The real effects of debt

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The real effects of debt

Postby Doc » Sat Apr 20, 2013 7:58 pm

http://www.bis.org/publ/othp16.pdf

Cecchetti, Mohanty and Zampolli
The real effects of debt
The real effects of debt
Stephen G Cecchetti, M S Mohanty and Fabrizio Zampolli
*
September 2011
Abstract
At moderate levels, debt improves welfare and enhances growth. But high levels can be
damaging. When does debt go from good to bad? We address this question using a new
dataset that includes the level of government, non-financial corporate and household debt in
18 OECD countries from 1980 to 2010. Our results support the view that, beyond a certain
level, debt is a drag on growth. For government debt, the threshold is around 85% of GDP.
The immediate implication is that countries with high debt must act quickly and decisively to
address their fiscal problems. The longer-term lesson is that, to build the fiscal buffer
required to address extraordinary events, gov
ernments should keep debt well below the
estimated thresholds. Our examination of other types of debt yields similar conclusions.
When corporate debt goes beyond 90% of GDP, it becomes a drag on growth. And for
household debt, we report a threshold around 85% of GDP, although the impact is very
imprecisely estimated.
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Re: The real effects of debt

Postby Endovelico » Sun Apr 21, 2013 1:58 am

I have a different rule of the thumb: debt is fine as long as its servicing does not exceed the debtor's saving threshold.
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Re: The real effects of debt

Postby noddy » Mon Apr 22, 2013 2:51 am

Endovelico wrote:I have a different rule of the thumb: debt is fine as long as its servicing does not exceed the debtor's saving threshold.


kind of meaningless in this chaotic world of constant technology improvements and new suppliers which destroy traditional sources of income overnight... every one of the broke countries claimed it was under control until an external shock changed the game on them.

the real problem of debt is the crap they are playing to avoid the default and rebuild stage - the arguments in europe between left/right are about different ways to prop up the existing mess... at this stage its only the loons on the fringes of left/right that want a proper reset.
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Re: The real effects of debt

Postby noddy » Mon Apr 22, 2013 2:54 am

the real effect of debt without default is slavery.
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Re: The real effects of debt

Postby Doc » Tue Apr 23, 2013 8:22 pm

~~~~~
Last edited by Doc on Tue Apr 23, 2013 8:25 pm, edited 1 time in total.
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Re: The real effects of debt

Postby Doc » Tue Apr 23, 2013 8:24 pm

noddy wrote:the real effect of debt without default is slavery.


Freedom is just another word for nothing left to lose.

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Re: The real effects of debt

Postby noddy » Wed Apr 24, 2013 2:02 am

thats a cute baby boomer sentimentality but its mostly a daft extreme absurdity.

somewhere in between having it all and having nothing is having a roof over your head and decent food and the ability to earn a bit extra for a bit more - and we dont need debt slavery for achieving that.
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Re: The real effects of debt

Postby Simple Minded » Thu Apr 25, 2013 11:42 am

noddy wrote:thats a cute baby boomer sentimentality but its mostly a daft extreme absurdity.

.................


Hey bro how bout showing a little more sensitivity..... self-deluded, rapidly fading memories of how we acheived cultural enlightenment.... and how wonderful we were back in the 60's...... is all some of us aging hippies have to cling to.........

If you don't burst my delusions, I'll try not to burst yours...... ;)

.... my bloods so mad, feels like co-agulating....... :)
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Re: The real effects of debt

Postby noddy » Fri Apr 26, 2013 2:17 am

Simple Minded wrote:
noddy wrote:thats a cute baby boomer sentimentality but its mostly a daft extreme absurdity.

.................


Hey bro how bout showing a little more sensitivity..... self-deluded, rapidly fading memories of how we acheived cultural enlightenment.... and how wonderful we were back in the 60's...... is all some of us aging hippies have to cling to.........

If you don't burst my delusions, I'll try not to burst yours...... ;)

.... my bloods so mad, feels like co-agulating....... :)


dont take away my delusions, they are all i have left!

im certainly dont think boomers have got and more or less delusions than the rest of us but they most certainly do have a part to play in our current economic mess and many of their symbols only make sense against the 50's and are getting a bit hollow now.
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Re: The real effects of debt

Postby Simple Minded » Fri Apr 26, 2013 2:49 am

noddy wrote:dont take away my delusions, they are all i have left!


fair nuff...... back when we was cool, one of my homeboys had a button that said "Don't f**k with my reality!"

Talk bout sticking to dah man!!!!!

People hate it when you f**k with their reality........ :D



noddy wrote:im certainly dont think boomers have got and more or less delusions than the rest of us but they most certainly do have a part to play in our current economic mess and many of their symbols only make sense against the 50's and are getting a bit hollow now.


yeah, but I thought this site was all about blaming more specific groups. them boomers are all too human, but which ones are the worst?

The whites, blacks, christians, muslims, euros, merikans, the center-right lefties, the left-center righties?

personally, I blame the japanese for not converting us all in the 80's......... ;)

long as you don't trust anyone over 30 either, I guess we are still cool..... :)
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Re: The real effects of debt

Postby noddy » Fri Apr 26, 2013 2:54 am

the only thing im certain of is that their will be plenty of blame to go around.
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Re: The real effects of debt

Postby Parodite » Fri Apr 26, 2013 8:54 am

Don't think the problem is debt, but how big the units are that can go bankrupt. Usually monopolies that go bankrupt are very destructive. Smaller units and diversity tend to give a system stability. Little to do with ethics.
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Re: The real effects of debt

Postby Simple Minded » Fri Apr 26, 2013 11:15 am

noddy wrote:the only thing im certain of is that their will be plenty of blame to go around.


absolutely! As long as opinions can vary, which they always will, blame will be plentiful.

We humans are very capable of imagining systems or groups that are better than what we are willing to create.

YMix's signature is an excellent example. To some, more humanity is the solution, to others, humanity itself is the cause of problems, to others what choice do we have?

Makes life interesting, amusing, tragic, rewarding, humorous....

cheers mate
Last edited by Simple Minded on Fri Apr 26, 2013 11:37 am, edited 1 time in total.
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Re: The real effects of debt

Postby Simple Minded » Fri Apr 26, 2013 11:18 am

Parodite wrote:Don't think the problem is debt, but how big the units are that can go bankrupt. Usually monopolies that go bankrupt are very destructive. Smaller units and diversity tend to give a system stability. Little to do with ethics.


true enough. Creative destruction is both always in flux and constantly self-correcting.

Too bad the would be masters of the universe/creators of utopia see it as chaos...... that and people hate reaping what they have sown....
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Re: The real effects of debt

Postby Parodite » Fri Apr 26, 2013 4:03 pm

Simple Minded wrote:
Parodite wrote:Don't think the problem is debt, but how big the units are that can go bankrupt. Usually monopolies that go bankrupt are very destructive. Smaller units and diversity tend to give a system stability. Little to do with ethics.


true enough. Creative destruction is both always in flux and constantly self-correcting. Too bad the would be masters of the universe/creators of utopia see it as chaos...... that and people hate reaping what they have sown....


Indeed.

Interesting question to me though is if not the financial industry by "deregulating" itself the way it did (with the help of politics) in fact destroyed diversity, healthy flux and small-enough-to-fail competition.

Consider a tropical rain forest that is already stable for millions of years. It is totally unregulated in terms of human intervention. It is however entirely regulated by the system as a whole. All species behave within the parameters and limitations set by their environment where co-existence and competition red in tooth and claw are but two sides of the same coin. As long as no species is "too successful", take over the system, destroy it and because of that die in the end as well, that particular rain forest remains stable.

The "deregulators" that wanted to free the economy from the limitations set by governments and regulations were in fact not that much interested in a healthy rain forest. They just wanted to get bigger and bigger, became "too successful" and too big to fail. A casino in the middle of the forest where you can engage in speculative banking while enslaving all species into a debt frenzy. In this casino you can now even bet on which species will get extinct tomorrow, or even better find some henchmen in politics or business that have a vested interest in this casino and then bet-kill-cash!

These types of "deregulators" from the oligarchy simply are the new commies.They sell you a mantra of freedom so they can enslave you. Don't think they are either democrat or republican by the way. :P That discussion is just another decoy and cover up.
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Re: The real effects of debt

Postby Doc » Fri Apr 26, 2013 4:43 pm

Endovelico wrote:I have a different rule of the thumb: debt is fine as long as its servicing does not exceed the debtor's saving threshold.



Here is what I go by
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Re: The real effects of debt

Postby Simple Minded » Sat Apr 27, 2013 1:38 pm

Parodite wrote:
Simple Minded wrote:
Parodite wrote:Don't think the problem is debt, but how big the units are that can go bankrupt. Usually monopolies that go bankrupt are very destructive. Smaller units and diversity tend to give a system stability. Little to do with ethics.


true enough. Creative destruction is both always in flux and constantly self-correcting. Too bad the would be masters of the universe/creators of utopia see it as chaos...... that and people hate reaping what they have sown....


Indeed.

Interesting question to me though is if not the financial industry by "deregulating" itself the way it did (with the help of politics) in fact destroyed diversity, healthy flux and small-enough-to-fail competition.

Consider a tropical rain forest that is already stable for millions of years. It is totally unregulated in terms of human intervention. It is however entirely regulated by the system as a whole. All species behave within the parameters and limitations set by their environment where co-existence and competition red in tooth and claw are but two sides of the same coin. As long as no species is "too successful", take over the system, destroy it and because of that die in the end as well, that particular rain forest remains stable.

The "deregulators" that wanted to free the economy from the limitations set by governments and regulations were in fact not that much interested in a healthy rain forest. They just wanted to get bigger and bigger, became "too successful" and too big to fail. A casino in the middle of the forest where you can engage in speculative banking while enslaving all species into a debt frenzy. In this casino you can now even bet on which species will get extinct tomorrow, or even better find some henchmen in politics or business that have a vested interest in this casino and then bet-kill-cash!

These types of "deregulators" from the oligarchy simply are the new commies.They sell you a mantra of freedom so they can enslave you. Don't think they are either democrat or republican by the way. :P That discussion is just another decoy and cover up.


Well said, the desire to use the politcal process to gain advantage over others.....

The difficulty with evaluating forests it that the trees get in the way and muddy up the overall assessment! "Societies" are forests, individuals are trees. How does one get the individual trees to shut the hell up and take one for the team, when the result "may or may not" be good for the forest, but obviously disadvantagous for them and their "families" (blood relatives, racial, national, political, regional, religious, ideological, etc)?

Also flora and fauna don't seem to suffer from McThinking, ie: are they impatient with the progress of evolution? Do the inefficient species whose behavior leads to their destiny of extinction hire lawyers to lobby for protection from the forces of Mother Nature? Does Mother nature show political favortism dependent upon bribes? Is the end result, or even the process itself satisfying to the participents?

The ultimate problem the social engineers have yet to overcome, or even seem to acknowledge, it that bailouts or safety nets (motivated by either good intentions or bad, and we all those those who think like me are good, and the other guys are bad....) either remove or numb the self-correcting, evolving forces of nature, ie: pain of stupidity, potential pain that results from foolish risk taking, satisfaction of accomplishment/achievement/improvement, declining rewards of unproductive, inefficient behavior, etc.

Everybody wants better, but try to get everybody to agree on a definition of better, or a time frame of process improvement, or to acknowledge the perverse incentives of their plans or to admit the hidden costs of the process......

Hard for me to discern, honest politicians corrupted by evil businessmen, or honest businessmen corrupted by evil politicians...... which is the chicken or the egg? Free markets evolve the fastest in response to change, but to expect those who bet on the wrong horse, and reap what they have sown, to be happy about the bets they placed is unrealistic.

Always seems to come back to the regulators are just as human as those flawed creatures who "require" regulation. Labels of political parties, race, nationality, religion, etc are irrelevant.
Last edited by Simple Minded on Sat Apr 27, 2013 8:34 pm, edited 1 time in total.
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Re: The real effects of debt

Postby YMix » Sat Apr 27, 2013 3:38 pm

Parodite wrote:The "deregulators" that wanted to free the economy from the limitations set by governments and regulations were in fact not that much interested in a healthy rain forest. They just wanted to get bigger and bigger, became "too successful" and too big to fail. A casino in the middle of the forest where you can engage in speculative banking while enslaving all species into a debt frenzy. In this casino you can now even bet on which species will get extinct tomorrow, or even better find some henchmen in politics or business that have a vested interest in this casino and then bet-kill-cash!


I was just reading an article by Michael Hudson that said pretty much the same thing:

Privatization’s ultimate beneficiary was the City of London, the square mile of financial institutions that obtained the quickest benefits and turned the program into something rather unanticipated by Mrs. Thatcher and Mr. Lawson. The rentiers for their part seem to have perceived the Thatchers and Friedmans as pawns, an advance infantry of promoters wrapping austerity economics in populist garb – policies that otherwise would have been difficult (if not impossible) to sell to voters.

The irony was that most of Mrs. Thatcher’s friends and heroes were businessmen – manufacturers who made or dealt in products, not financial manipulators. But inevitably, her privatization policy led her to rely on the City financiers. Her autobiography and that of Nigel Lawson reflect their growing annoyance and even fury with the way in which the bank underwriters chosen to advise the government turned privatization into a vehicle to grow rich very fast. Mr. Lawson is scathing as to the the City institutions’ lack of competence, exceeded only by their greed (always pointing out how much more venal their global partners were, to be sure). But once the government had chosen these institutions as its partner, the die was cast. It was unable to find a way to control the underwriters, and feared to disengage.

To the investment bankers placed in charge of underwriting over £65 billion (over $105 billion) of enterprises, at fees of over three billion pounds during 1979-97, and probably at least as much in short-term trading gains, the monetarist politicians appeared out of Britain’s ideological woodwork as well-meaning fools, political front-persons presenting privatization – and hence, City underwriting fortunes – as “popular capitalism.” As far as the City financiers were concerned, their disdain for the City enabled them all the better to act as political spear-carriers for a policy that turned control of the British economy over to themselves. What Margaret Thatcher provided was a populist and even idealistic legitimization for their gains.



These types of "deregulators" from the oligarchy simply are the new commies.They sell you a mantra of freedom so they can enslave you. Don't think they are either democrat or republican by the way. :P That discussion is just another decoy and cover up.


Of course.
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Write off...

Postby Endovelico » Mon Feb 02, 2015 2:04 pm

Croatia writes off debts for poorest citizens
11:16AM GMT 01 Feb 2015

Thousands of Croats will see their debts written-off on Monday as part of an attempt to boost the economy by helping households to regain access to basic facilities including bank accounts.

The scheme, which has been dubbed "fresh start", will see the debts of around 60,000 citizens erased by banks, telecoms and utilities operators as part of a deal with the government.

Around 2.1bn kuna (£20m) worth of bad debts are expected to be written off by creditors who have signed up to the scheme. None will be refunded for their losses.

Qualifying households must have debts lower than 35,000 kuna (£3,500), and their monthly income should not be higher than 1,250 kuna. Croats who own property or have any savings will not benefit from the deal.

"We assess that this measure will be applicable to some 60,000 citizens," said Milanka Opacic, Croatia's deputy prime minister. "Thus they will be given a chance for a new start without a burden of debt."

It is estimated that the program will give 20pc of the 317,000 Croatians whose accounts were frozen in July last year due to bad debts access to their accounts again.

"This is the first time that any [Croatian] government tries to solve this difficult problem and we are proud of it," Prime Minister Zoran Milanovic told a cabinet session.

The deal will be noted in Greece, where the new Syriza government is trying to renegotiate the terms of its multi billion euro bail-out.

http://www.telegraph.co.uk/finance/economics/11382576/Croatia-writes-off-debts-for-poorest-citizens.html


Good! Now just extend the measure to everybody and we will have licked the problem...
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Re: The real effects of debt

Postby Miss_Faucie_Fishtits » Mon Feb 16, 2015 3:29 am

Doc wrote:
Endovelico wrote:I have a different rule of the thumb: debt is fine as long as its servicing does not exceed the debtor's saving threshold.



Here is what I go by


and the business definition to that, is no bid......'>.......
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