Once more I would like to analyze the current situation of the financial markets and try to understand how the current situation will develop in the upcoming months.
My competence on economic subjects is close to zero, but I think that the situation is getting out of control. When I see graphs like the US debt history, I guess that there is something not ok. How will they pay their debts when there is no money coming in?
Let’s suppose I have a store and my business is going fine and I earn 100 and for my business to run I have a loan I have to pay back, let’s say 10. One day I want to make my store beautiful and I increase my loan to 30, but my income is decreasing to 70. Then I want to have some top models selling in my store, help the neighbors, plant a tree, etc. I need more money so I increase my loan and 100. My income at the same time has decreased to 30. My employees are happy, rich and successful! My store is beautiful!
But there is a problem… I cannot afford the expenses I have with the income I have. So what do I do then… I have some savings and I use those. At the same time I get more loan to finance my expenses.
I am in a terrible situation now. I have no money, I have lots of debts, I have no good forecast to make money enough to pay back all those debts but the store is beautiful. Can my store after a long negative trend catch up so fast and reach the expenses? Is it worth to keep the business running in this situation? I could continue like this, but where am I going? My store anyway could not be so nice anymore because there’s no more enthusiasm, only worries over worries. My employees are aware of the financial situation of my store, so they are also worried.
In a normal situation, like the store case, you give up, you loose everything but you have a chance to try another business one day. Or you can find a job. But when Nations are involved, the situation is more complicated. Do you ask your people to leave the Country and search for a life somewhere else? Or do you keep on going raising the debt in order to keep normal people’s life as most as possible as it is? In a Country scenario I would probably choose this last option… but with what perspectives?