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Imf Expect Us Debt Per Capita To Exceed Gdp Per Capita This Year

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Here is something I've been musing on for a while about all this sovereign debt.

If owing only three times your income is ok for a domestic mortgage, why the big problem with beginning to owe only just a bit more than 1 x GDP for a nation?

Now of course, I can see all sorts of major problems for nations that should expect a GDP contraction gratis demographics, like Japan, Russia and Italy.

And not being in control of one's debt has all the usual problems .... but ...

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Here is something I've been musing on for a while about all this sovereign debt.

If owing only three times your income is ok for a domestic mortgage, why the big problem with beginning to owe only just a bit more than 1 x GDP for a nation?

Now of course, I can see all sorts of major problems for nations that should expect a GDP contraction gratis demographics, like Japan, Russia and Italy.

And not being in control of one's debt has all the usual problems .... but ...

Because:

A mortgage is an investment to aquire an asset in the hope of avoiding rent.

The repayments are financed by earnings.

A state (tends to) borrow to finance spending because it can't raise enough tax.

It might not be able to finance the repayments by earnings.

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Here is something I've been musing on for a while about all this sovereign debt.

If owing only three times your income is ok for a domestic mortgage, why the big problem with beginning to owe only just a bit more than 1 x GDP for a nation?

Now of course, I can see all sorts of major problems for nations that should expect a GDP contraction gratis demographics, like Japan, Russia and Italy.

And not being in control of one's debt has all the usual problems .... but ...

I recently read an interesting point made by Kyle Bass. You should compare debt to government income. In the case of the US, stage revenue is approximately 25% IIRC so that gives you a debt to income of 400%. That is a much more relevant and worrying figure.

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Here is something I've been musing on for a while about all this sovereign debt.

If owing only three times your income is ok for a domestic mortgage, why the big problem with beginning to owe only just a bit more than 1 x GDP for a nation?

Now of course, I can see all sorts of major problems for nations that should expect a GDP contraction gratis demographics, like Japan, Russia and Italy.

And not being in control of one's debt has all the usual problems .... but ...

With a mortgage there is an end date to the debt, with govt debt it's perpetually rolled over and at some point you will hit a debt spiral. Can't remember the exact source or details but the point of no return is seen around 100% of GDP.

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  • 284 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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