Friday, February 1, 2013
Who will bailout the supposedly rich nations?
We keep on hearing that the richer nations and financial institutions keep on bailing poor and not so poor nations in order to avoid the collapse of the world economy but has anybody realized that what would have if in the worst case scenario, these same nations go into economic crisis, who would then bail them out. This is the nightmare or doomsday scenario, the world is already under huge debt and in this case it will be the total collapse of the whole economic system of the world. The so called world richest economies are also the world's most highly indebted ones and I believe they are in no position to pay their debts as witnessed by the rollover of the debt by issuing new debt to cover only the interest of the principal owed. I don’t seem to be the alarmist but the U.S. and Japan which are considered the richest have the most debt and are in no shape to pay their debt unless they inflate themselves out of it which will create its own problems. And the world top financial institutions like the IMF and the World bank are already dependent on the U.S. and Japan to pay for their operating budget and funding, so who else is going to bail them out. I am afraid no one and this is what my point is that there is no one who will ultimately bail these nations out once the confidence of the investors in their ability of the governments to pay back what they owe is eroded or destroyed.