The global economic crisis explained in 1 minute or less?

1. 62

   ThunderKeysposted 12 years ago

   Is there anyone reading who can explain the global economic crisis simply and objectively in just a few paragraphs?
   
   When I try to find information to understand what's going on with the Euro and with the US economy, there is so much biased nonsense. Everything from unhelpful off-topic political attacks from both sides, to bizarre conspiracy theories.
   
   For example, how much does the average country owe? Why do they owe so much? Can the "austerity" or fiscal cuts programs actually reduce the debt in each country to acceptable levels?
   
   How can we as a connected global economy get out of this crisis with the least harm and risk?
   
   Is it really as simple as debt elimination (i.e. this much owed, this much we can pay off and this is how to do it)?
   
   
   Just facts please, no politics.

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      EmpressFelicityposted 12 years agoin reply to this

      What a "national debt" can consist of:
      
      1. Money owed to people who have bought securities such as government bonds - these people can be individuals, corporations and banks (including central banks like the Federal Reserve), both within the country and abroad.
      2. Money that may have to be earmarked by law for pensions/social security/whatever you call it.
      
      
      There are two main ways of measuring national debt:
      
      1. as a percentage of GDP
      2. as an absolute value.
      
      The absolute value idea makes a lot more sense. GDP supposedly measures a country's economic "worth" but it includes government spending which if you take a moment to think about it, makes GDP a completely idiotic way to figure out how healthy someone's economy is!
      
      Why does a country like the US (or Britain, or probably any other Western nation) owe so much?
      
      AFAICT, one reason is that national debt is by no means a new phenomenon - it has been building up over decades, even centuries. In Britain for example, our government has always borrowed money to finance wars:
      
      http://www.debtbombshell.com/history-of … l-debt.htm
      
      
      You ask whether fiscal austerity programmes can reduce national debt. IMO the trouble with such programmes is that it's hard to make much inroad into the debt when it's so colossal, because the interest on the debt actually outstrips any economies that can be made just by doing a few tweaks here and there. For example, the annual interest on Britain's national debt is £43 billion. That's more than we spend every year on defence, and about 40 percent of what we spend on our National Health Service:
      
      http://www.debtbombshell.com/public-spending.htm
      
      
      Here are some statistics about national debt in countries around the world:
      
      http://en.wikipedia.org/wiki/National_debt#Scale

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   2. 61

      Evan G Rogersposted 12 years agoin reply to this

      You're going to get a lot of BS on this forum. Here's what happened, and it makes the most sense. Most of what will be posted by others won't make sense in enough ways to satisfy you.
      
      here's what's happening:
      
      We have a money system which allows a small group of people to decide how much money exists at any given time. They do this by lowering or raising interest rates.
      
      When interest rates are low, LONG-TERM investments (building houses, building hotels, etc.) seem like a good idea. However, there is only an increase in money supply, not resources. Thus, more people are using their newly-printed money to buy construction materials. This raises prices, and then leads to a collapse as the builders realize that they can't afford to pay for the construction costs.
      
      Also, printing money out of thin air robs the poor of wealth and gives that wealth to the rich. If, suddenly, $20 Trillion exists that didn't before (yes, we've printed about $20 trillion in the past 5 or so years), then each dollar in the system is worth less. The people who receive the money first (the bailed-out) get to spend the money.
      
      Why is the problem global? Because all countries are printing their own version of paper money, and they're all backing their money with the dollar.
      
      Check out my "Evan's Easy Economics" hubs for more info.
      
      If you would like to learn more, here's a video explaining it a bit better:
      http://www.youtube.com/watch?v=5K4Os5eXPw4

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         EmpressFelicityposted 12 years agoin reply to this

         On top of this, for every $1 of paper money that is printed, there is about $10 in "virtual money" which doesn't exist, even on paper. This is because for every $1 in the system, banks are allowed to lend ten times that much (the multiplier of ten is a typical number - some countries allow more, some less).
         
         Again, it's all hunky dory when everyone is confident. When the economy tanks, people try to get their savings out of the bank in a panic. Banks are in very real danger of going under when that happens, because their profits depend on lots of lending going on, and not a lot of saving.
         
         It's known as fractional reserve lending and you will never, ever hear about it in the mainstream media.

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2. 36

   AmazonSalesposted 12 years ago

   People can be manipulated to believe almost anything and humans are neglecting to help other humans.

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   1. 62

      ThunderKeysposted 12 years agoin reply to this

      That's true. But what about the actual economic numbers. How much money is owed? How much can each country pay off on average, through austerity measures?  Can we get out of debt as a nation and as a global economy? If so, how?

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      1. 61

         Evan G Rogersposted 12 years agoin reply to this

         Don't trust the numbers.
         
         If you sit down and actually study (for only about 10 minutes) the "numbers" that macro economists use, you'll find immediate glaring mistakes that no one seems to discuss.
         
         For example, Supply and Demand are different, right? Supply is PRODUCTION (how much stuff there is), and demand is SPENDING (how much is bought).
         
         Knowing this extremely basic fact - not even a fact, just merely a definition of terms - you will find out that GDP is a lie. GDP is Gross Domestic Production. Notice the word "production", which would imply supply. However, it is measured by how much is SPENT (how much is DEMANDED).
         
         This utterly basic measurement used on a minute-ly basis by macroeconomists is a bald-faced lie. They tell you it means production, but it's really spending.
         
         Another glaring issue with "the numbers" is that the government keeps redefining things. Unemployment has been redefined some 10 times in the past century. *sarcasm* And for SOME reason, the new definition always makes unemployment smaller *end sarcasm*. This means that if you compare current statistics with the same title, "employment" for example, you can't compare the numbers beyond just a few years at a time.
         
         However, macroeconomists do this on a daily basis.
         
         Don't rely on the numbers, rely on the logic behind it all.

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3. 61

   knolyourselfposted 12 years ago

   Privately owned for profit banks go bankrupt from criminal speculation, and are bailed out by socialist governments, so that now all the banks are back in business, but all the governments are broke.

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   1. 62

      ThunderKeysposted 12 years agoin reply to this

      That sounds kind of political. My question is about the actual numbers. What is the percentage of debt in the USA to "Income"? What is this ratio for Euro countries? Can austerity  measures actually work? What are the actual numbers?

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4. 61

   knolyourselfposted 12 years ago

   https://www.cia.gov/library/publication … 6rank.html

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   1. 62

      ThunderKeysposted 12 years agoin reply to this

      I'd prefer it if you would actually post a response to the actual question, I've asked here.

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   2. 62

      ThunderKeysposted 12 years agoin reply to this

      Google says this site is in French and asks me if I want the page translated. Weird or what?
      
      That page doesn't answer my question.

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5. 61

   knolyourselfposted 12 years ago

   No pleasing you.
   
   http://www.youtube.com/watch?v=LyePCRkq620

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   1. 62

      ThunderKeysposted 12 years agoin reply to this

      I've seen that that one already. It is funny but it doesn't answer my questions. In fact it was one of the many videos I've seen already in my search to try and understand what's going on with the global economy. But thanks. It would have been a great laugh if I hadn't seen it already; and right after I'd be on HubPages here asking the same opening question - lol

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6. 60

   recommend1posted 12 years ago

   The US was the centre of the world economy through aggressive trading, taking over from the Brits before them and the other European countries before that, and Rome before that.
   
   The entry of China into the developed nations club has turned the world economy over and exposed all the manipulations, the comfortable position of the rich getting richer by default (just because they 'owned' the money and the means of producing it), and the monopoly that a few corporations have on the whole supply, logistics and sales of almost everything.
   
   As the world turns back to the normal position of Asia being the economic super-power the house of cards that is western economics is collapsing.  Based on expansion and unfair feeding on the destitute areas of the world in terms of labour and resources, the western model is flawed at its base and is broken.  The rich are stealing as much from the cash drawer as they can while it is still there and ensure that they are internationally mobile so that they have a financial life jacket available as each country sinks.

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   1. 62

      ThunderKeysposted 12 years agoin reply to this

      That's about as political as a post gets. My question is simply about the debt reality and paying it off as global economy within our current democratic capitalistic society. This is an economics question not a political question.
      
      The question of ending corruption is separate too, all though it is equally applicable in Asia as in Europe and North America. 
      
      My question has 3 columns only. What is owed and what is the best way to pay it back.
      
      For example will the austerity measures now being proposed work? If so, for what specific economic/accounting reasons? If not in specific numbers, than in simple percentages or ratios.
      
      Are there any objective economists on hubpages today? How can I get their attention for this question?

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         recommend1posted 12 years agoin reply to this

         There is no such thing as an objective economist.
         
         You cannot separate economics from politics.
         
         The simple answer you seek is:
         western economies a whole have spent the family savings
         over-mortgaged until they are all (the conglomerate all) in negative equity
         Max-ed out their credit
         
         this means that EVERY effort that is not directly aimed at reducing overall debt is fiddling with the loose change. 
         EVERY manipulation of the system is only about shifting more from the people to the few or the banks (which is the same thing)
         
         You, as an individual are totally screwed by the current whichever way you jump - so if you don't get interested in the politics of economics you will stay screwed.

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            couturepopcafeposted 12 years agoin reply to this

            Even I understood that.

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7. 65

   2uesdayposted 12 years ago

   If the site is accurate some of the statistics are here.
   
   http://www.usdebtclock.org/world-debt-clock.html
   
   Watching the numbers clock up is almost hypnotic.

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      couturepopcafeposted 12 years agoin reply to this

      And you need to add public and external debt together to get the real number.  But this is measured against the GDP so it doesn't work.

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   EmpressFelicityposted 12 years ago

   Addendum to the OP: you are right, it is impossible to get this sort of information from the mainstream media, which is as biased as hell. I speak as someone who has had to turn the TV off quickly when watching the BBC's coverage of David Cameron/the Euro, because I was worried my blood pressure would go off the charts.

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9. 62

   ThunderKeysposted 12 years ago

   I totally missed Empress Felicity's post which really provides some clear information on the UK debt vs austerity measures, although I'm still not clear on how much and/or what percentage of the total debt for that country will be paid off via the current austerity program there.
   
   I'll have to check out some of the non political links that people have provided here, to hopefully see some numbers.
   
   Again I have explicitly asked that any political bias be left out here. I'm only interested in developing a simple numbers-based picture of the global economic situation and how it can or can't be resolved through austerity measures and or increased taxation. I'm not advocating anything, just looking to understand the numbers and options in simple objective terms. Political bickering and bias seem to cloud these facts.

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      mom101posted 12 years agoin reply to this

      Back to basics.
      
      Short enough?

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      Evan G Rogersposted 12 years agoin reply to this

      This economic collapse is explained easily with the most basic of economics.
      
      A government can only pay for spending through 3 means - Taxation, borrowing, and printing money. However, ultimately these 3 means break down to nothing more than taxation (you have to repay borrowed money, and printed money loses value quickly).
      
      Every dollar spent is a dollar taxed, and just about every government has been in debt for decades now.
      
      The creditors started calling for their money, and were handed toilet paper.

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10. 73

    Kangaroo_Jaseposted 12 years ago

    Answer in less than one minute.
    
    Europe, America and several other sovereign nations have a slow or slowing economy, larger than they can handle domestic debt owed to other countries, and not enough people in jobs to pay taxes.

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11. 90

    peoplepower73posted 12 years ago

    Three factors: (1) The banks hold assets that amount to 23% of GDP.  That's almost one fourth of our GDP consists of not products but $$$ being held by banks.  (2) Most of our manufacturing is outsourced.  Just take a look at where your clothes and goods are made.  They certainly are not made in the U.S.A. (3) Deregulation of the laws to protect home buyers and the comingling of assets of commercial banks and investment companies has caused the global market problem. They created financial instruments, such as mortgage backed securities, collaterlized debt obligation, and credit default swaps that were traded on the global markets.  When the housing markets went into default, they could not cover the leveraged instruments and they fell like a house of cards, world wide.  We then bailed out our banks.
    
    Until we can start regulating our financial markets, manufacturing our own products, and getting the banks to loan money they are sitting on, this problem will not go away, here or globally.

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12. 48

    TheRippleposted 12 years ago

    The NAZI Banksters' Crimes Ripple Effect movie explains the situation, but it takes more than a few paragraphs/minutes. A short answer for this question might not be very thorough. A historical study is in order.

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13. 77

    American_Choicesposted 12 years ago

    We, globally - all of us, have overspent.
    
    We, here in the United States created credit but have not effectively learned to manage credit terms - banks and government.
    
    The biggest secret in finance is the explosive power of interest. Bankers are wealthiest profession in the world.
    
    As a family we can manage our finances and not have our finances manage us -if we understand the "explosive power of interest".

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14. 60

    TMMasonposted 12 years ago

    The average country owes billions... America owes trillions.
    
    And I do not mean 16 trillion. Americas total national debt is 55 trillion dallars.
    
    We are so screwed, and none of them will tell you the truth about it.
    
    Not a good thing.
    
    What is the fault of it.
    
    Semi-Socialist policies that drain monies and do not replenish the funds in any way. Especially now that the payroll tax is been ceased.

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