It is a problem all Western countries have. The big challenge and problem for democracies is that there are far more people ready to vote in politicians when they are being bribed with what they hope is other peoples money, through the tax system.
Unfortunately, they have reached the point where they can't tax people much further, as productive people then start finding more imaginative ways of avoiding paying it (Laffer curve). Somebody with an average lifestyle on an average wage at the moment is taxed just under 50% of their income, if they drive high mileages, smoke or drink a lot it is over 50%. Remember 38% of GDP is tax taken from the economy and their are an awful lot of people that pay no tax, so the rest that work are paying much more than this.
Then when they can't tax anymore they borrow.
So keeping the bribe going by borrowing lots of money, unfortunately once borrowing exceeds 100% of GDP it is not sustainable, with most Western economies approaching this level and some exceeding it. And you have to start to making savings just to pay the increasing interest as the loans grow (UK £8bn pre-2008 crash now £50bn, by 2015 it will be at least £60bn (2x the defense budget)).
So, they then plan growth strategies.
But, unfortunately economies aren't growing, most Western economies are currently in recession / depression contracting. So they lie to us by saying every year: This year will be tough with no growth, but next year will be better, and the year after that brilliant, #2008, #2009, #2010, #2011, #2012, #2013???.....
So they try to re-balance the economy through austerity.
About the maximum contraction you can have is about 1% per year, beyond that you have taken all of the growth out of the economy and you start a Greek, Portuguese, Spanish style economic death spiral. With the percentage of money spent in the public sector and all of the red tape spewing from Brussels, guarantees there will be none of that.
So they then use funny money tactics like having the printing presses running flat out and QE and other liquidity wheezes.
Which causes stagflation, which is where the UK currently is and will continue to be for along time. You can't solve a debt crisis with liquidity.
So by 2015 we will have had years of falling wages, high inflation and increasing public sector costs (public spending is set to rise every year to 2015, just a bit less quickly every year than under McRuin, with non-existent growth is meant to cover), Once is all comes to ahead, pulling more and more levers, will not stop us copying Greece, Spain, Italy, Portugal, Ireland, France, Belgium, Austria and the USA with our own economic death spiral.
Leaving the EU and dramatic cost cutting (like overseas aid, windmills etc) and massive supply side reforms to free business of unnecessary overheads, we might have just about been able to avoid the coming storm created by Gordon McRuin. But the two water melons (very wet with green politics on the outside and red within) in CamMoron and Clegg and an anti-business secretary in Wince Cable, there is no chance.
The IMF has never lost money until now as it role and remit was to bail out countries with negative balance of payment problems. The French have now changed that remit as Ireland has always and currently has a balance of payment surplus. So under Lagarde (Dens hairy arsed lover with her even hairier armpits and 'la amour' of this French elder lady aroma of stale garlic, urine and BO) expect to see some spectacular losses, that's why the American and Canadian will not put any further funds into the IMF to bailout the suicide currency zone Eurozone.
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Topic: World's greatest hypocrite (Read 3169 times)