledge the debt
they have hidden away in the Bank of London.
The largest volume of debt honor goes to Japan at 208% of GDP. In order to
meet its share of the economic boost proposed, Japan announced it will raise its
national sales tax even though the Japanese consumer has already been tightening
its collective belt for more than 20 years. Italy checks in at 187% debt rate
with the USA lagging in third at 110%. The largest volume of debt ($17.3
trillion) goes to the U.S. as does the largest single GDP.
South Africa had the smallest GDP at $384 billion. Saudi Arabia has the
smallest debt volume at $93 billion while Russia (10%) and China (12%) battle
for the lowest debt ratio.
The EU countries check in at a collective rate of 92.2% debt to GDP. But
all of the EU is considered "developed" economically and were hit by Kyoto.
China, Russia, S. Korea (37% debt), Mexico (42%), Turkey (44%) Argentina (40%),
Australia (26%), Brazil (68%) India (66%), Indonesia (29%), Saudi Arabia
(16%)and South Africa (46%) were not. So there is a distinct split among the G20
as to past performance and future predictions in the economic activity.
Kyoto was a breaking point for the welfare and benefit of the collective
citizens of those countries while it was a breaking point into decimation for
those it targeted.
Because it stagnated for the last six years, the U.S. is no longer the top
dog in per capita GDP. Australia soared past the Americans and now leads with
more than $63,000 for every individual, while the U.S. comes in at just $49,625.
Canada moved into the No. 3 spot while the EU has slipped behind Japan and is in
grave danger of falling under the $15,000 mark.
But the incompetent boobs running these countries, all of which fail to
repay the national debts they've amassed, want to tell you and me how to
increase productivity.
The one common theme in the countries that have managed to keep their
national debts low--the leadership doesn't care about the citizens so has no
real social programs in place. The leadership has taught their people the state
knows best for them and gets away with it while not providing anything of
substance. Those that are lagging have all instituted massive welfare programs
for the citizens and are thus beggaring them all.
The G20 vote sounds laudable but it lacks little substance and will have
less impact. n a tech-dominated world, where a company with just 55 employees
can be sold for $19 billion, governments will have to adapt in ways not
imagined by any economics instructor. Former Clinton Labor Secretary Robert
Reich, now at Stanford, publicly decried the decline in "jobs" and pushed for
more active involvement of the government to create jobs.
But that "solution" is what has caused the massive debts already in place.
The better course, but most indigestible to politicians, is to get the
government out of the picture and let a free economy find its own level.
Then again, if governments had followed the better course they wouldn't be
in the position of massive debt in the first place. Fools don't learn from their
mistakes. Then again, it isn't their wealth they are expending, it is the wealth
of the citizens of those countries that they are indebting.
"I have sworn on the altar of God eternal hostility
to every form of tyranny over the mind of man."--Thomas
Jefferson
Facts for today's Rant came from the data on the stated
countries in the records of the International Monetary Fund, a report by the
ECB on the debt crisis as of July 2013 in the EU and a review of the
Kyoto Treaty terms as presented in Wikipedia.
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