The Current Debt Default Crisis

“Ten Trillion and Counting,” presented by Frontline provides quite a picture of America’s national debt as it surpasses the trillion dollar mark. They ponder the financial well being of current and future retirees while also exposing on how America got into this mess, and what the Obama administration plans to do during his term. America is able to close the gap year to year in its national budget by selling bonds and T-bills. Foreigner countries who continually purchase these obligations are beginning to grow. Much like the Bush administration, the Obama administration has started borrowing big with plans to cut the budget years down the road. It is clear for anyone to see that this borrowing and the future promises of cutting cannot go

results of the debt. It is a look at both the factual causes and the arguments

May 1st, Puerto Rico had to default again on their debt. Now reaching $72 billion ("Everything You Need to Know..."), Puerto Rico is facing a serious problem. Congress is currently working on finding a solution to the problem, but they can’t agree. In this paper, Puerto Rico’s debt situation and the severity will be outlined while proposing solutions to help lessen the problem.

When α government spends more thαn the revenue collected from tαx, tαriff, αnd other fee revenues, it must borrow to cover the deficit it fαces which when αccumulαted over the yeαrs becomes the nαtionαl debt. Internαl αnd externαl debts αre the two types of nαtionαl debt. Internαl debt includes the αmount borrowed from sources within the country. The government rαises this money by selling securities, government bonds, αnd bills. While externαl debt is the money borrowed from foreign sources. These sources mαy include privαte sources, other countries, αnd the Internαtionαl Monetαry fund. This pαper will explore the reαsons αnd consequences of the high nαtionαl debt fαced by the United Stαtes of αmericα. Furthermore it will αlso discuss wαys the reαson for this excessive spending cαn be eliminαted or reduced. economists forecαst thαt by 2030 the current αccount deficit would surge up to $5 trillion on αnnuαl bαsis which would constitute up to 15% of the country’s GD. This entire deficit will cumulαtively contribute in further inflαting the level of foreign debt thαt would burden the economy which would imply greαter imposition of bαck-breαking tαxes on the people of the country.

The economic crisis of Puerto Rico continues to deepen as the situation increasingly becomes grimmer. As of January 1, the government of Puerto Rico defaulted on its second bond payment in less than a year. The government has commenced choosing between bond payments and essential services. The island’s constitution requires general-obligation bonds to be paid out before other services; however, Governor Alejandro Garcia Padilla made it clear he will prioritize his constituents over the financial institutions, stating, “My government has the responsibility to protect, as much as possible, Puerto Ricans from grave consequences.” He backed up this statement by allowing the Public Finance Corporation to default on the $37 million dollar payment due January 1. The government paid out nearly $1 billion in other bond payments on January 1, yet the necessity to prioritize services and bonds is a troubling sign for the Commonwealth.

Our budget for a number of years has operated as a deficit. As a the deficit grows annually we go deeper and deeper into debt. In order to decrease our debt we need to operate with a budget surplus. I am going to discuss a number of options to reduce our debt crisis.

This paper will present and discuss the American national debt situation, propose two possible solutions and finally will endeavor to steer a conclusion as to which solution to follow.

As well all know Puerto Rico is under a debt crisis of 70 billions of dollars , the fiscal position is unsustainable, the population is falling, and there is no growth. All those 4 issues are the responsible of how the situation is going in the island. More than 4 billion in annual tax revenues fund debt service and are not available for public service.The total public debt of Puerto Rico has nearly doubled over the past decade.The accumulation of debt accelerated when the island’s government began borrowing no to invest in infrestucture , but to cover budget shortfall. The biggest controversy during this crisis is that Puerto Rico can not declare in bankruptcy that’s why the United States will create a new federal law called PROMESA signed

Currently, Italy’s GDP has fallen back to the same level as it was during the 1990s, a time which was plagued with tax evasion and massive debt such as today. The current debt ceiling is at 133% the country’s GDP, and also holds the position of being the second highest in the eurozone. One of the main reasons for Italy’s extended

In the last ten years, there have been a variety of proposals which, unfortunately, usually reflect only the special interests of the groups proposing them. Generally speaking, these solutions fall into three categories: repudiation, minor adjustments in repayments, or reduction. A report “Relief

In August of 1982, Mexico was the first of many Latin American countries to not be able to pay off their loans on the money they borrowed. It began in February of 1982, a sharp decline in international reserves forces Mexico’s government to decrease the value of the peso. This made the dollar-denominated debt burden increase, mostly to the United States commercial banks. With the marked down of the peso, Mexico’s government is not able to stop its loss of reserves and runs out of money. Mexico’s Minister of Finance, Silva Herzog, tells the US government and the International Monetary Fund program, that Mexico is unable to service its external debt of 80

The European sovereign debt crisis, which made it difficult or impossible for some countries in the euro area to repay or re-finance their government debt without the assistance of third parties (Haidar, Jamal Ibrahim, 2012), had already badly hurt the economies in “PIIGS”, Portugal, Ireland, Italy, Greece and Spain. This financial contagion continues to spread throughout the euro area, and becomes a dangerous threat not only to European economy, but also to global economy.

The Argentina debt affected the country between the late 90’s to the early 2000’s and can be attributed to misdiagnosis and ineffective policy. During this time the IMF and Argetina’s government worked closely together. Previous to the crisis Argentina had been celebrated for its economic policies and growth. The government worked to put in place conservative economic policy, including the privatization of companies, looser trade regulations, among other conservative changes. Economic growth in that period appears to have been in large part the result of increasing amount of international debt. Before the end of the 90’s, things began to fall apart.

The readily identification of debt crisis was Mexico’s inability to serve its outstanding debt of $80 billion debt. And the situation continue to worsen, and one year later, by October 1983, 27 countries owing $239 billion had reschedule debts or in the process of doing so.

Answer2: Just like coin has two sides this movement to cancel growing debt owed to the IMF have both positive and negative aspects. Many poor countries are buried under IMF debt. Debt cancellation will help countries to alleviate poverty in short run. Furthermore instead of paying billion of dollar in debt these countries can spend this money on health, education and infrastructure which will