Think that Greece is the only country with debt problems? Not at all. In fact, many other countries are struggling to stay afloat amidst higher debt totals and rising unemployment. When people are not employed, things really start getting out of control. This string of events ties into the concept of market sentiment. When people have jobs that they feel are secure, they are more likely to invest back into the economy through purchasing things. When employers feel that they can have a strong market of buyers to purchase their goods, they continue to invest in the marketplace by improving infrastructure and keeping people employed. As you can imagine, when either one of those segments of sentiment is off balance in any way, a lot of terrible things can start happening all at once, or stealthily over time.
This isn’t about Greece alone, of course. There are other countries that are facing debt crises of their own. Left unchecked, these crises could spiral down into full on disasters, something that no country wants to have to face.
A sudden change downward in economics could plunge other countries into the same disaster that Greece is facing. The cooling of the financial markets in 2008 was just the beginning of recession conditions. Some people are finding that even with bailouts, the money doesn’t get distributed to everyone equally. There are still cases where bailouts lead to just corrupt agencies taking money that should be used to stimulate the economy and move it into special interest projects that only benefit a tiny handful of companies.
Many countries around the world are facing the same issue. Take Tanzania, a country that is well known for being rich with gold and other important metals. While the country has many natural resources, they are limited by the ability to export these resources to other countries. So falling prices affect the country and any other country that is dependent on exporting goods in this manner.
Not all of the news in Tanzania is bad, of course. More children are completing their education in Tanzania than ever before, and child mortality is almost a thing of the past. Yet the siren song of getting loans is too good to resist, especially as the country rebuilds infrastructure. Private money is preferred to government bailouts, and many private investors have been picking up steam with national bonds rather than direct acts of charity. Simply put, it’s a worldwide search for the best yield on their investments.
But if borrowing gets out of control, these same investors aren’t going to be able to get their money out of the market. This change in sentiment can have negative effects for every country trying to balance between foreign interests and their own citizenry.
Even within the UK, debts are increasing as some hard realities are coming to the surface: there is a growing segment of the population that isn’t able to fully support themselves, and needs Government services more than ever. In addition to this problem, another segment of the population is aging and needing care. The birth rate has declined, which means that there are fewer children that will grow up to be hopefully hard working and tax-paying citizens. These are all factors that will become more and more important as time passes. One only has to look to Japan for this humbling reality. In fact, the birth rate is so low in Japan that the population is actually shrinking instead of growing. The birth rate coupled with a difficult immigration program means that there are fewer people able to help keep the economy going strong.
All of these problems are predicted to worsen in the years to come, but that doesn’t mean that it’s all doom and gloom. It’s possible to still build wealth as countries wrangle over debt. One simply has to focus carefully on smart financial truths. Good luck.