what would Happen to a Country if its Loan is Written off ?

[VCheng]

I am not challenging the position of the US market, valuable as it is, the US still cannot print dollars indefinitely without incurring a hyperinflation response.

Yes, but as long as the world soaks up the dollars printed, it is all good. The evidence lies in the consistent purchasing power of the dollar.

Back to the topic, how do you see Pakistan handling its ever increasing debt?

 

[AZADPAKISTAN2009]

US can regenerate trillions with its economy and companies who annually make Billions in profits

Pakistan can't be compared with USA


Government's plan is take loan , give subsidy on Roti and pani , and then complete 3 years and then disappear let next person deal with problem

In USA 1 Company can make 2-10 Billion if they work hard

• Apple company has 500+ Billion in reserves
• Microsoft has 400-500 Billion in reserves

Pakistani media , just busy with Tabla bazi on 20 billion forex reserve !!! That is combined output of "All "companies in Pakistan just 20 Billion in reserves

Every billion dollar in loan puts burdan of 1 rupee increase on difference between Dollar and rupee

 

[Gauss]

if loan is written off, government will become richer. previously it had to spend some money from its revenue for servicing debt. but after loan is written off that money will stay in the government's pocket.

 

[Icarus]

Yes, but as long as the world soaks up the dollars printed, it is all good. The evidence lies in the consistent purchasing power of the dollar.

Back to the topic, how do you see Pakistan handling its ever increasing debt?

Which is exactly the point that the dollar can never exceed.

At the moment, Pakistan's options are limited, revenue generation is dismal primarily due to the flight of capital in the face of deteriorating law and order situation and energy crisis during the last government's tenure. Pakistan's policies are also far from being investor friendly, the government usually makes concessions when meeting with boards but I believe that the conditions on paper must also be liberalised to encourage investment.
The present government is taking a number of steps in the right direct (cue PTI supporters who will have my head for this). Nawaz Sharif as a businessman himself does command a fair degree of investor trust but we need to go beyond waiting for investment to come our way.
Pakistan has various Industrial Parks that have been converted to housing colonies and sold off, government needs to come down hard against individuals responsible for this land grab and offer other virgin lands as industrial estates. One way we can make good with this scheme is using these industrial estates as basis for setting up new towns and cities, as it is, the cities are expanding at an unsustainable rates which has caused widespread problems in ensuring that basic civic necessities can reach the citizens. If we set up industrial estates in Balochistan, which is sparsely populated, we can create jobs, encourage the populations of new cities and also do justice to the concern that Balochistan has a very small industrial base.
Suitable legislation to guarantee suitable market access, tariff and energy/physical security to investors will also help encourage people to apply, at the moment, our market policies straddle along protectionism but we have no industrial base to protect.

 

[Faiez]

Pakistani media , just busy with Tabla bazi on 20 billion forex reserve !!!

hahahaahahha LOL "Tabla Bazi".....that's too funny !!!

 

[ito]

if loan is written off, government will become richer. previously it had to spend some money from its revenue for servicing debt. but after loan is written off that money will stay in the government's pocket.

But why will be loans written off? Unless the worth of the loan is less than that is written in books?

 

[VCheng]

Which is exactly the point that the dollar can never exceed.

At the moment, Pakistan's options are limited, revenue generation is dismal primarily due to the flight of capital in the face of deteriorating law and order situation and energy crisis during the last government's tenure. Pakistan's policies are also far from being investor friendly, the government usually makes concessions when meeting with boards but I believe that the conditions on paper must also be liberalised to encourage investment.
The present government is taking a number of steps in the right direct (cue PTI supporters who will have my head for this). Nawaz Sharif as a businessman himself does command a fair degree of investor trust but we need to go beyond waiting for investment to come our way.
Pakistan has various Industrial Parks that have been converted to housing colonies and sold off, government needs to come down hard against individuals responsible for this land grab and offer other virgin lands as industrial estates. One way we can make good with this scheme is using these industrial estates as basis for setting up new towns and cities, as it is, the cities are expanding at an unsustainable rates which has caused widespread problems in ensuring that basic civic necessities can reach the citizens. If we set up industrial estates in Balochistan, which is sparsely populated, we can create jobs, encourage the populations of new cities and also do justice to the concern that Balochistan has a very small industrial base.
Suitable legislation to guarantee suitable market access, tariff and energy/physical security to investors will also help encourage people to apply, at the moment, our market policies straddle along protectionism but we have no industrial base to protect.

Given your post above, it is safe to say that Pakistan's debt problem will grow a lot worse before something gives. During the time that the positive changes you describe take hold, the new loans and their interest will pile up, while the periodic payments sap investments into social development.

But why will be loans written off? Unless the worth of the loan is less than that is written in books?

A partial default is far more likely than a write-off.

 

[ito]

Given your post above, it is safe to say that Pakistan's debt problem will grow a lot worse before something gives. During the time that the positive changes you describe take hold, the new loans and their interest will pile up, while the periodic payments sap investments into social development.



A partial default is far more likely than a write-off.

Yes..I agree. A partial default or even a default one or two times may not lead to write-off. But repeated defaults may indeed lead to write-off

 

[zip]

No, minor fluctuations are the norm in any economy, a full blown crash also happens once a couple of decades but a collapse of said magnitude has not taken place since the Great Depression where the Dollar was devalued to the point where it was used for lighting fires as buying matches was too expensive.

In a hypothetical scenario if usa decides to change its currency from dollar to euro and decides to write off its debt by printing dollars and both happens at same time what will be its effect on american and global economy ?

 

[AZADPAKISTAN2009]

Similarities between Greece and Pakistan


Greece:
Economy is crap and people have rich life styles
Greek people don't want to work hard , enjoy the sun and get free benefits
Their leaders think every think has a solution and that is Take Loans
Greek economy makes nothing of value , and only runs on Tourism
Growing old population
Educated class has moved out of Greece to USA/Canada

€323bn

• Un Employment Rate 25% but lower population vs Pakistan
• 11.03 million (2013) - 2.7 Million are unemployed

Pakistan:
Economy is crap , and people enjoy franchise food stores, BMW fancy cars - golf course
Out of 365 days 200 days are worked rest are all vacations , elections and vacation or cricket
Leaders of nation feel Loans are only solution to solve any crisis
Country running ad hoc on agricultural only and its value is reduced yearly
Burderned with big uneducated population
Educated class keeps migrating out to Middle east and USA/Canada/UK

Debt 70-80 Billion dollars , by 1999 Tajarba-kar team had made our debt close to 90 Billion

• Unemployment rate 8.50% but greater population level !!!
• 15.8 Million people un employed (Tajarbakar Team)

Tajar-bekar team has taken our LOAN to 70 Billion range , 1999 main 90 billion per out ho gaye the , ab Third innings main 100 bane ka khiyal hai

Purchee Leader

Can't even articulate idea

 

[NHUDA]

In a hypothetical scenario if usa decides to change its currency from dollar to euro and decides to write off its debt by printing dollars and both happens at same time what will be its effect on american and global economy ?

LOL>>> Even in thr Dreams US would Not Do it .... Never .. NEVER EVER .... USD is not only a Currency like other Countries it is the Economic Back bone which have kept USA afloat in troubled times (Most Recent Being Billion & Billions of Dollars Given in Recent Bailout during Depression, u think they can Print Euro This Easily) ..

USD is Most widely used currency (Import, Export Oil) ... what other countries have to Earn & work For , US only have to Print (i m over simplifying though) ... even if TODAY countries lose trust on USD & trade in any other currency for only thr Oil Purchases & let go of thr Dollar Reserves & those Gulf Countries who are Pegged to USD, de-link them .... USA won't be able to sustain for 5 years ...

Hence US won't even Think of Switching for Euro, Infact they will do every possible action they can to keep Euro under Pressure & so is ANY other currency (Yen, YUAN etc.) ....

As u said USA decide to switch its currency to Dollar while writing the Debt off by printing dollar .. technically the moment USA will think of Switching to Euro .. the Dollar will come to an end ... the World will go Crazy ... everyone would be dumping thr Dollar Reserves for any other currency and the Butter Fly effect would not only be worse off for USA but the WHOLE world ....

Also a Country cannot Write-off (Pay Back) thr debt just like that ... they are LONG term loans & have to be paid back in specific time period with Interest rates till tht time ... USA cannot just Print 5 Trillion dollar & give to China tht here is your Money GTFO !

Even the thought of doing something tht Drastic ... which USA has developed since Ages is hilarious !

USA is NOT the World Power for its Military Might ... it is Super Power Because of its Economic Hold on the World & anyone , anywhere have challenged that have been suppressed in one way or another !

 

[Azadkashmir]

dump the dollar and print and mint your own currency. map out your resources and put people to work to mine it and process it. do barter trade on international level, i give your ten tonnes of steel you give me ten tonnes copper. imf/world bank thrown out including multi national and foreign corporation.

i think this great idea but only works on everyday essentials soap, toothpaste etc. Saturday and Sunday pay half wage and half barter goods (barter goods priced at warehouse price not final sale price).

This average worker can trade soap with the average worker for shoe vice versa.

 

[NHUDA]

Similarities between Greece and Pakistan


Greece:
Economy is crap and people have rich life styles
Greek people don't want to work hard , enjoy the sun and get free benefits
Their leaders think every think has a solution and that is Take Loans
Greek economy makes nothing of value , and only runs on Tourism
Growing old population
Educated class has moved out of Greece to USA/Canada

€323bn

• Un Employment Rate 25% but lower population vs Pakistan
• 11.03 million (2013) - 2.7 Million are unemployed

Pakistan:
Economy is crap , and people enjoy franchise food stores, BMW fancy cars - golf course
Out of 365 days 200 days are worked rest are all vacations , elections and vacation or cricket
Leaders of nation feel Loans are only solution to solve any crisis
Country running ad hoc on agricultural only and its value is reduced yearly
Burderned with big uneducated population
Educated class keeps migrating out to Middle east and USA/Canada/UK

Debt 70-80 Billion dollars , by 1999 Tajarba-kar team had made our debt close to 90 Billion

• Unemployment rate 8.50% but greater population level !!!
• 15.8 Million people un employed (Tajarbakar Team)

Agree to Some points but Over Generalization & simplification of a very complicated situation (For Both Pakistan & Greece) !
But it is not the point of the Thread here , hence won't indulge into a debate !

If u want U can Open a Thread and provide counter narrative, to which we can talk / Discuss !
Below is My Premise :
Criticism is very easy but ground realities needed to be take into account ... the New Greek govt. came into Power with slogan of NO MORE LOANS (Much Like Someone Tried to in our Elections) ... but end up borrowing More & MORE loans on harsher condition ...

You have a better option to Pay Back Existing loans without taking new Loans, increasing Taxes, Reducing Subsidy .. Enlighten us All (Please do not say Ask Zaradari & Nawaz to Bring thr Money or Get the Money Back from Swiss accounts, they are all rhetoric with little value) ... but any realistic option would be welcome !

 

[AZADPAKISTAN2009]

Nawaz Sharif ki Tajarbakar team said same

a) We will not take loan
b) We will break the KASHKOL
c) We will end electric crisis in Pakistan 3 months
d) We will build Transit in every city
e) We will reduce the Inflation

However reality

a) Failed Energy projects
b) More loan from IMF
c) Loan to pay Loan
d) Subsidies to poor becasue they can't afford roti
e) Cancellation of bullet train plan
f) Ruppee is 108 ruppee to dollar


In 90's he gave Pakistan Yellow cab, his idea was all unemployed ppl should become taxi drivers , and as result in billions were given in subsidy to allow car loans , the cars went out in 4-6 years

Ameer Ul Momeenin Nawaz Sharif , now wishes to be called His Excellency

 

[NHUDA]

dump the dollar and print and mint your own currency. map out your resources and put people to work to mine it and process it. do barter trade on international level, i give your ten tonnes of steel you give me ten tonnes copper. imf/world bank thrown out including multi national and foreign corporation.

i think this great idea but only works on everyday essentials soap, toothpaste etc. Saturday and Sunday pay half wage and half barter goods (barter goods priced at warehouse price not final sale price).

This average worker can trade soap with the average worker for shoe vice versa.

NOT Practical .... U cannot Turn Steel / Iron into Oil by International Barter .. Not specially with Negative Trade Deficit ..

If u Print Your OWN currency and it is Not link to Any international Currency .... it will not gain the trust of Users (For Sure Not the International Users, thr is a Reason Most of the Dealing is Done into USD)

As for Half Wages ... How come it makes difference when the ratio is halved by Both Traders ... the eventual Ratio will stay 1/1..

How will u trade a Shoe to a Dinner Set .. who will decide the Pant is Cheaper or costlier thn the Shoe ... how the Whole sake Market will work in barter ... how will the Storage will happen ... like i do not need a dinner set but i want to sell the shoe ... if i sell it anyway & keep the Dinner set , how will i store & sell that ...

What ABout Taxes .. how govt will perform the Road Construction, how she will collect Taxes from people and Pay to Contracter who need to pay it to Labour ... the Transfer & shipment of the Amount of Goods ..

Read a little About BARTER Trade even on Wiki & u will knw how it is Not possible at ANY LEVEL ...

Also Printing own & own Money ... Read About Zimbabwe