I've been reading a rather interesting thread lately about personal debt default, of the student loan variety. I think most of you know which one I'm talking about. Some rather indignant opinions surfaced during the discussion, and that made me wonder: How do these people feel about government default?
Is it moral for a government to default on its debt? Do the citizens of spendthrift nations have a moral obligation to, through austerity, cut public spending (and benefits) and pay down their nation’s public debt?
A nation, after all, is just the sum total of its individual citizens.
Recently Greece defaulted on their debt and the creditors had to take a 50% haircut, i.e. investors (pension funds, banks, other sovereign nations) had 50% of their original investment written off as unrecoverable. Certainly the argument is that the Greeks were profligate and reckless with their borrowing; as I’m sure some will point out. But the Greek government spent all that money and increased the living standard of its citizens without an adequate understanding of the risks associated with their borrowing (debatable, I’m sure) and on the advice of a certain major investment bank, which functioned as their “financial adviser.”
Why do nations (or individuals, for that matter) become over indebted? IMHO, I think it’s because they (1) want (a lot of) stuff they can’t afford (2) and they want a living standard that is beyond their means. Also, they are prepared to ignore reality for as long as possible no matter the consequences to investors or their citizens. So the proverbial “can” gets kicked down the road. To me this sounds like the most lethal cocktail of all: greed mixed with stupidity.
Just to clarify, I’m not against sovereign debt as a means to finance public projects, like infrastructure. I have a problem with governments which are borrowing billions (or even trillions) of dollars to finance utterly useless programs or projects. Here’s a list of 30 such projects by the US government (other governments are spending money on similar or even more ludicrous junk, I’m sure. I’m not picking on the US; data is just easier to get for the US.):
#1 In 2011, the National Institutes of Health spent $592,527 on a study that sought to figure out once and for all why chimpanzees throw poop.
#2 The National Institutes of Health has spent more than 5 million dollars on a website called Sexpulse that is targeted at "men who use the Internet to seek sex with men". According to Fox News, the website "includes pornographic images of homosexual sex as well as naked and scantily clad men" and features "a Space Invaders-style interactive game that uses a penis-shaped blaster to shoot down gay epithets."
#3 The General Services Administration spent $822,751 on a "training conference" for 300 west coast employees at the M Resort and Casino in Las Vegas.
The following is how the Washington Post described some of the wasteful expenses that happened during this "conference"....
Among the “excessive, wasteful and in some cases impermissable” spending the inspector general documented: $5,600 for three semi-private catered in-room parties and $44 per person daily breakfasts; $75,000 for a “team-building” exercise — the goal was to build a bicycle; $146,000 on catered food and drinks; and $6,325 on commemorative coins in velvet boxes to reward all participants for their work on stimulus projects. The $31,208 “networking” reception featured a $19-per-person artisanal cheese display and $7,000 of sushi. At the conference’s closing-night dinner, employees received “yearbooks” with their pictures, at a cost of $8,130.
You can see some stunning pictures of GSA employees living the high life in Las Vegas right here.
#4 Do you remember a few days ago when credit rating agency Egan Jones downgraded U.S. government debt from AA+ to AA? Well, someone in the federal government apparently did not like that at all. According to Zero Hedge, the SEC plans to file charges against Egan Jones for "misstatements" on a regulatory application with the SEC.
Normally, the SEC does not go after anyone. After all, when is the last time a major banker went to prison?
No, the truth is that the SEC is usually just a huge waste of taxpayer money. According to ABC News, one investigation found that 17 senior SEC officials had been regularly viewing pornography while at work. While the American people were paying their salaries, this is what senior SEC officials were busy doing....
One senior attorney at SEC headquarters in Washington spent up to eight hours a day accessing Internet porn, according to the report, which has yet to be released. When he filled all the space on his government computer with pornographic images, he downloaded more to CDs and DVDs that accumulated in boxes in his offices.
An SEC accountant attempted to access porn websites 1,800 times in a two-week period and had 600 pornographic images on her computer hard drive.
Another SEC accountant used his SEC-issued computer to upload his own sexually explicit videos onto porn websites he joined.
And another SEC accountant attempted to access porn sites 16,000 times in a single month.
#5 According to InformationWeek, the federal government is spending "millions of dollars" to train Asian call center workers.
#6 If you can believe it, the federal government has actually spent $750,000 on a new soccer field for detainees held at Guantanamo Bay.
#7 The U.S. Agency for International Development spent 10 million dollars to create a version of "Sesame Street" for Pakistani television.
#8 The Obama administration has plans to spend between 16 and 20 million dollars to help students from Indonesia get master's degrees.
#9 The National Science Foundation spent $198,000 on a University of California-Riverside study that explored "motivations, expectations and goal pursuit in social media." One of the questions the study sought an answer to was the following: "Do unhappy people spend more time on Twitter or Facebook?"
#10 The federal government actually has spent $175,587 "to determine if cocaine makes Japanese quail engage in sexually risky behavior".
#11 In 2011, $147,138 was given to the American Museum of Magic in Marshall, Michigan. Their best magic trick is making U.S. taxpayer dollars disappear.
#12 The federal government recently spent $74,000 to help Michigan "increase awareness about the role Michigan plays in the production of trees and poinsettias."
#13 In 2011, the federal government gave $550,000 toward the making of a documentary about how rock and roll contributed to the fall of the Soviet Union.
#14 The National Institutes of Health has contributed $55,382 toward a study of "hookah smoking habits" in the country of Jordan.
#15 The federal government gave $606,000 to researchers at Columbia University to study how heterosexuals use the Internet to find love.
#16 A total of $133,277 was recently given to the International Center for the History of Electronic Games for video game preservation. The International Center for the History of Electronic Games says that it "collects, studies, and interprets video games, other electronic games, and related materials and the ways in which electronic games are changing how people play, learn, and connect with each other, including across boundaries of culture and geography."
#17 The federal government has given approximately $3 million to researchers at the University of California at Irvine to fund their research into video games such as World of Warcraft.
#18 In 2011, the National Science Foundation gave one team of researchers $149,990 to create a video game called "RapidGuppy" for cell phones and other mobile devices.
#19 The U.S. Department of Agriculture once handed researchers at the University of New Hampshire $700,000 to study methane gas emissions from dairy cows.
#20 In 2011, $936,818 was spent developing an online soap opera entitled "Diary of a Single Mom". The show "chronicles the lives and challenges of three single mothers and their families trying to get ahead despite obstacles that all single mothers face, such as childcare, healthcare, education, and finances."
#21 The federal government once shelled out $2.6 million to train Chinese prostitutes to drink responsibly.
#22 Last year, the federal government spent $96,000 to buy iPads for kindergarten students in Maine.
#23 The U.S. Postal Service once spent $13,500 for a single dinner at Ruth's Chris Steakhouse.
#24 In 2011, the Air Force Academy completed work on an outdoor worship area for pagans and Wiccans. The worship area consists of "a small Stonehenge-like circle of boulders with [a] propane fire pit" and it cost $51,474 to build. The worship area is "for the handful of current or future cadets whose religions fall under the broad category of 'Earth-based', which includes Wiccans, druids and pagans." At this point, that only includes 3 current students at the Air Force Academy.
#25 The National Institutes of Health once gave researchers $400,000 to study why gay men in Argentina engage in risky sexual behavior when they are drunk.
#26 The National Institutes of Health once gave researchers $442,340 to study the behavior of male prostitutes in Vietnam.
#27 The National Institutes of Health once spent $800,000 in "stimulus funds" to study the impact of a "genital-washing program" on men in South Africa.
#28 The National Science Foundation recently spent $200,000 on a study that examined how voters react when politicians change their stances on climate change.
#29 The federal government recently spent $484,000 to help build a Mellow Mushroom pizzeria in Arlington, Texas.
#30 At this point, China is holding over a trillion dollars of U.S. government debt. But that didn't stop the United States from sending 17.8 million dollars in foreign aid to China in 2011.
If you don’t believe the veracity of these expenditures, please follow the link to the source and find all the links to different expenditures there.http://theeconomiccollapseblog.com/arch ... your-money
Now, how would you feel if your government defaults on its debt and leaves 1000s of pension funds, insurance companies, individuals, banks, and sovereign wealth funds, with 50% or less of their original investments, effectively destroying tens-of-thousands of people’s lives?
Would you feel a moral obligation to pay back your part of the public debt? (Remember: you enjoyed the new roads, bridges, health care, etc.) Would you accept draconian austerity measures forced on you by outside creditors so they can recover their money?
Don’t the citizens of defaulting nations have the responsibility to, at least, try to repay their nation’s creditors, through cutting public benefits and services?