Brace for Impact

Managing our national economy can be likened to managing a home.  While there may be complaints about the food, washing, maintenance, and other services, if the mortgage loan is not repaid, then the occupants will suffer the trauma of being forced out of their home, and their previous complaints would become entirely irrelevant.

We are being manipulated into making complains about government services the primary criteria for judging the performance of those managing our economy.  The primary measure of their performance is the risk to making those mortgage payments.  Complaints about services is an important secondary concern.  Of course, if we were not in debt, then the service complaints would become the primary concern.

Continuing with the home analogy, the bank (IMF) recommends that our debts not exceed 40% of our gross salaries (GDP).  They have now grown to over 135% of our gross salaries and we have received repeated warnings by the bank about our ability to repay the debt.  Concerned citizens have implored the current administration (DLP) to listen to better advice, but the DLP seems intent on only trusting their current advisors until the bitter end.

Many think that the solution is to go back to the previous administration (BLP).  However, they brought us from the safe debt of around 35% GDP to the unnecessary 90% GDP on the sorry excuse that low-interest loans were available.  It takes no special competence to negotiate a low-interest loan if you are within the safety of the responsible 40% GDP debt ceiling.

It should be noted that while the 2009 Moody’s downgrade occurred during the current DLP administration, Moody’s blamed the downgrade on the recklessness of the previous decade, which started when the BLP crossed the debt ceiling of 60% GDP, which the IMF recommended as the limit for advanced economies like Germany.  But we wanted to ‘punch above our weight’, and used the deficit financing option irresponsibly.

By the measure of risk to repaying our loan obligations, crossing the safety of the 40% GDP debt limit to over 90% GDP, and more than doubling the national debt from $4.3B to $9.2B, must rank the previous administration as our worst.  The current administration is behaving as if that is an enviable position to pursue.

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