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Rachel Mander

Pupil, King Edward VI Camp Hill school for girls

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How are we going to get out of debt?

There are increasing debt problems in most countries at the moment, and it seems everyone owes everyone money. How would you solve this?

Topics: Debt Crisis Financial downfall Global Finance debt financial crisis world financial markets
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  • Andrew Kewley

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    Aug 24 2011: In principle, the same way as any other investment - growth in net income outstripping the interest repayments.
    In practise, we have to ask is this possible? What level of long term growth is realistic? While in principle there is no immediate shortage of energy available, there is certainly going to be major scarcity in the resources we currently use the most, such as oil.

    As a previous commenter said, a simple solution is simply to consume less - aka living below your means. (This principle can be applied on all scales, from the individual to the national government level). But this is easier said than done. It is difficult to change all our habits at once, but if we start now, making all the small changes we can and finding solutions to the larger challenges then we can certainly turn things around in our lifetimes.

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      Krisztián Pintér 200+

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      Aug 17 2011: guess who got the money: the masses. i don't know too much about the UK situation, but i know where the money is in the US, in hungary and in greece. people bought houses, flat tvs and cars, which they could not and can not afford. people retired at active age. governments built roads, bridges, skyrockets, aircraft carriers.

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          Krisztián Pintér 200+

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          Aug 17 2011: surely not everyone. but in hungary, 8% of the entire population has some form of debt they can't pay back. this number is mind boggling.

          where is the money? actually i'm not an expert on this. but people i trust says that it mostly ended up in bank's balance sheets. they are afraid of lending it, because they don't know who they can lend to safely. and right they are in that regard.

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          Krisztián Pintér 200+

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          Aug 17 2011: well, it might turn out that people were actually right when they let it happen. because they can just say: paying back debt? no, thanks. we don't want to. then the creditors will have to learn the old wisdom: you don't lend money to someone with aircraft carriers. how do you plan to enforce your agreement?

  • Chee Cheong Lam

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    Aug 17 2011: In the ancient days, wars would have been fought to try to resolve this issue... Modern day with its advanced weapons of mass destructions would render this as unthinkable. I read recently with great interest abt some proposals by the richest man in the world on how rich individuals shld be taxed more to help to share the pain and load aka 'shared sacrifices'. See this link http://www.news24.com/Columnists/ClemSunter/Shared-sacrifice-20110817. One of the obeservations he made was rather interesting... graded as an investor, he is taxed abt 17% whereas his employee that works for him is abt 35%... the irony of it all was that in bad times like now, the economy needs to expand and provide jobs to stabilise the situations so that debts can be repaid but instead business confidence gets shaken and aggravate it further (thus, it is always a sound fiscal policy to save when the economy booms and spend when times are bad). As for the Western advanced economies, I see 2 major social hurdles that must be addressed and accepted by the masses before a clear resolution can be worked out (hopefully, without violent protests and anarchies) :-
    1) aging population where the younger ones feel the strain to sustain the welfare that the majority of the older ones are drawing upon
    2) the generous welfare and overly protective employment act are being called in questions as it means changing structural employment issue becomes very difficult (as a social threat and threatening to its citizens)

    I think the government of the day recognise the issues but it takes a revolution to change this in a more competitive world. Not too sure if the political will is there to see this through and whether the masses can accept the pain and bit the bullet. As I shared recently, Asia has seen more such economics upheavals but I would say we take it in good stride cos' welfare is minimal and each knows that they have to strive for themselves to tide through
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    Prashanna Tiwari

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    Aug 15 2011: Capitalism is not flawless. Nothing is too big to fail.
    You can get rid of debt by cutting spendings and overhauling tax system.
    You know clock is always ticking, world is always changing. Its economy is changing. 5 centuries ago India and China were richest. Now they are back on track.
    I mean to say you can no longer be richer. Some riches is going to China , India and other world parts.
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    Rafi Amin 20+

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    Aug 15 2011: Cut defence spending by 50 percent and increase tax on those who are earning in millions .

  • Ju Gao Yuan

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    Aug 15 2011: cut down personal spending
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    Krisztián Pintér 200+

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    Aug 14 2011: greeks tried to set banks on fire. didn't work too well, so i recommend to try something else.
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    lars francis

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    Aug 14 2011: Change our way of thinking and behavior.

    *Economically: We have to switch from mass consumption society to a less is more conviction.

    *For the moral aspect I would like to quotate the Dalai Lama:

    ‎"To develop a sense of universal responsibility - of the universal dimension of our every act and of the equal right of all others to happiness and not to suffer - is to develop an attitude of mind whereby, when we see an opportunity to benefit others, we will take it in preference to merely looking after our own narrow interests."
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      Sabin Muntean 30+

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      Aug 15 2011: I like you idea of switching from mass consumption to a less is more conviction. For example as far as food is concerned we are currently producing more than we actually need and yet we have both overweight people as well others suffering from hunger.
      However, stopping such excesses can ultimately only come through education.
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    Sabin Muntean 30+

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    Aug 14 2011: Now, economy isn't a subject I'm that good at, but I'll give it a try.
    The way I see it there are basically two ways to lower debt - you either receive more or you spend less. This means that you either raise taxes or cut spending in certain areas. Most likely, states will attempt to use both solutions, unless there is some tax-raising-phobia like in the US.
    Raising taxes is a tricky business, for example here in Germany people already pay almost hald of what they earn on different taxes. I see taxing corporations and eliminating certaing benefits they had so far as a good solution. Now, you may say these are the "job-creators" you don't want to tax, but I feel that in many cases governments were too indulgent with corporations.
    Cutting spending is the other idea and here it's important to optimize spending and find out what isn't needed. Military spending for example often is much higher than it should be, this of course is directly related to the extent your country is involved in wars and peace keeping missions around the globe. The danger is of course cutting spending from vital areas such as social security, healthcare or education.

    All in all, I feel that the best way to go overall is taking action so that the ever widening gap between the rich and the poor is bridged. Tax increases for the overly wealthy, same social support for the needy. It would help gather more money and would bring upon a fairer society as well.
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