Economy: What would happen if.....

[Arti]

Economics is a subject which I find hard to get my head around, so I would appreciate simply-phrased answers.

What would happen if The USA and all of the EC countries decided that they were not going to pay their debts?

[Postdog]

Balliffs

[sandyRoe]

According to this it looks as though the USA has decided to just let its debt build.
http://www.brillig.com/debt_clock/

[starone]

What I find mysterious about it is if the USA are so rich to whom do they owe the money? And why the necessity of borrowing it in the first place? I think I could understand it a bit more if the whole of the rest of the world owed money to America. Oh well, there you go - it seems to be a complete mess and thank goodness I am not the one who has to sort it out. Although looks as if I am one of the ones who has to suffer for it.

[emmie]

it quite long, but worth having a read even the first few paragraphs

http://useconomy.abou...lpolicy/p/US_Debt.htm

[SIRandyraven]

If the such as the USA , UK , Italy etc decided to default on it's debts , then it would effect those it owes money to.
Like me and you , if you owe your Brother ,Sister or mate money and then don't pay them back , they suffer the hit.
Now who leant money to these country ?
Other nations , banks and financial institutions.
Money is borrowed in the forms of bonds.
ie Pension funds buy bonds and get interest paid on the bonds and when the bond matures , they get their money back.
In this case pension funds would crash ....insurance firms buy bonds via your endowment money ...so these would also fail.
Banks would take a hit and maybe crash ...
It would also make it hard for these states to borrow money in the future , unless they pay a higher interest rate , due to the higher risk of lending to them.
Simple solution is to spend only what you earn.
Reduce spending ...Earn more money ...
i.e. Less government spending ....higher tax intake via growth

In my view the worlds economy is on the brink and will have a huge crash in the next 12 months.
If you think times are hard in this country now ...you aint seen nowt yet :-)

[cazzz1975]

I think arti was hoping that the debt would be written off ;)

[SIRandyraven]

The Western world is used to a 5 star life style compared with Asia.
We now have the income for a 3 star life style ....but continue to borrow money to maintain a 5 star life style.

Having worked with people in Thailand and Argentina Saturday ....working remotely on IT systems for a 1/3rd of a UK or US salary.
They all spoke perfect English, were intelligent and motivated.
Why would anyone want to employ someone in the UK on three times the cost ?

We live in a Global village

[Arti]

Thanks all. It makes me feel a little better in my ignorance that others seem comparably ignorant.