The Scale Of Debt Crisis

• What Debt Crisis Really Means:

A debt crisis deals with countries and their ability to repay borrowed funds. Therefore, it deals with national economies, international loans and national budgeting. The definitions of "debt crisis" have varied over time, with major institutions such as Standard and Poor's or the International Monetary Fund (IMF) offering their own views on the matter. The most basic definition that all agree on is that a debt crisis is when a national government cannot pay the debt it owes and seeks, as a result, some form of assistance.

• Beginning of Debt Crisis:

When the world economy went into recession in the 1970s and 1980s when the oil prices sky rocketed,it created a breaking point for most of the countries in the world.Developing countries also found themselves in such conditions.

As the interest rates increased in the US in 1979 the debt payments too increased.It was hard for the developing countries to payback their debt.Then news spread that the Latin Americans would not be able to payback their loans.This was the beginning of Debt Crisis.

• 10 Most Affected Countries in the World:

1. America- 9 August 2011
2. European Union-30 June 2010
3. France-30 June 2010
4. Germany-30 June 2010
5. Netherlands- 30 June 2010
6. Japan- 30 September 2010
7. Ireland- 20 August 2010
8. Italy- 30 June 2010
9. Spain- 30 June 2010
10. Lunemberg- 30 June 2010

• Affects of Debt Crisis:

world debt has been long recognized as a major obstacle to human development. Many other problems arise because of enormous debt.

Effects:

1. Foreign banks are major bond holders in the world,so when international debt crisis begins banks often lose large sums of money.This has a negative effect on economy.
2. The Government cuts its policies.
3. People become unemployed.
4. Those who have work, are made to spend more time than before.
5. Government have very high rates on future bonds.

• How to Put an End to THIS:

Here's my idea;

Each year federal expenditures should be limited to the previous years. Actual tax revenue,in other words,in any given years the federal government is never spending more that it brought in the previous year. Any excess revenue each year would then be allocated to reduce national debt.