I don't have the data to hand, but I would be surprised if when I checked every single government since WW2 hasn't done it to greater or lesser extent, fuelled by solidarity and the welfare state demands following a dark period in human history and a need for change and desire to protect the vulnerable in society. But if you want to look at a particularly egregious example, chose France - whose liabilities are simply so huge with respect to welfare that they simply don't put most of it on the books at all! Greece et al are similar, but the liabilities pale into insignificance compared to the French welfare state. Enron anyone?! Capitalising your current accounts is quite bad, but at least most of the debt is on the balance sheet and you can see it. Just not recording them at all on the grounds that they are so large they are scary is obviously a great technique! I can't think of a single example where that has gone wrong!!
So in the long run is it manageable? Why would bond holders continue to roll over debt ? Presumably because if they don't they are screwed along with everyone else ? How can we cut £100 billion in government spending ? Do we want to ? If deficit spending becomes the new norm then what is the end point ?
Countries are thus like banks. No bank can afford to pay out. A run on a bank quickly kills it. A run on a country would kill it too. It all works on confidence, doesn't it? Who thinks that France would just say, "Oh, about that money we owe you. Forget it. We've decided we're not going to pay you". On the other hand, if it were Zimbabwe, you'd think that quite a likely scenario. On that basis, it doesn't much matter if France is lying through its back teeth, unless, I suppose, if you've leant them many billions.
Glidd, I agree. But the French simply can't afford to sustain their levels of welfare spending and pension support long term, and they can't put taxes up and up as they already have sky high tax rates (putting aside the level of non-compliance that obviously creates!). They have also created a culture where enterprise and making money (paying taxes) is considered socially less just than taking from the system and receiving benefit. Which is interesting.....
I still think personal debt in this country is largely out of control, low interest rates and interest only mortgages have fuelled consumer spending in other areas such as electricals and cars, you only need an interest rate rise of 1% and many people will be absolutely stuffed. Back in 2008 when the economy became really tough my co-directors and I had a wake up call, we cut our costs and our salaries and weathered the storm, however even now when we are all earning very good money again I have continued to travel light, I have no debt apart from a fairly modest mortgage and have got out of the habit of wanting "stuff"
