When the government can not pay

Italy, Greece and others are not paying their dues. They have borrowed lots of money and can not afford  the loan payments. Somebody has to give them money so they can continue. Or shall the lenders take the losses or should the borrowers be allowed to borrow more money so that the lenders can get off scot free? Tax increases, budget cuts must follow thereafter.

Minnesota State is closing down parts of their activity – their coffers are empty. Employees are sent away, payments are stopped.

The question of the US debt ceiling is not solved, there is a fierce political battle raging in Washington, Obama has now put a time limit – 36 hours – on finding a solution. The solution have to include budget cuts – even the holy cow of military expenses may be affected – tax increases – even for the rich. So excitement is building – who will fare the worst, suffer the most when the budget is cut. It is obvious what a country spending half of its income on the military should do – is it not?

The big question of a possible default by a state, even the once superior US is what it is about. A default is deemed a catastrophe that could involve the rest of us in a major crisis, pulling everybody into a slide – “they” say. This is faulty and soft thinking – all lenders should know their risk and face the consequences when things go wrong.

How can this situation come about – are we not sensible people after all? Where have all the money gone? Who will benefit from a sitation like this? The money has not just disappeared.

It is obvious that the economic system of the world is a proper scandal run by people who do not know how to run it, or without the power to do what must be done – tightening when tightening is needed.

New principles are needed. The present ways are not viable. Who is really in control of the economic system – the states or the big financial institutions?

The principle of default by states must be accepted, the practice of default by states must start, the lenders must know their risk, they must pay when they go wrong. A new dawn for lenders is coming.

Iceland did it  and others must do it too.

And the politicians – shame on them – they went wrong, or did not understand what they were doing. New and sensible politicians – our representatives – all around please. And we should all seek deeper involvement all along, continously question what is being done.

Lots of pain is in the air for many.

An understanding by us all of what we really can afford and what risk there is, is at the heart of the matter. Putting your trust in a state that is not run by economically sensible principles is a question that should be deeply considered, for individuals to become dependent upon a such a state is a high risk undertaking.

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