The world has fallen into a luxury trap – E24

The world has fallen into a luxury trap – E24
Debt-financed reconstruction: Many countries are taking on more and more debt. The arms race contributes. Here, Romanian and Portuguese F-16 fighters take part in a NATO exercise over the Baltics in May.

Many countries are mired in debt, while interest rates are rising. The past year witnessed several severe crises. More is coming.

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In our small country, 15-year-old cuisine is inedible for many. And we are happy to hire professionals to do something about it. In residential areas, green number plates are often predominant during the day.

At the same time, prices practically devoured Norwegian wage increases. For ten years, wage settlements have been historically meager. The golden age is over.

Therefore, the consumer end is often financed by loans. At the same time, we have calmed down lately debt growth Little. We have also seen signs of declining consumption.

But changes are coming slowly. So far, Norwegian consumers are still high in the global debt race. Here we are fighting for the top positions.

As individuals, of course. For the Norwegian state, of course, it is just the opposite. We have a certain national debt, but the oil fund is insanely much larger.

This also makes us unique in the world.

for though many foreigners kept their purses better than the Norwegians, their powers were generally more lenient.

It signifies the spirit of the times. Many voters expect compensation for the exorbitant time and accelerating inflation. Many corporations and lobbying organizations are lobbying to keep taxes low, green subsidies high, and the arms race alive.

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At the same time, Norway and many other countries are in the midst of a wave of elderly people. It requires increasing amounts.

Point by point, an increase in spending often makes sense. For example, Putin’s attack on Ukraine cannot be ignored. Defenses must be built. five of the neighboring countries To Russia, Belarus and Ukraine also lead the global increase in government debt.

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But politics is about setting priorities. Politicians primarily have one job. If some want to have more, others must have less. Unfortunately, Norwegian and foreign politicians often prioritize re-election.

And abroad, they do not have a fund of money that they can rely on. The result is that the mountain of debt is growing. Many countries are steadily heading towards the welfare trap.

So it should be said that inflation and growth have wiped out some real debt since the height of the pandemic. In addition, many countries were deeply in debt during and after the financial crisis.

But at that time interest rates were much lower. Many believed that inflation would be low and money nearly free to borrow for decades to come.

With the health crisis, that changed. Subsidy packages are expensive, and even low interest rates and money printing from central banks cost a lot. Supply crunch and warmongering by Putin have come to the fore. A price spiral has been launched. Now you will be killed with higher rates of interest.

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More debt and more interest now contribute to countries having to use more of their limited funds to pay for the old fun.

So, in the long run, there will be less money for all the important things. Less for street lights and less for nursing homes. In France, debt repayment is now the largest expenditure item.

Debt can also cause more severe disasters. Do we remember the sovereign debt crisis in Greece? Or Liz Truss last year? Its short-lived government will paint an irresponsible budget with more debt.

The proposal became a financial Ragnarok. Stock markets fell. Pension funds faltered. The exchange rate of the pound against the dollar fell directly, and the interest rates on the debts that London had to pay directly fell.

Calm was only restored when we got an answer as to whether Truss or a head of lettuce will keep longer.

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Investors are always on their toes. In a number of countries, countries are struggling to service their debts. Sri Lanka, Ghana and Zambia are among the latest hit by a large-scale debt crisis.

There are also many countries close to our latitudes that have alarmingly high national debts. Both are in Europe Spain and France are almost as volatile Great Britain. Even countries like Italy and Greece are heavily indebted.

And in the US, the recent row over raising the debt ceiling has put everything on the line. Calm has now been restored. But the budget deficit and debt are constantly increasing. Confidence in the US’s ability to pay is lower than before. The world’s largest economy must pay more interest than it needs to.

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Most other states can pay less. Credit rating agencies look at a country’s ability to pay. At the most, S&P, countries still with the highest rating can now be counted condemns.

Hopefully, more countries will understand that a respectable podium spot on this list is something to strive for. Perhaps more people can be inspired by our real-life Finnish neighbors. There, parts of the opposition went to the polls on budget cuts and debt reduction. And won.

Because the debt cannot be increased year after year without consequences. If the debt spiral is not stopped, there will eventually be little left for British frigates, Finnish border fences or Japanese kindergartens.

If many Norwegians don’t calm down about the loan increase, there won’t be much left for new kitchens either.

It is not just the world’s finance ministers and central banks that will have to prioritize money more in the coming years.

Indebted Norwegian families also have a job to do.

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Jabori Obasanjo

Jabori Obasanjo

"Coffee trailblazer. Certified pop culture lover. Infuriatingly humble gamer."

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