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pdrgois91
Topic Author
Posts: 7
Joined: 10 Nov 2016 01:30
Location: Portugal

What should be the prudential limits on national private and public debts, and how can these be implemented and policed?

12 Nov 2016 00:04

It is important to have access to current national public debt figures, so I share the following link: http://www.pordata.pt/Europa/Administra%C3%A7%C3%B5es+P%C3%BAblicas+d%C3%ADvida+bruta+em+percentagem+do+PIB-1763

Although I am not an economist, I believe that three countries will inspire greater attention, Greece, Italy and Portugal. The gross debt, in percentage terms when compared to the GDP, is chaotic in Greece, but also scary in the other two countries. It might not be appropriate to set a universal prudential limit but analyze each case in specific. In the Greek case, for example, I believe that a reduction of national public debt to 140% (which would represent a global reduction of more than 20% in the total percentage) would be a good start. In the Italian and in the Portuguese case, an initial reduction of public debt to 110% of GDP (which would represent a global reduction of something about 15% in the total percentage).

But we know of the difficulties to achieve these results, so I did some calculations for the case of Portugal, where I live. So, if Portugal can generate a GDP growth of 2% in the medium to long term - Which represents twice the average in the last 20 years (which is close to 1.05%) -, With a primary surplus of 1% (while the average in the last 20 years was - 4.95%, it means, a deficit of almost 5%) and a public debt interest rate in 3,3% (The average in the last 20 years was 5.5%), It would take about 20 years before Portugal could achieve that target (public debt of 110% GDP).

Perhaps someone with better knowledge in economics could explain better about how can these be implemented and policed.

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Primeiramente, é importante que tenhamos acesso aos números atuais acerca das dívidas públicas nacionais, então eu compartilho este link:
http://www.pordata.pt/Europa/Administra%C3%A7%C3%B5es+P%C3%BAblicas+d%C3%ADvida+bruta+em+percentagem+do+PIB-1763

Apesar de não ser economista, acredito que estes três países inspiram uma maior atenção: Grécia, Itália e Portugal. A dívida bruta, nestes países, em termos percentuais, quando comparados ao PIB é caótico na Grécia mas também assustador nos outros dois países. Acredito que não seja apropriado indicar um limite prudencial global mas analisar cada caso separadamente. Na Grécia, por exemplo, eu acredito que uma redução da dívida pública para 140% (o que representaria uma redução global de mais de 20% no percentual total) seria um grande começo. Nos casos Italiano e Português, uma redução inicial da dívida pública para 110% do PIB (o que representaria uma queda de aproximadamente 15% no percentual total).

Sei que é difícil de alcançar esses resultados, então fiz alguns cálculos para o caso de Portugal, onde eu vivo. Se Portugal conseguir gerar um crescimento no PIB de 2% à medio-longo prazo - o que representa o dobro da média dos últimos 20 anos (que esteve próximo de 1,05%) - com um superávit primário de 1% (enquanto a média nos últimos 20 anos foi - 4,95%, ou seja, um déficit de 4,95%) e uma taxa de juros da dívida pública de 3,3% (enquanto a média nos últimos 20 anos foi de 5,5%), levaria algo como 20 anos para que Portugal conseguisse atingir este objetivo (uma dívida pública que represente 110% do PIB).

Talvez alguém com melhores conhecimentos económicos possa explicar melhor sobre como esses limites podem ser implementados e controlados.
 
simoncov
Posts: 10
Joined: 10 Nov 2016 10:55
Location: Cardiff

Re: What should be the prudential limits on national private and public debts, and how can these be implemented and poli

12 Nov 2016 08:26

The focus needs to be on private sector debt not public sector debt because private sector debt is a true indicator of the health of economies while public sector debt is just a consequence of conflict between monetary and fiscal policy. For Europe the private sector debt statistics can be seen here:

http://stats.oecd.org/index.aspx?queryid=34814

Within the Eurozone the issue is not public sector debt but structural imbalances between countries and capital flows that fail to differentiate risks. Yanis has made proposals to restructure the Eurozone to address this:

https://yanisvaroufakis.eu/euro-crisis/modest-proposal/
 
phiandre
Posts: 6
Joined: 24 Apr 2016 21:41

Re: What should be the prudential limits on national private and public debts, and how can these be implemented and poli

30 Nov 2016 10:29

An interesting overview of "What European Banks scare people?"

http://www.alterecoplus.fr/banques-euro ... r/00012671

Focus on the risks and advise for more/better rules. As the ECB (European Central Bank) is independent (have a mission, but no democratic representation and mandate), rules only can be designed by politics at european level and give to ECB to control the banks.

It is in French, but with Bing or Google translation, you can have a rather good access to it in English

Philippe André
 
simoncov
Posts: 10
Joined: 10 Nov 2016 10:55
Location: Cardiff

Re: What should be the prudential limits on national private and public debts, and how can these be implemented and poli

30 Nov 2016 14:02

https://translate.google.co.uk/translate?sl=auto&tl=en&js=y&prev=_t&hl=en&ie=UTF-8&u=http%3A%2F%2Fwww.alterecoplus.fr%2Fbanques-europeennes-peur%2F00012671&edit-text=&act=url

Thanks, that alterecoplus article is definitely relevant to what's going on at the moment. We also discussed separating investment banking from day-to-day banking in another thread:

viewtopic.php?f=39&t=4902

Unfortunately the opportunity to reform investment banking was missed after the 2008 Great Financial Crisis, which means that the structural flaws in the global financial system remain broadly the same as in 2006. As we can see the efforts to recapitalise the banks have fallen mainly on the shoulders of the tax-payers. The problems of Deutscher Bank (and others) call into question fractional reserve banking, opaque derivatives, and rules regarding business ownership and bankruptcy.
 
phiandre
Posts: 6
Joined: 24 Apr 2016 21:41

Re: What should be the prudential limits on national private and public debts, and how can these be implemented and poli

30 Nov 2016 14:10

Agree.

there is also a topic about How bank can help "real" economy? for example, we can question the real add value of high frequency trading (in nanosecond) to finance entrepreneurs, innovation, industries and all economy sectors (not only private led but also social and solidarity economy (translation of the french "économie social et solidaire", which is a special sector in France with different corporate governance rules than mainstream private sector)

Philippe André
 
User avatar
Ralle002
Posts: 5
Joined: 29 Apr 2017 07:37

Re: What should be the prudential limits on national private and public debts, and how can these be implemented and poli

13 Feb 2018 18:41

National debts are also caused by the fact, that neighbor countries abdicate to charge their inland companies with taxes.

I think that the Euro-System has no chance to exist much longer.

The new monetary system should work different and must not be debt-based.

Then it is fact, that most countries are not able to pay their national debts back.

The reason is, that the money possession is unequal.
Debts can only be paid back if there is enough money in circulation.