Perhaps Capitalist States should take Polonius’s advice to heart: ‘Neither a borrower nor a lender be; For loan oft loses both itself and friend.’
Capitalist entities don’t have friends to lose. It’s a dog eat dog social system’
French national debt over three trillion dollars and rising.
https://commodity.com/data/france/debt-clock/
It’s reported that 'Restoring France’s financial system will require tough spending cuts, Finance Minister Bruno Le Maire said on Monday, as he warned the nation of hard times ahead.
Speaking in Paris, Le Maire said he is determined to straighten out the nation’s finances by reducing the country’s multi-trillion-euro debt and the budget deficit. The French government spent heavily to support households and businesses during the Covid-19 pandemic, and the energy crisis which was triggered by EU sanctions on Russia.
“I remind you that we must find at least €12 billion in savings by 2025. So, let’s call a spade a spade: in terms of public finances, the hardest part is ahead of us,” said Le Maire.'
[Who is this ‘us’ of whom he speaks?]
'The finance minister lamented “the difficult decisions” that the government has made and has yet to make. New proposals will be made in the coming weeks, he added, especially regarding revisions to public spending.'
[Ah, public spending. The negative effects of austerity affect who most?]
'The country’s budget for 2024 has already been marked by spending cuts that mainly come from phasing out energy subsidies. The opposition criticized the document for austerity, although it provides for an increase in welfare payments and pensions.
In June, Le Maire said austerity “was not an option,” and that it would be “an economic and political mistake.”’
It is reported that meanwhile in Northern American, ‘United States national debt has exceeded $30 trillion for the first time spurred on by high borrowing during the Covid-19 pandemic, according to data from the US Treasury Department.
Japan and China remain the top foreign creditors, holding $1.3 trillion and $1.08 trillion in US Treasuries respectively, and are owed interest on all the money that has been borrowed. Nearly $8 trillion of the US’ debt is owed to foreign entities, which – aside from Japan and China – also include major creditors like the United Kingdom, Luxembourg, Ireland, Brazil, Canada, France, India, and Belgium, as well as Taiwan and Hong Kong.
A further $6.5 trillion is owed by the US federal government to itself, mostly to Social Security trusts and the Military Retirement fund. Over the course of the pandemic, the Federal Reserve also doubled its balance sheet to $8.9 trillion by aggressively buying trillions of dollars in Treasury bonds and securities.
The shocking number was reached far sooner than anticipated, with US officials and economists failing to predict the Covid-19 pandemic and subsequent response, which inflated government spending, and subsequently, national debt by as much as $7 trillion since the end of 2019.
The US budget deficit totalled $2.77 trillion for fiscal year 2021, falling just short of the previous year’s record-breaking numbers, but still in line with the massive Covid-era spending. For the fiscal year of 2020, the US posted an eye-watering deficit of $3.13 trillion.
David Kelly, the chief global strategist for JPMorgan Asset Management, told CNN that the debt means the US is “going to be poorer in the long term” and claimed “American taxpayers will be paying for the retirement of the people in China and Japan, who are our creditors.”
[Who is going to be poorer?]
Even Russian capitalists are concerned about the USA debt. Russian government agency says the deficit is biggest threat to world economy in 2024. ‘The $34 trillion owed by Washington is mathematically impossible to pay off, Roscongress has claimed in a report it published on Wednesday. The agency based its estimate on the current ratio between the size of the debt, the rate at which it is growing, and budget revenues.
“The excessive debt was accumulated at low rates but needs to be refinanced at high rates that limit economic activity and reduce cash flow. In the medium term, the servicing of US debt will cost $1 trillion a year,” reads the report, titled ‘Key Events – 2024. Geoeconomics. Forecasts. Major risks’.
The US government cannot solve the problem by restarting the printing press this year because that would lead to higher inflation, the report added.
The country saw consumer prices shoot up to the highest levels in decades in 2022, prompting the Federal Reserve to embark on a series of rate hikes to tame inflation.’
There’s an easy solution isn’t there?
From the Socialist Standard, November 2020
The National Debt: whose debt?
Marx had something to say on the origin and consequences of the ‘National Debt’:
‘The state’s creditors actually give nothing away, for the sum lent is transformed into public bonds, easily negotiable, which go on functioning in their hands just as so much hard cash would. But furthermore, and quite apart from the class of idle rentiers thus created, the improvised wealth of the financiers who play the role of middlemen between the government and the nation, and the tax-farmers, merchants and private manufacturers, for whom a good part of every national loan renders the service of a capital fallen from heaven, apart from all these people, the national debt has given rise to joint-stock companies, to dealings in negotiable effects of all kinds, and to speculation, in a word to stock-exchange gambling and the modern bankocracy.’ (Capital, Penguin edition, Volume I, Chapter 31).
This is a fair description which still applies today but, unfortunately, is a source of many currency crank theories. Marx was aware of this and warned:
‘The great part that the public debt and the fiscal system corresponding with it have played in the capitalization of wealth and the expropriation of the masses, has led many writers, like Cobbett, Doubleday and others, to seek here, incorrectly, the fundamental cause of the misery of the people in modern times.’
The fundamental cause of this misery is not the financial system but the class ownership of the means of life and production for profit. What is required to remove it is not monetary reform but common ownership and production directly to satisfy people’s need.’
https://socialiststandardmyspace.blogspot.com/2023/11/the-national-debt-whose-debt-2020.html
It is reported that meanwhile in Cuba ‘The Cuban government will hike gasoline and diesel prices on the island by 500% effective February 1, as part of a set of measures aimed at reducing the country’s large budget deficit.
Fuel in Cuba has been subsidized by the nation’s government for decades and is among the cheapest in the world.
The price of a litre of regular gasoline will jump from 25 Cuban pesos (CUP) ($0.20) to 132 CUP ($1.10), an increase of 528%, while premium gasoline will go from 30 CUP ($0.25) to 156 CUP ($1.30), up 520%, the minister of finance and prices, Vladimir Regueiro, announced on state television.
Economy Minister Alejandro Gil admitted that, with the country short of foreign currency and under a punishing decades-long US embargo, the government could no longer afford subsidizing fuel.
The hike is also aimed at closing the gap in prices created by the subsidy. Energy Minister Vicente de la O Levy said previously that the fuel is currently priced based on the official fixed exchange rate of 24 CUP to the dollar, whereas arriving tourists exchange dollars at the current rate of 120 CUP to the greenback, which was introduced by the government in August 2022. That gives them an unfair advantage, the official explained.
Authorities said a network of service stations will be created for tourists, who will be obliged to pay for fuel in foreign currency.'
[Another state capitalist entity used to make tourists pay in foreign currency too.]
'The Cuban government, which subsidizes almost all essential goods and services in the country, announced a package of measures late last month aimed at addressing the economic crisis plaguing the country. Among the steps is an increase in the price of cigarettes, tobacco, and basic services such as liquefied gas, water, gas, transportation and energy.
According to official estimates, the island’s economy shrank by 2% in 2023, while inflation reached 30%.
The Cuban currency began a sharp decline in 2021 after the government dumped a complex dual-currency system. The government says the central bank is studying a potential new exchange rate against the US dollar.
Cuba has been under a US economic blockade since the early 1960s. Restrictions were eased during Barack Obama’s presidency, but later re-imposed under Donald Trump. In October, Havana accused the US of provoking an economic crisis in Cuba. Washington’s sanctions have led to critical shortages of food, fuel, and medicine on the island, leading to mass emigration, according to the Cuban government.’
Cuban Government Debt to GDP ratio 119 per cent.
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