Greece had a big debt caused by a large budget deficit for many years. It was not able to collect sufficient tax revenue to pay for the cost of government. It borrowed on short term bonds to cover the deficit. The lenders are not willing to roll over the debts and to buy new debts.
Many countries are in similar situation. They include the Japan, UK and USA. Will the debt crisis come to these countries? It will - it is just a matter of time.
What is the root of the problem? What is the long term solution?
Maybe Greece is in trouble because
ReplyDelete1. They do not have the CPF system.
2. They do not have high cost public housing where majority of citizens live in.
3. They don't have COE or ERP. Not sure if they have GST.
4. Foreign talents don't go there in large numbers over a short time.
5. The ruling party do not have 98% seats in Parliament.
6. They have lots of welfare for citizens.
Greece is rated as junk now. Soon spain, portugal ,ireland will follow.It will be worse than iceland.\These are bankrupt countries.
ReplyDeleteProf. Krugman's latest, on the Greek crisis:
ReplyDelete"A Money Too Far".
http://www.nytimes.com/2010/05/07/opinion/07krugman.html
either increase the tax revenue or cut the cost of government.
ReplyDeleteIf the government is a good government of strong quality and is fair to the citizen, then increase tax revenue seem to be the better way.
As long as the right government is in place, it had the responsibility to ensure minimun rich and poor gap, make sure the economy damagae is minimise as little as possible.
as long as the government is able to attain it, maybe increasing tax revenue is better.
Default on the debt. Lenders should also take some of the pain. Bailing the lenders out doesn't help solve the problem in the long run. And perhaps in the future lenders would be more careful with their investments.
ReplyDeleteGreek citizens should not bear the full brunt by taking on more debt via the bailouts. Many other nations are in debt too. Bailing out doesn't solve the problem in the long run; it prolongs it. How can one bankrupt country lend to another? All these bailouts converge to one source - monetizing the debt.
Reference David's post May 07, 2010 9:20 PM.
ReplyDeleteGreece hss a history stretching back a couple of thousand years.
Singapore has a 45 year old history.
A bit too early and arrogant for us to strut, lecture and boast don't you think?
There is a greater picture then just basic economic or financial status & sometime what is written is of surface value.
ReplyDeleteComments are blunt & some make no sense of intellectual disgestion.
If you commented on debt caused by large deficit over years..a search will show you all countries if not most; have debt outstanding liken USA run into trillions & way out of the GDP reach for ions! so what is their secret of still "standing" at the world's stage?There is not going to be any "long term solution",not this generation neither the next to come but using our intelligence of economic revolution of the last 50 years or so,is simply over indulgence in the world of capitalism & yes, i would be the last to point finger because we are all part of it and that is why we are here,well educated,able to debate fairly and living in the comfort of our rooms writing fair blog comments; we are all partaker of the forbiden wine and we should not "cry wolves"...simply saying only the third and less develped countries do not fall in the category of this mess, the most basic of livihood..so,"what is the root of the probelm?"is all at the inception of this so call thing call industrialize capitalism of economic revolution & now may we also welcome in true faith here in Singapore a new Era of political evolution,a new awakening & when deep thinking is rooted,the passion of life quantify more then just mundane of life's luxury; an awakening is knocking at the door & all it takes are a few brave & good men to unlock the opening.Are we ready?comrades of the few good men?
I was wonderng, are we worst than Greece? Maybe because of our reserve, we are not so bad. But, what about the recent losses GIC and Temasak took in US subprime problem? Maybe this set of data is taken before Greece problem.
ReplyDeletehttp://en.wikipedia.org/wiki/List_of_countries_by_public_debt
This is a list of countries by public debt as percentage of annual gross domestic product, based on The CIA World Factbook. Figures are gross debt, not net debt - assets are not included.
Economy CIA 2008[1] CIA 2009[4]
Zimbabwe 241.20 304.30
Japan 170.40 192.10
Saint Kitts and Nevis 185.00
Lebanon 163.50 156.00
Jamaica 124.10 131.70
Singapore 113.70 117.60
Italy 103.70 115.20
Seychelles 92.60 43.90
Greece 90.10 108.10
Sudan 86.10 104.50
Egypt 84.70 79.80
Another site
ReplyDeletehttp://www.economicshelp.org/blog/economics/list-of-national-debt-by-country/
Wonder why US is in number 66 and the media gave the impression that US is one of the country that is in deep problem with their debt. If Sgp rank higher than US, does that means we are in deeper trouble i.e. spend more than we earn?
1 Zimbabwe 304.30 %
2 Japan 192.10
3 Saint Kitts and Nevis 185.00
4 Lebanon 160.10
5 Jamaica 131.70
6 Singapore 117.60
7 Italy 115.20
8 Greece 108.10
9 Sudan 104.50
10 Iceland 100.60
66 United States 39.70
Greece has value added tax higher than Singapore's 7% GST. They have high influx of immigrants from former soviet union and east germany (ie less develop countries) like in Singapore. Workers are skilled and trained to handle automation. They have strong union and citizens have good human rights. Citizens are generally thrifty and hard working.Police are afraid of bad guys and apprehensive to act first and arrest them. Their government is surely pro-business.
ReplyDeleteThere are quite many similarities between Greece and Singapore.
To Anon 3:57pm
ReplyDeletei think most of the comments are not blunt and make sense, sometimes we don't have to think until so complicated and actually the answer will be clearer.
it is simple, if everyone keep on printing money, in the end the money will get less and less worth. if the tax become too high for income, people will want to work for income less. if the tax is high for people who don't even have much income, there is something wrong with the government and rightfully this type of government will not be elected.
In the end of all these, it will be very messy, but by logic it will turn out like this if you want to eat a good meal, you will get it not because you have a lot of saving of money , hold a position that draw a high salary, but it is because you can cook very well for yourselves.
In the end, if you want a smart child, it is not because you can afford expensive tution, but it is because you can teach your child well
The Spanish government was fiscally disciplined and actually had a small government budget surplus for a few years. However, much of its economic growth was due to the real estate and construction boom.
ReplyDelete1.53am
ReplyDeleteCan't u relax and understand the insinuation by Mr David that his comments is 'double sided' a mockery of sort to the particular system of Singapore (& government politics?) Relax lar, learn to laugh and not take every comment so serious, no wonder you are Singaporean.
Greece knea greased?
ReplyDeleteMaybe we should remove the credit system and everything should be paid cash upfront. Trust nobody.
ReplyDeleteIf you want to buy a car or computer, pay with hard cash and take no loans or credit. This is what many of the China chinese practices.
This should apply to the government as well. So if the government wants to build roads or whatever, collect enough tax, sell their lands or commodities to fund it.
Then there won't be any housing bubbles, debt crisis, home foreclosure etc. And maybe the housing will be cheaper cause you minus the loan interest and since you dun borrow, the government will have to lower the housing price or give more subsidies for the mass public to own the house. The result is cheaper houses, no money sucker banks and housing price which is more reasonable.
Yes, eventually, all these debts will need to be paid, but it will not happen within the next 15 -20 years.
ReplyDeleteRolled over again & again.. its the only way.
Print more money.
Because:
A) the workers will refuse lower pay
B) prices of goods & services remain high
C) Taxes cannot be raised
D) we live in a connected world
If the life line is cut, war will eventually happen. This is an event that every politician will avoid at all cost.
Currently, we live in very peacefull time, no mad dictator or meglomaniac. This is because we all have sufficient to eat.
Asia is truly de-coupled from the distresses of the West. So long they keep buying from us, and they have to.. since they cannot produce the very things that they like.
It will be OK.
Let us hope that the crisis will not end up with war. This is what the west had been capable of, colonising and looting the east. When they want tea leaves, attack india, want rubber, malaysia, want silk, china.
ReplyDelete11.30am
ReplyDelete"If the life line is cut, war will eventually happen. This is an event that every politician will avoid at all cost."
I kinda agree with this statement of yours. Frankly, this world is getting too complicated and too messy; this are not a one-time event, but accumulated many years ago.
I believed that to end everything, there needs to be a "reset" button. Where the counter will be reset to 0 and the world will functioning as per normal.
Sad to say, war is one of the option but i hope for alternatives.
Cheers
Malaysia which is currently runned by the corrupted UMNO government is also on the list of a bankcrupt
ReplyDeletenation.
My prediction is Malaysia will be a bankcrupt nation within 50 years' time as long as UMNO is still running the country.