Public vs. Private Debt
Although this chart raises questions about of why is it that Japan and the UK are not yet failed states (too much public and private debt) and shows that the US debt situation is relatively benign, it sends an additional message. What this chart seems to indicate is that, in most cases we do not have a “public” debt crisis but we do have a “private” debt crisis (e.g., Spain).
It is interesting to note that in Greece where it is arguable that the government spent too much money (not on so-called costly social programs but on economic development [infrastructure] programs) the German bankers demanded governmental austerity requiring slashing social programs, that were not responsible for much of the debt on the first place, in order to pay off mostly German bond holders. In Spain’s case where the problem is clearly not “public” expenditure but failures of the private banking system, caused in part by governmental negligence in adequately regulating them, the German bankers recently shoveled money to Spain to disburse to the private banks with no requirements that the banks clean up their act or that the government increase their oversight.
Why is it that Bankers believe that the discipline of the private market wherein private entities that bet wrong fail, applies only to the rest of us and not to them?
- STUDY: Financial Crises Always Come From Ballooning Private Debt (businessinsider.com)
- Public and private debt and the imbalances of global savings (acefinance.me)
- Economic Growth Idea: Forgive or Restructure Debt US Citizens Hold (theatlantic.com)
- Anthony Randazzo on How Private Debt Is Crippling the Economy (reason.com)
- Steve Clemons: Want Economic Growth? Forgive and Restructure Debt for American Working Families (huffingtonpost.com)
- Spanish rescue package will further bleed taxpayers (themoderatevoice.com)
- The Only Thing that Can Save Capitalism: Modern Debt Jubilee (slog.thestranger.com)
- Are U.S. Debt Levels Now Manageable? (ritholtz.com)