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Crisis Infographics

The following info graphics serve to explain the different aspects of the current global economic crisis in understandable language. Basically governments are over-borrowing to pay for the different facets of government; war, bank-bailouts, economic bailout packages, along with the regular costs of running countries.

When the debt to GDP (ratio to debt) of a country gets too high they have to continue to finance the interest on the government debt, leading to a deficit in national income. GDP being the ‘gross domestic product’, the amount of income per capita (citizen) that a country generates. Eventually the debt gets too high and this means that the country can either default or print more money (causing hyper-inflation).

The system is based on secrecy, because if it was clear how much money major countries are in debt then the financial / investment markets would become unstable, giving the governments unfavorable credit ratings, causing investors to move to other markets and generally causing economic decline. An integrated facet of the current school of economic thought is that the economy must continually be growing in order to pay off the ever growing national debt. If the economy would reach a no growth or decline situation than the interest on national debt could no longer be covered by national income (unless taxes were raised). However a continually growing economy is an irrational thought because the earth and her resources are finite, eventually leading to a no growth situation (which is predictable and agreeable). In this leveled off or no growth situation national debt becomes impossible to pay off. The current economic paradigm is therefore impossible to sustain.

The American 2007 (+/-) homeowner crisis

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