The Truth about the Economy
By Karen Fiala
This morning, and in fact every morning for the past few weeks, one of the first news stories has been the state of the economy.
It seems that the stock market is falling and many people are worried about this.
I, on the other hand, actually see this as a good thing.
So, how can I be so optimistic when everyone else is spreading doom and gloom?
First, let me tell you about another news story which I heard today. The headlines say “Unemployment levels fall. More people have jobs in Australia”.
At first, you would think this was a very good thing - that is, until you understand that the Australian Government has been systematically harassing and hounding people off the ‘official’ unemployment programs such as the dole. Here’s an example:
I have a friend who is a single female who’s nearly 60 years old. Instead of understanding her situation (after all, who is realistically going to hire this lady?) the ‘system’ has been reworked so she is going to be forced to do 15 hours a week of either part time work or voluntary work. The lady tells me that she can scarcely afford to live on the unemployment payment and to use her car to get to voluntary work would put her over the edge, financially. As for part-time work, don’t you think she would snap up the offer, if it was available? Of course she would. This lady has kept on doing courses and upgrading her skills, yet no-one will employ her. She has applied for many jobs but the competition is fierce and 100 people, or more, are vying for the same job.
Anyhow, as I was saying, you would think that a low unemployment figure would be good news. So many more people with jobs but the reality is, most of those jobs are either casual (with no long-term security) and they’re part time (which hardly feeds a household of one, let alone a family).
You would also think that the stock market would react favorably to a low unemployment figure but no, those greedy, selfish corporate types see this as ‘more people with disposable income which could lead to more spending. This means the government will say ‘people are spending too much’ and they will raise interest rates in order to stop the spending spree. Since most people have mortgages and credit card debt, when the interest rates are increased yet again, this leaves us regular folks with even less available money.
So, the whole thing is a vicious cycle.
It’s OK for those who are wealthy. They don’t feel a thing. In fact, they have extra money to invest, so the fact that interest rates have gone up makes them even richer. They’re laughing all the way to the bank - at the expense of the rest of us. Of course they are the ‘elite’ of the planet and their friends are in the governments or corporations of the world. We, on the other hand, are the ‘other’ six and a half billion people who are living virtually on the poverty line – or below!
So, back to my original question, “How can we be optimistic when the stock markets are falling?”
The answer is simple. All the large corporations and multi-nationals, and also some smaller ones, are trading their shares on the stock markets of the world. These are the same guys who tell us what to eat, drink, wear, watch on TV, what movies we’ll see, what we should read and what information we can readily access. They’re the ones who offer us the low paying jobs and expect us to be grateful!
These corporate types manipulated our world, and our governments, till we were all their puppets – thinking and acting the way they want us to.
This is WRONG – so very wrong!
If these stock markets begin to fall and never recover we are led to believe that there will be a worldwide economic recession or depression. Well I’ve got news for you, we’ve been in one since the 1980’s or 90s. For any of us who have had to live from ‘hand to mouth’ with barely enough money to survive, it is already that way. For anyone who has had no work or very little hours or has to work two or three jobs a day – you’re already in a depression.
If you get paid between 8 and 10 dollars per hour, you are living on a subsistence wage.
If you are in debt because the wage doesn’t cover your expenses – you are in your own economic hell.
So, that’s why I believe that the crash of the stock market would be a fantastic thing.
It would end world dominance of our financial markets. It would see the rapid decline of the corporate capitalist system and it could herald a completely new way of living – one which would be fair and just and equitable for all – and not just a privileged few.
How Do All The Different Nations Borrow Money
By Bill Darke
Just like people, nations can borrow money and just like us they also must repay their debts along with relevant interest!
But why can’t all of the countries (nations) borrow money? Simply the same reason why individuals can’t - their expenses are greater than their income in many cases. To cross the gap some countris try printing extra currency, raise debt and cut expenditure. Often a country combines the three to tackle its financials. This is not good practise however.
There are roughly three ways that a country can borrow money; one is by issuing bonds internally to its population, two is taking a loan from international entities like the World Bank or the Asian Development Bank.. and third is by undertaking loans from other countries.
Many governments issue Treasury Bonds and other Debt related Instruments which essentially means that the government is borrowing on behalf of the country or from their citizens. While most of these bonds are issued to cover the expenses of the government in some cases they are issued with some specific purpose like building infrastructure etc. Normally the bonds issued by governments are considered to be the safest way to invest money and so the interest rate is also the lowest. These bonds are bought and sold in the open market and their yields also fluctuate or vary.
The 2nd source of borrowing for countries is most often from institutions like the International Monetary Fund or the Asian Development Bank as mentioned earlier. Here, each country has to specify what the purpose of the funds are going to be and the inspectors from these institutions then visit the country to appraise the project. For example if a particular country wants to borrow money for building a Dam they will approach the international fund. The fund will then send their inspectors to appraise the project, see the viability and the benefits that are going to accrue to the people as a result of the project. They then determine the amount of the loan, tenure and the interest rate. Normally such loans are subsidized as they are for good causes.
This type of loan is not given out in a lump sum and money is released at different stages of the project and the repayment also normally starts at the end of a speciified time period - say 5 years or so. This provision is kept because the country is seeking the loan precisely because they do not have funds right away and the project being undertaken is for the benefit of the people. However this does not mean that interest does not accrue on that amount for that time period. Interest keeps on accruing which has to be paid later.
A 3rd way in which nations borrow money is by borrowing it from other nations. Normally, this is also carried out with some specific purpose in mind and is reasonably well subsidized which means that the interest rates are lower than normal. Nations do this to develop strategic ties with other nations generally to gain some form of economic or military advantage. For instance the US may decide to lend to Pakistan to fight terrorism or India may lend to Bangladesh to tackle floods because it’s a neighbor. More than simply financial aid, when nations lend to each other it’s very often a signal of goodwill and political diplomacy. In political diplomacy there is always give and take and unlike the case of individuals, where if one borrows money one is expected to repay, here the beneficiary country can repay in other ways as well. While all this is never clearly stated the cases of many debts being written off after a period of time without relationships getting strained is enough evidence to indicate that the lending country did not really expect to get it back. Other favors can be given in international forums like the WTO for economic reasons or for military reasons by providing a country’s airspace and land for having a military base.
Comments are off for this post Digg this