Summing Up
Responses to this month's column devolved into a debate about the division of responsibility among institutions faced with the potential for a national bankruptcy. The majority argued that such bankruptcies shouldn't be permitted, largely because of immense social costs. Other remedies sought could include aid from one country to another, the sale of national assets, and the deferral of commitments to allow time for a work out. A sizeable minority, however, took the view that lenders, because they helped contribute to a potential bankruptcy, should suffer the consequences. The question this raises is which lenders, nations or commercial institutions?
Shann Turnbull, citing some of his own work on the subject, argued that the risks of allowing insolvency "can no longer be reliably managed because they have become too complex …(in part because) individuals who know about the risks are no longer connected to individuals who possess the incentive, power and capability to take action and manage the risks." Stephen Basikoti agreed, noting that "creditors have already shown themselves incapable of making better decisions by propping up a system that has led to the situation that must be rectified." Kapil Kumar Sopory cited his concern that insolvency would further exacerbate inequality, expressing the fear that "This is going to lead to revolutions in the long run." Tom Dolembo added, "Dissolving a currency and national identity dissolves the social contract between people and government." Phil Clark commented that "Those who go bankrupt lose sight of personal principle and beliefs. A country going bankrupt undermines itself and demonstrates its weakness." Guarav Goel, while arguing against allowing any country to seek bankruptcy, nevertheless suggested that the situation might require forcing lenders to "absorb the losses," suggesting a fine line between formal and de facto bankruptcy.
Sudheer Thaakur was among those suggesting that national bankruptcy might well be preferable to other rescue measures, commenting that "the pain should be borne … by greedy and equally irresponsible lenders." JTG, while agreeing, didn't quite see it that way, suggesting that citizens as well as lenders share responsibility. In his words: "… can we say that the people are not responsible for the nation's debt? … they are the ones who chose the representatives."
As an alternative to insolvency, forgiveness of debt combined with other measures had appeal for several respondents. Yadeed Lobo, while entertaining the idea of bankruptcy, suggested that debt forgiveness might be preferable. If it involved a developed economy, "That would (suggest) a new type of fourth world country, a developed economy which just turned into a developing one."
Should world financial policy essentially reflect a philosophy of "let the lender beware"? Should nations as lenders bear the greatest share of burden, possibly because of their responsibility for and interest in longer term solutions than commercial lenders? Who, other than a nation's citizens, should bear the burden of a national insolvency? What do you think?
Original Article
These are especially interesting times. For example, debt seems to be on the mind of a lot of people. That's ironic at a time when, as one CEO recently told me, "There is a sale on money." (One company with which I am familiar acted on that belief recently by borrowing a billion dollars that it didn't need and giving it to shareholders in the form of a stock buyback.) The US government and other borrowers are beneficiaries of this phenomenon, at least for the moment.
My favorite barber, an immigrant from Greece with a love for his adopted country that more than matches his devotion to the country of his origin, tells me his friends and relatives in Greece lead better lives than they can afford. Their wages are high, their benefits even higher, and their taxes are low (because, he claims, they avoid paying them). Banks in other countries have to finance Greek lifestyles. It's a form of wealth redistribution across borders as long as the hammer of bankruptcy doesn't fall on the country.
The phenomenon doesn't only apply to Greece. One recently published study of debt around the world highlights the challenge. Its authors conclude that government debt may become unsustainable over the next 25 years if there are no changes in current tax rates or government benefit programs in retirement and health care—a big "if". Stating that net debt (financial liabilities minus financial assets) levels of 200 percent of gross domestic product are unsustainable, the authors project that, given current policies, the US will experience ratios ranging from 155 percent to 302 percent in 2035, depending on assumptions regarding growth. Euro zone nations, where some action already has been taken, would experience lower ratios. Emerging economies would experience the lowest ratios of all. Among developed economies, only Japan would approach the ratios of the US. Even assuming that all such long-term projections are never accurate, is it possible that a country could fall into bankruptcy?
What does national bankruptcy mean? Years ago economists told us that the national debt in the United States was not important because we owed it to ourselves. If it became worthless, those holding the debt—presumably the banks and most wealthy among us—would lose out to those who benefitted from the deficits causing the failure. Of course, others now own nearly half of US debt and could be in a position to impose onerous penalties on the country and its economy.
But how enlightening would it be for a country like Greece—small enough to serve as a kind of laboratory for the rest of us—to fail? I assume it would be a Chapter 11 bankruptcy, a workout, as we say in US law. Quite likely, lenders would be left in control of the workout. Would Euro zone agencies and lawmakers, acting on behalf of lending banks, have to take drastic action to force Greece's government to impose new laws and collect the taxes? This would be a blow to democracy, but would it be a good lesson in fiscal responsibility for the rest of the world? Is this what it would take to bring us to our fiscal senses? Is it time for a national bankruptcy? Or would a restructuring of the Greek debt (a smaller redistribution of wealth) without imposing bankruptcy be a better solution? What do you think?
To Read More:
References:
Joseph E. Gagnon assisted by Marc Hinterschweiger, The Global Outlook for Government Debt Over the Next 25 Years: Implications for the Economy and Public Policy (Washington, D. C.: Peterson Institute for International Economics, 2011)
See also Gretchen Morgenson, U.S. Has Binged. Soon It'll Be Time To Pay the Tab, The New York Times, May 29, 2011, pp. BU1 and BU7, for an interesting commentary on the Gagnon and Hinterschweiger study.
- Anonymous
When I consider that the U.S. has assets conservatively valued at over $200 Trillion, and liabilities (debt) of $14.5 Trillion, I have a hard time wrapping my head around the concept of the U.S. going into bankruptcy.In fact, it makes me seriously question the intelligence of people who loudy proclaim or suggest that the country is either already bankrupt, or heading toward bankruptcy. Using their loose standard, even Bill Gates would be considered bankrupt.
- Gaurav Goel
- DGM, RCom
Any entity that continues to consume more than what it earns would eventually end up being bankrupt (no matter that how much assets it has to start with).The lenders to such entities take calculated risk based on their returns from such lending and the probability of getting back their investments.
I don't think that we can allow the lenders to a sovereign state to declare a country as bankrupt and to impose taxes of the residents of the country to pay back their debts. I can think of following reasons for not allowing such an act:
1. The Lenders are aware of the risk while giving debt and should absorb the losses in case the country fails to pay its debt
2. Such a practice would give rise to a new era of colonization where the developed nations would trap the poor nations in debt and would make the residents of poor nation as bonded labors
3. Lending to any country that seems not to be capable of paying back should be in form of aid (with little expectation of any material returns)
- CJ Cullinane
Default, bankruptcy, and a lower standard of living may be in our (future). The United States is not as productive as we should be, we are addicted to debt at all levels of society (Personal, State, Federal, and company), this combination does not bode well for American financial stability.I do not believe that inflation will help the economy in the long run and is not a solution to our spending addiction. Just 'printing' money does not work if we have to depend on outside sources for much of our goods, food, and energy (oil).
I just read that Moody's is considering reviewing the U.S. debt rating due to our lack of direction and enormous debt. This is sad, but inevitable. We just spend too much at every level of our society.
Our standard of living will drop, it is dropping now. So say good bye to the McMansions, Luxury cars, expensive wars, foreign aid, and government benefits. I think the party is over, now it's time to work.
Charlie
- Ravindra Edirisooriya
- Senior Accounting and Finance Major, Missouri Southern State University
National debt crisis is long time coming similar to our environmental crisis. If you remember, two unfunded wars and medical drug prescriptions to seniors, dissipation of beget surpluses by way of tax cuts to the wealthy in the name of creating jobs (did not happen) and economic growth (nothing significant) by the Bush administration (2000-2008) is the beginning of our current fiscal crisis. Weak fiscal health had made it difficult to rise from the recession with the usual rebounding economy. We live in a global economy controlled by individual nations or alliances between nations. Bankruptcy of one (or more) nation will affect the economic balances of all nations.Speaker of the house put a seal of approval on his recent national debt reduction plan by saying "150 economists approved this plan." Statistically, it has little merit. Perhaps, information on how the economists were sampled (size and selection criteria) from the population of economist (to evaluate the plan) and what proportion (P) approved the plan can add more credibility to the speaker's plan.
The economic and environmental change we need is to transition from an "animal" planet to a "human" planet will not happen by human action since we are fragmented and close minded by centuries of religious and cultural indoctrination. However, the nature is acting /reacting by way of violent and involuntary makeovers both physically and fiscally, which will force upon us the real change we need to make until we get it right (natural selection).
Professor Heskett asked if a country could fall into bankruptcy. Given our desire for short term gains with long term environmental and fiscal liabilities it is possible. National bankruptcy means paying with a "pound of flesh" for atonement of the sins of financial indiscipline. International debtors will not take pennies on the dollar as a means of settlement and they will ask for national assets as payment for their debts. Say no and you will have another war coming. Patching up the system robs us the opportunity to rebuild the system with the necessary safeguards. Our economic system has been running since 1750 and we need to upgrade the operating system to capitalism X.0. What is capitalism X.0? Is it a more equitable tax code that reduces the distance between wealthy and not so wealthy? Is it to address the dislocation of the human right to work with highly intelligent and high capacity robotic systems? Is it to safeguard the planet from involuntary destructio
n and the advancement of the human race to the distant planets? ... Or is it all of the above?
- Sergio Perez
- President, American Innovation Working Group
The issue of national bankruptcy brings up key issues on the mechanics of executing such an action. I was involved in the bankruptcy of a $5B corporation and it cost some $200M to go through the process. It is possible that the US bankruptcy will cost close to $1T and represent a good business opportunity for bankruptcy services. We will have to replace the greenback and ask our creditors for a significant reduction and $10T will be a good target.The article could be more interesting if it included more of a backdrop of the economic situation across the country. Municipal, state governments and the federal government are going bankrupt while our corporations enjoy the highest profits in ages and are drowning in cash. Our top 2% wealth holders are increasing their positions based on recond breaking worker productivity and the extension of tax cuts.
It is clear that president Bush should have cancelled the tax breaks early in his first term to fund the wars. Now we have people addicted to those cuts so we can fund our luxury life styles while others keeping losing their homes.
We need honesty and common sense in dealing with our financial situation.
- Sasha
Greece officially spends 4% of it's GDP on military expenditures. Almost twice the world's average. Without facing any threat to its national security.The vast majority of this trade benefits Germany, France and the UK.
How can anyone seriously request the curtailment of social security and other benefits to the public as long as this trillion dollar business continues unabated?
- Anonymous
The question Professor Heskett asks, requires redirection. What he should be asking is:- Considering countries like Greece, how should nations posture themselves to ensure economic sustainability?The title of the article has the power of suggestion and the capacity to trigger (these articles are read and respected by international finance ministers). It also begs the question:- Who is prepared to benefit?
From this place of influence and in light of the recent financial crisis, is it prudent to ponder bankruptcy of a nation as means of fiscal education for others?
- M Kealy
The comments by Gaurav Goel are of particular interest to Irish readers. Many feel that Ireland's banking debt variously quoted to be approx ?200bn+ cannot be carried by a 4.5m population with a current deficit of ?20bn.But the EU, driven by its German and French politicians, either seems to believe it can or does not want the owners of that debt, its German and French banks to face the allegation of reckless lending.
- Anonymous
"I assume it would be a Chapter 11 bankruptcy, a workout, as we say in US law. Quite likely, lenders would be left in control of the workout. Would Euro zone agencies and lawmakers, acting on behalf of lending banks, have to take drastic action to force Greece's government to impose new laws and collect the taxes?"Not even close. It has been a century or so since the US sent in the marines to run the counting houses of debtor Latin American countries in the interests of collecting that debt. More recent history (at least since the Latin American debt crisis of the 1980's) would suggest that lenders generally take it in the throat while sovereigns work on a way to restructure their economies to be able to survive without (or with reduced) dependence on foreign credit. Some massive haircut is worked out with (or imposed on) former lenders the amount of which is related to what the sovereign can reasonably expect to pay and how dependent they are (or expect to be) on continued financial support from them.
While the austerity measures required may feel to the local population like "the lenders" or the IMF are running the country, what they are really feeling are withdrawal symptoms of bad fiscal policy.
Oversimplification of course but Walter Wriston was right - countries cannot go bankrupt. What he missed was that they can stop paying their debts.
- ajit
- nonr, none
Yes, it is time. No politician can win asking the American people to cut back significantly enough and where we are the weakest, like health care delivery, the ecosystems are too corrupt. So pull the plug and bear the pain. Many have done it which is why bankruptcy lawyers are getting rich.- Anonymous
I'm not a trained or untrained economist. I'll admit I have a VERY simplistic view of economics and a jaded view of global economics. And, I'm Canadian, so I have a perspective coloured by strong social safety nets.I love, love, love the arguments put forth by Gaurav Goel above.
I do know that in terms of loans and investments, risk is mitigated by interest rate. There are no guarantees. That's why it is a form of informed gambling.
If any country defaults on their loans, it should be the investors who bear the brunt, not the citizens. That's why the investors earn interest on the loans.
Loans and 'bailouts' transfer the risk back to the country, and rescues the lenders. Sweet deal!
The citizens lose all the important social services AND their self funded pensions in bailouts because the conditions of bailouts are privatization of most public services. Wow. Another bonus for lenders.
If the country defaults, I still lose my private pension. Possibly my country has to cut back on social services, but we still make the decisions.
Since I lose in both scenarios, I prefer to hold the investors accountable for their decision to make risky investments.
- Tom Dolembo
- founder, NewNorth Institute
Germany tried a version of it in the 1920's, ending in World War II. Their emergency manager was inevitably a worst case. Henry Kissinger's favorite expression in Gov 180 at Harvard was, "the worst possible choice ultimately becomes the only alternative." We should fear an option that demands a draconian political solution. German industrialists did not complain.Living in Michigan, where emergency managers can arbitrarily overrule contracts and agreements in the name of balancing a budget, it gives one pause. Bankruptcy is both a process and a statement, and the assumption is that some surviving entity at the end of it will emerge. I do not believe this is a fact. Many emergent companies fail again. Dissolving a currency and national identity dissolves the social contract between people and government. I continue in my belief that we are seeing world revolution, not world recession, and the end is a potentially violent one. If we choose to tip the balance, the new contract may not be the best for old management.
- Yadeed Lobo
I think bankruptcy would be a good option.Bankruptcy essentially implies that
a) some people would lose out on their investments(especially foreign private investors).
b) there could a slew of asset fire sales of public and private infrastructure to overseas institutions to repay debt.
c) Greece would pay its way out over another generation through prudent fiscal discipline.
Could it be that some private institutions might be able to forgive some debt just like it was done for Africa?
That would entail a new type of fourth world country, a developed economy which just turned into a developing one.
- Bob Dillon
- Ret'd EVP- Sony Elec., HBS '55
The Bush tax cuts have fueled greed among those who have most benefited without creating the jobs which they were supposed to create. Jobs are created when those who create them can see a benefit in doing so, usually a financial benefit.The Deficit Commission came up with the closest thing to an effective plan. We will all have to pull in our belts and not put all the burden on our children. Ryan showed courage in putting Medicare on the table, but willful ignorance in thinking that vouchers are a reasonable substitute for those born after 1956(or7).
Taxes need to go up, especially on those at $250K and above. There needs to be a bracket at the 40% level or so.
In WWII, there was a 90% bracket in effect. We don't need to go there, but surely 40% is not too high for the affluent.
Many changes could be made if reasonable people on both sides of the aisle would work together to spread the pain of taxes and lost benefits around. Is that really too much to expect of our elected representatives - and ourselves??
- Shann Turnbull
- Principal, International Institute of Self-governance
Congratulations on raising a question others are too afraid to contemplate.Politicians, governments, economists and bankers are only talking about how to save or manage banks going bust. Not how to prevent or manage a country going "bankrupt".
Today, banks that were "too big to fail" have now become like those in Iceland and are now too big to be saved because they would "bankrupt" their host country. Countries cannot really go bankrupt but their credit rating could be downgraded as is now being contemplated for the US.
The top officials in Basle negotiating new banking regulations now accept the inevitability of another crisis as reported in our local newspaper. So instead of trying to avoid another crisis they are trying to accommodate it by increasing bank equity and liquidity.
However, earlier this year, The Financial Crisis Commission Report of the US government did not identify either the lack of bank equity or liquidity as the "key cause of this crisis". Like many other expert commentators they concluded: "failures of corporate governance and risk management at many systemically important financial institutions were a key cause of this crisis".
Managing solvency and liquidity risks has historically always been a core reason for banks to exist and so a core competency. My co-author, Michael Pirson and I argue that these risks can longer be reliably managed because they have become too complex, opaque and spread out so that individuals who know about the risks are no longer connected to individuals who possess the incentive, power and capability to take action and manage the risks. We use the Lehman liquidators report to illustrate this systemic problem.
To avoid another crisis we recommend the adoption of "network governance" to establish the connections required to manage complex opaque risks. Refer to our in-print article "Corporate Governance, Risk Management, and the Financial Crisis- An Information Processing View" in a special issue on the financial crisis by 'Corporate Governance: An international review' posted at http://ssrn.com/abstract=1723782.
In a follow up article at http://ssrn.com/abstract=1723782 we recommend governments plan now for another financial breakdown by establishing a supplementary monetary system that could morph into an alternative fall back system when the current system fails. Details are set out in my paper "Options for reforming the financial system" posted at http://ssrn.com/abstract=1723782.
- Stephen Basikoti
Bankruptcy is premised on the need to cede control to those who can manage things better. But who can? The creditors have already shown themselves incapable of making better decisions by propping up a system that has lead to the situation that must be rectified. Can they now be trusted to come up with a way to unmess the system they are partly responsible for messing up? As before, self-interest and greed would blind them while presiding over bankruptcy.- Anonymous
Prof. Heskett incidentally raises the issue of democracy and governance: What brings a democratic country to such poor governance as to make it bankrupt? Must good governance be imposed from outside, by lenders tired of irresponsible and/or incompetent governments?In most countries, democratic elections mean alternance between two main parties or groups of parties, so that the party in power always has an incentive to empty the state coffers (and to borrow as much as they can), first to finance all the generous pre-elections promises and second to prevent the other party from promising too much next time, since it must and will be known that the till is empty. Ideally, the next guys will have to tighten the belt, thus shortening their time in office.
What is needed is a way to make the political class as a group co-responsible for such key decisions as how much debt to incur. There are insufficient checks and balances in most governments when it comes to matching revenues and expenses. Alternatively, just as good central banks are independent entities, the ultimate responsibility for accepting the state's budget could be outsourced to the central bank or some similar type of new entity.
- Mathews Daniel Kapito
- Director, Centre for Corporate Management and Finance
Times have changed, Days have changed as the business environment is more and more volatile, dynamic and unpredictable.Banks are putting strict requirements for lending and Governments are on the move to collect more from the poor. Tax hikes, fuel shortages and many businesses shutting down. what does this mean. Governments are broke and most will be bankrupt. what is the reality, is this the right time to go bankrupt? absolutely NO!!!!!
Borrowing in my field of work should always be supported by an equivalent value asset and if you borrow to repay a debt, BIG MISTAKE.if a Manager or Directors get a loan to buy back its shares in any economic condition, i would propose we fire them. If a government is borrowing to repay its long outstanding debts, we need to change the structure. Today, almost every nation is going through financial challenges and the desire to lend to others is fading. every one has to focus on their own resources and if a nation is bankrupt today, the will face more and more challenges for the next 10 to 15 years as the economic recovery is slow for many nations and with natural disasters, recovery might take a little longer.
In my company,we have contracted and are operating at the lowest cost possible, with only owners equity to avoid borrowing. in the same way countries are focusing on internally generated funds to the creation of employment and promoting Investments.
This is a very bad time to be Bankrupt and i dont know if there will be any good time for bankruptcy after recovery.
th
- Ajay Kumar Gupta
- Doctoral Researcher and Faculty(ITM), Tata Institute of Social Sciences, Mumbai, India
The basic logic of banks is to create liability into assets. They take deposits and borrow from other agencies to further lend it to borrowers in the form of assets. The difference in interest earned and paid is the profit of the banks. Government also pump in fund from time to time in case of resources crunch. The source of Government fund is collection through various measures, like imposing taxes and offering various scheme to save taxes on deposit or investments. What will happen when government does not have sufficient surplus to supplement banks in case of resources requirement. This will lead to asset liability mismatch where liability will outnumber assets.In the Greece, the similar kind of situation seems. People evade taxes and banks liberally finance lifestyles. It clearly indicates that people have more option to expand money and government has loose mechanism to collect money through taxes. I think this is the governance incompetency that leads to disastrous situation in future and it needs urgent attention and action. I think two pronged approach may solve the bankruptcy problems. First method is to impose taxes on bank financing lifestyles and second, strengthening tax collection mechanism effectively. This will reduce people borrowing for lifestyles and increase government revenue through taxes. This will also ensure redistribution of wealth without blowing to democracy.
The other measure that may be helpful to prevent national bankruptcy is to ensure the credit growth for lifestyles should not exceed the net income growth of individual. For example, if a person increases his income by X+10 and existing liability by Y+2, then his net income growth is 8 percent. It means bank should consider financing for lifestyles whose installment or EMI should be paid within 8% of income increase. This will ensure proper redistribution of wealth among the citizen at one hand and between Government and citizen on the other hand.
- Sudheer Thaakur
- Visiting faculty, BITS Pilani
Let us make distinction between internal and external debt. As far as internal debt is concerned best is to pare it down in gradual manner by printing money at the cost of inflation. Govt should ensure that inflation in consumption goods is kept to minimum and really not worry about asset onflation. As regards external debt is concerned it will be in everyones interest if something similar to capter 11 is applied. The pain should be borne not only by irresponsible borrower but equally if not more by greedy and equally irresponsible lenders. yes it will impinge temporarily on sovereign and democratic rights of borrower country but that will be good learning and preferable to rolling over which will only postpone the inevitable but will inflict greater pain when bullet has to be bitten finally.- Anonymous
Hmmm . . . if you or I print money it's called counterfeiting.When a sovereign government does it, it's called monetizing your debt.
"When governments reach the point where they are borrowing to pay the interest on their borrowing they are coming dangerously close to running a 'sovereign Ponzi scheme.'
Ponzi schemes have a way of ending unhappily."
So sayeth Forbe's "Dr. Doom", aka Nouriel Roubini
- Anonymous
If all the countries are in debt, and most of the companies are in debt, and most of the individuals are in debt, then who is providing the money. Where are those small number of people who have given debt to all of us? Where have they vanished? In the equation of debtor there is a lender also. Who are these money lenders? Who are the money lenders for Greece, Japan, European Economies or US?Can the govbernment redistribute the money from the money lenders to debtors?
The problem does not seem as difficult as it sound. For anybody to recover money by forcing more tax or other liability like becoming bonded labor, there will be need of police force and military and if the people in military and police are themselves under huge loans will they take orders from money lenders.
After death nobody can take the money to heaven and sameway nobody can recover debt from a person who is died and has left no assets.
I am confused about the lending problem in larger perspective.
- Kapil Kumar Sopory
- Company Secretary, SMEC(India) Private Limited
It is not a time for National Bankruptsy for most of the countries including India. The problems due to high inflation touch the middle and the lower middle classes and very often there is little done to redress their suffering. Governments use coercive means to hike prices and taxes creating a yawning gap between the incomes and expenditures of the masses whose standard of living goes down every day.That is as far as the quantitative aspects of National financial stability is concerned. However, if we take into account overall scenario which should include the good of the people, many countries would fall into the category of National Bankruptsy. Mostly, making rich richer and poor poorer would be the observed economic state of affairs. This is going to lead to revolutions in the long run.
- Santhanam Krishnan
- AGM
When India faced a near bankruptcy problem in the early 90s the anti-dote suggested was right, left, center India should liberalize and open her economy to the global investors - an approach which India has shunned till then due to Nehruvian/Socialistic economic model. The result is there for every one to see. But what does one do if a country which has already a liberlized economic environment according to the tenets of free economic model undergo a near bankruptcy situation? Irresponsible economic governance as a political ploy cannot be an engine of growth for any country and sadly Greece is a voluntary victim of this. Unless the entire country - those who govern and the governed - opt for a sensible voluntary and disciplined sacrifice, the situation would automatically pass on to the creditors. The present crisis is a self inflicted blow and the remedy certainly lies with themselves - a honourable situation of avoiding bankruptcy. Japan remains as an example of how societal discipline can lead to political and socio-economic recovery even in the trying times.
- Philippe Gouamba
- Vice President of Human Resources, Skyline Windows, llc
A national bankruptcy? That is the dumbest think I have ever heard of!As alluded to in a prior post, the institutions that lend out money take a risk in doing what they do and every now and then, they lose. Third world nations are saddled with huge debt and they cannot afford the interest in the debt they are carrying because of the excessive greed of the first world institutions that set-up these loans in the first place.
As we examine our own lives, it is very apparent that the practice of spending more than one earns is not sustainable. So the question becomes: what do we do when we find ourselves in a situation where our "out-go" is greater than our "in-come"?
We need to scale back, we need to tighten our belts, and we need to review our spending habits. In brief we need to be more responsible. Has personal bankruptcy become the answer to irresponsibility? I would think not!
Another thing we can do when faced with difficult times is to GET TO WORK!! Make something, grow something, create something, build something then set out to market it in an effort to stimulate some revenue and then manage that revenue to secure future revenue - invest in strategies that work.
In closing: Not now, not ever is the time for a national bankruptcy; not for this great nation and not for other nations around the Globe. I think it is time for growth through innovation - that is what we are best at. Other countries will have to figure out what they are best at. It is time for leadership that teaches responsibility and accountability on a National level. That is what we need, not another new absurd accounting and financial gimmick called a "national bankruptcy".
- Yedendra Chouksey
- Professor, International School of Business & Media, India
A major disadvantage of the world being a global village is that a nation plunged in an economic or financial catastrophe caused by its own follies cannot be left to its own devices. Otherwise, even when it will pay for its sinful extravagance, the inter-connectivity of trade and commerce will cast its shadow on other nations forming a vicious circle. The bigger the defaulting nation, the higher the impact on other nations. So, on paper, the solution of national bankruptcy in extreme cases looks appealing. But externally imposed economic discipline has political overtones and it could lead to a tussle for supremacy among rescuer nations. (Drawing an analogy from Chapter 11 bankruptcy, if the nation's debt exceeds assets, who will own the country?) Therefore, no such package could be implemented well unless the defaulter and the saviors work together in good faith with rescue as the sole objective.- JTG
Let's explore how 'bankruptcy' works. An individual/ company/ country runs out of cash and can no longer service the outstanding loans. Banks or institutiions depending on convenants of the loans have or do not have a recourse at the borrower's assets. Bankruptcy is then declared so that the borrower's assets can be sold off and whatever proceeds divided among debtors according to the hierarchy of the debts.In the context of a country declaring bankruptcy, I presumed the question then becomes can the lenders go into the country to force a sell off the country's assets? Or can the lenders appoint the members of the management team (the government) to ensure that debts are paid off before money can be spent on non-essential areas of the country's budget? Of course, what constitutes essential or non-essential will be decided by the management team or the government.
Is democracy compromised? Yes! In the event, that the individual's house is repossessed due to defaulting on the mortgage, is individual rights to a roof over their head compromised?
There are a few comments that lenders should take a hair-cut because they feel that it is a case of lenders beware. Why should the borrowers deserve more sympathy? As it should also be a case of borrowers beware, is it not? Be it individual/ company or country bankruptcy, a consistent approach should be implemented. There should be no exception due to that implementing the same rules on the company or the country is unthinkable. There will be pain but at least it will not leave lenders or borrowers in doubt about their responsibilities as parties to the loan terms.
- Anonymous
Coming off the back of the GFC, it's precisely actions and statements like "'There is a sale on money.' (One company with which I am familiar acted on that belief recently by borrowing a billion dollars that it didn't need and giving it to shareholders in the form of a stock buyback.) The US government and other borrowers are beneficiaries of this phenomenon," that should be raising big fat eyebrows.- Anonymous
Bankruptcy usually is, and should be, a last resort. But that does not mean that we should bail them out. Greece, any other country, state, county, city, citizen and corporation should take fully responsibility for their respective actions. These constant bailouts and "kicking the can down the road" actions hurt those who have lived prudently (e.g. savers), reinforce bad behavior and only create bigger debts for our children to repay. It is time to stop this nonsense.The executives of the world's biggest banks are crying that an economic crisis will occur - but what is their self interest? To have the governmental agencies - including the IMF, which obtains a huge amount of its capital from the United States, bail out Greece so that their bond holdings become profitable.
It is time for politicians and citizens to take hard medicine. Perhaps this is an immediate pre-packaged bankruptcy. Then implement an "fund" to attempt to repay the defaulted debt by various future fundraising efforts, such as (1) collecting back taxes and penalties from the tax avoiders; and (2) selling off the government-owned enterprises (e.g. phone company); and (3) seeking penalties from those investment bankers (e.g. goldman) who helped Greece hide the true magnitude of their debts in order to gain acceptance into the EU.
The political process has become corrupted by those seeking power and re-election. It's time to remove them and run these government entities like bottom-line oriented businesses.
This applies to the United States as well.
- jay Somasundaram
- Systems Analyst
I'm reminded of the old joke - When you borrow a hundred thousand dollars, you spend sleepless nights. When you borrow a hundred million dollars, it's the bank manager who can't sleep.- Phil Clark
- Clark & Associates
National bankruptcy is not about the money. It is about the will to stand as a power and democracy. Harry Truman went broke early in his life. He refused to go bankrupt but repaid the full debt. It was pride, conviction, and the will to prove to others he was a worthy person that drove him to that. Those who go bankrupt lose sight of personal principle and beliefs. A country going bankrupt undermines itself and demonstrates it weakness. We have the assets...do we have the will. The character of a nation is being tested. It will be interesting if our people from Wall Street to main street have the will and character to stand as a nation. If we continue to "fight like dogs over a bone" I fear the nation will suffer. We are all to blame for this crisis. Let us all work together to resolve it.- Anonymous
There are two points I would like to make:a. Individual/Company/National bankrupties can not be addressed consistently because they differ in nature.
b. we tend to underestimate the responsibilities of the lenders when they lend money in an irresponsible manner.
The different nature:
When individuals borrow money they undertake full responsibility personaly. It is the individual who is fully responsilbe as a person for the use of money. He is also the one to suffer the consequences of irresponsible use of the money he borrowed. In this sense it is correct to assume that the person pays the penalty for his individual behavior. Therefore such an approach is socially accepted and therefore applied without any major objection.
When a company borrows money there is a kind of collective responsibility and collective decision making on the use of borrowed money. Individual shareholders may or may not agree with the decisions of the collective body that manages the company/country/state. However decisions are made though a collective decision making system which will at the end reflect a mixutre of influence of common sense, comprimises of conflicted or opposite interests, power games or even a degree of irrationalism from time to time. Shareholders have the control over the decision of how many money they put into the company. They can only be punished by loosing this capital. Lenders have no further right over their property. Same shareholders can once again buy shares of a new company without any concequence beyond the money they lost. This mehcanism is once again socially accepted and clear to all participating entities both lenders and borrowers.
When countries are borrowing money once again there is this kind of collective responsibility and collective decision making. But there are some significant differences: a. a citizent does not have a choise of participating or not in a country like a shareholder b. the citizen does not have a selection of how much money will "invest" in his country c. loans to countries are not given usually against predetermined "mortages". d. once a country goes bankrupt its citizens can not participate in a new company as a shareholder. It is these differences that make national bankrapties socially unacceptable and make debt repayment agreements difficult.
But what about the lender?s responsibilities over the situation we face today?
The lender side in all cases is making a business decision whenever decides to lend money. It is clear to them that they undertake a certain risk of the loan not being payed in the future therefore theye require for a certain premium. It is up to the lenders side to evaluate the risk and determine premiums and securities required prior to lending the money.
Doing a good job on the lender side means correct estimation of the required premium. This is to be included in the cost of money when lending.
Lenders who irresponsibly sell money actually have been giving money below cost just to increase their market share. How fair is it to save them? Is it fair for wise lender to intervene so as to force borrowers to pay back the lenders who have given money in an irresponsible manner? If we force debt repayments then it would be just like saying you can go on unfair competition and irresponsilbe sales?
In a free market at the end of the day it is the borrowers responsibility to correctly estimate the risk and include this in the cost. Noone forced borrowers to give the money. They just gived in the tempation of selling money at sales prices to individual/companies/countries and now they complain for the risk of their losses.
If we want to avoid similar situations in the future it is primarly the borrowers that must be punishted and get a clear lesson on how they price the money they sell and how the compete on a fair basis with each other.
- Dr. S.A. Visotsky
- Chairman & CEO, Vitech Group LLC
Greek Debt in April of 2010 was around 300 Bil. Euros, give or take a 100 Bil. (that may or may not have been parked offshore according to 2 of the EU largest Banks). Now, why didn't they, (EU) have a Crisis Management Team on the ground before they gave them the bailout in 2010? The European Commission, the IMF and ECB set up a tripartite committee sure, but they need to be on site, not in a video conference room. They (Greece) got the initial money last year, and by September it was gone. They claimed they lost a majority of it in high risk investments and margin calls. Before they, (Greece) get another Euro Cent, their should be a EU Crisis Management Team of 50 to 100 individuals, ON SITE, to manage those funds. Move them straight into the Ministry of Finance until further notice, give them the wheel and let them navigate out of the storm. Poor Management (EC, EU, IMF), accumulated government debt (120% 2010), and tax evasion (20 Bil Euros p.a.), all on public record, are enough grounds for the EU to step in and set up shop. Isn't Compliance the new mantra in the EU? The bankruptcy per se, has effectively already happened. The management of it, or lack thereof needs to be addressed now.
- Anonymous
Addressing national debt issues with financial criteria is one way to read the story.Going back to the origins of economy we need to remember that economic activity and tools has been invented and developed till today with a single objective: to meet more efficiently the needs of societies.
Debt crisis is not only linked to the financial entities but with the very main customer of economic activity, society itself. It is important to investigate these influence as well:
We have to keep in mind that in cases of debt crisis, the ammount of money have not ended up equally to the citizens of each country. I would say that they are not even invested properly for the interest of the citizens of any country ending up in such a situation.
While most of the economic theories assume perfect information and rational approaches, the real world usually comes to deviate from such assumptions. In the cases of overdebted countries this deviation can be expected to be much higher. There are interconnected interests both on lenders and borrowers side which have power to benefit mutually. Some lenders increase their sale of money, some politicians, companies etc on borrowers side gain access to capital which they use for meeting their goals which do not necessarily align with the interests of the citizens of the country (usually there is a democracy deficit in these cases or a deficit in the efficiency of democracy).
Allocating debt accumulated to the whole population reciprocates a justified reaction on the ground that nobody wants to get the burden of a debt he was not benefited of. If action is taken to force the population to repay the debt then it is a natural law that a reaction should be expected by population.
So here are some questions that we consider:
* who is responsible in such cases: the individual citizen? the corrupted goverment? the lender whose interest is limited to just increase his sale margin with no furhter examination of the borrowers credibility in broader terms?
* spreading the burden of the lost debts to societies to a certain extent ensures payment of the debt but reciprocates reaction from individuals not benefited by the debt and now they are expected to contribute to repayment. How are we going to respond to a growing disatisfaction by individuals who have also been somehow cheated?
* how are we going to manage unemployement levels of 40% in young ages in countries which we claim to belong to "developed" countries such as Spain? How is this going to be developed in 10-15 years when this age group will middle age if unemployement remains high?
* what can be the reaction of populations if they perceive (correclty or erroneously) that existing economic model is not serving them at the end of the day?
I do not have the answers but I think it is important to address the issue in a more wide perspective taking all issues into account and not just the financial part of it.
Afterall societies is the foundation for economy. If the societies start to disintegrate even in the developed side of the globe then I would not have much hope for the economies of all countries.
- Douglas R Elliott
The term 'national bankruptcy' is an oxymoron because it is the court system of a nation that adjudicates the rights of insolvent debtors and their creditors. The better term is 'national insolvency' which is the inability of a debtor nation to repay its creditors from its revenues. There are 'laws of nations' remedies including seizure of the insolvent's assets, suspension of trade, or acts of war. But these are drastic and unilateral remedies that only rise to the interests of other nations that are themselves substantial and aggrieved credtors. By and large, private creditors to insolvent nations are on their own and good luck to them.Default is always avoidable if new debtor assets can be found to secure borrowings and whose proceeds can retire current at-risk debts. The United States and the rest of the highly developed nations are fortunate to have such assets in the form of intellectual property and similar intangibles. Patents, trademarks and copyrights are obvious examples of these 'creation capital' assets. And it is the rule of law long established by the domestic courts of such nations that makes these properties so valuable.
The US government itself holds a few trillion USD of these intangibles. And they do not show up on its national balance sheet. Seems to me that it is now time to begin monetizing these assets and restore the confidence of markets in the true wealth of nations.
Doug Elliott
D. Elliott & Associates
- Sharika Kaul
- Business & Media Strategist
If lenders decided to run every company that went or was about to go bankrupt, then they would not be in the lending biz. The idea is not to let a person, company or country, for that matter to file for bankruptcy as that would mean that they are no longer responsible for the losses or bad judgements that they have used. The goal is to get in people who are competent to understand what went wrong in that specific situation and allow them to do their job - that of turning around that loss making unit. And then legally collecting what is owed. It's impractical for lenders to say 'hey you don't know how to do your biz, so I will do it'. If big corporations can be turned around from the dumps and there are people who call themselves turnaround specialists, then definitely there is a positive opportunity to use and deploy these skills, even at a sovereign level. It will be difficult as there would be many balancing acts to be played. But I am hoping that in such a dire situation where millions of lives and families would be endangered, the moral compass would point north. The test I think is not what would happen if we allowed a country to go bankrupt and like voyeurs see the fun. The test should be whether the financial institutions and governments have the courage to do the right thing and do what is in the best interest of the people who live in that country. And lastly fiscal responsibility cannot be taught by allowing some else to go down in flames. Human beings, being what we are, we would watch the show, feel bad about it, discuss it in media, parties and our homes, but not learn from it. Personal and sovereign fiscal responsibility can come through only by discipline and sacrifice. And discipline sometimes has to be enforced and this can be viewed by many as being undemocratic. That is the tricky part.
- JTG
In an earlier comment, I threw into the mix the need for consistency in dealing with the responsibilities of the lenders and borrowers be it at the individual/ company or country level. I agree that the benefits and risk at the borrowers at these levels differ. However, I do see that people behind the company or country should be responsible for the debts. At the company level, CEOs, senior management and Board of directors loss their jobs when a company is in bankruptcy because they took the decision to borrow. Of course, employees further down the line also suffer as a result. They are more innocent as they don't choose their superiors.For a democractic nation, can we say that the people are not responsible for the nation's debt? Though they are not directly involved in making the decisions to borrow, they are the ones who chose the representatives. Though the money that was borrowed may not be evenly distributed, majority of the country enjoyed the benefits of over spending. Majority of the country are happy to go back to the ballot box to return that group of people who decided on the borrowings back into office. If they are not responsible for the debts and bear some, if not most of the pain, why should the lenders be the ones to bear most of it?
I am not saying that lenders should get away with it, not when the lenders did not perform their due diligence to ensure the credit worthiness of their borrowers. I just simply cannot see how either party to a fair contract can wiggle out of their responsibilities. I still believe that implementing the responsibilities consistently even at the country level will deter borrowers from over spending and lenders from over commiting. National bankruptcy, it will have to be, I guess.
- David Testa
- Retired, T. Rowe Price
Greece should be cut loose from the EURO and the EC. Money spent kicking that can down the road would be more effectively focused on building a firewall around the European banking system and the other weak sisters in the currency union. It will have to be spent there sooner or later anyway. The Greek population and government are so corrupt after years of fiddling at every turn, personally and as a whole, that no other solution is credible. Taking that step at this time would have the salutary effect of sending a clear message to the other miscreants and would significantly increase the probability of their accepying the necessary policies to end the crisis. Allowing Greece to escape (even if only temporarily) the consequences of their perfideous behaviour would lead to the unwinding of Europe's attempt to bring the continent together in an enduring and beneficial union. Greece is a small and periferal member of both unions andits excision would protect the whole from a fatal infection.
- Anonymous
We should eliminate utility bills for citizens, that way we could pay our bills. Families could survive on one income and spend more time with their children. Immigrants with no visa should pay a fee monthly instead of using up resourses and not paying into the system. I am sure there is alot of money leaving the country. Ask western union. I am sure they want to do the right thing. And would not mind paying a fee just to remove the criminal element.- ajit
- none, none
Not sure what all the fuss it about. Yo borrow, you payback. You borrow and spend, now you spend less, and payback. Yes it does involve a 'workout', for those who do not like the word bankruptcy, so start working it out. And yes the workout will be painful just like taking bitter medicine, but the country will come out the other side better off. And politicians will have had this one excuse to cut expenses and collect more taxes. Going a bit hungry is OK, helps toward a healthier lifestyle, and men spending more time at home with family is good, let them do a veggie garden and play more with the children. Also in the US the rich can remodel a bit less and buy cars more often. it will work out. They can try cooking more, and invite me :)- Steve Sheinkopf
- CEO, Yale Appliance
National bankruptcy? It will be more insidious than that. Germany will own Greece eventually, and the Greeks will still owe the debt.Our country is headed down the same path. You cannot say yes to every special interest, cut taxes every four years and fight two wars. It is simple economics. Obligations surpass revenues.
We have an additional issue: We can't manufacture anything to help create jobs and raise revenues. Read about our latest 7.2 billion dollar bridge...Made in China
- V P Kochikar
- Assoc. Vice President, Infosys
No country can afford to declare bankruptcy in the way a corporate entity can. The social and economic costs would be just too high. The misery such a move would impose on that country's citizens - many of them innocent - would be unimaginable. Luckily, I also believe no major country needs to go to that extreme. Countries have lots of avenues available that companies or individuals simply don't:- Public assets can be sold. As an example, Greece can sell stakes in public companies including utilities, posts, railways etc. to raise at least $50 Billion that'll be enough to tide over its crisis.
- Also precisely because of the high costs a national bankruptcy would entail, other nations and international institutions will scramble to save the endangered nation. In Greece's case the EU has already done much and will do more. This is why it is extremely unlikely (bordering on the impossible) that Greece or any of the peripheral European nations (somewhat unflatteringly referred to by the acronym PIIGS) will actually default or go bankrupt, despite widespread fears and fulminations to that effect.
- Rafael
If I'm a Greek national and run the numbers, there is very little chance that my country can pay back the debt. It can't devalue and export its way out of it. As long as it is in the Euro, it can't inflate its way out of it, and nothing seems to suggest that it can credibly follow and increased productivity path out of it either. Even if everybody starts paying their taxes it's not likely enough. - So if I come to this conclusion, why would i accept another loan to repay part of my debt?My motivation would be to simply say "no", i realize that a national liquidity crisis is extraordinarily painful, but with the proposed path, i just keep digging myself into a deeper hole, and its not as if I'm "buying time" for anything.
It will be painful to me, but it will also be painful to the banks that lent me the money, the national treasuries where those banks reside, and for the financial system globally. I rather like the prospect of everybody having skin in the game of solving this problem than just me.
Yup, if I were Greek, this would be tempting.
- Georgia Kollias MPA
- Athens, Greece
As a Greek citizen, this new Hooverism being shoved down our throats by the EU and the IMF makes me wonder whether the EU or Greece itself is truly a democracy.As a Greek citizen, I personally played no role in creating this huge deficit over the past 30 years, but nor did I enjoy the fruits of its investment capacity. Those who did reap its benefits, when it was still called a loan and not a debt, were the corrupt politicians of all political parties (last 20 years) all the way down to local government levels, their cronies in the ministries who embezzled public funds, the powerful unions who demanded and got the perks they wanted, the banks of all European countries at least while they were being reimbursed, rich industry leaders who usurped the loans meant for smaller business investments, the huge civil service bureaucracy and their pensioners who got jobs in exchange for votes, etc.
As a Greek citizen, I have always paid my taxes, paid for my kids' private education because the public school teachers were always on strike, and what I got in return were public works programs of lesser value (as half their cost was pocketed by ministries), phone/internet services that rarely worked especially if it rained, public utility companies that suffer from frequent power cuts, and that striked more than they worked, yet their bills continued to increase (bills which include the cost of public TV and public radio for whatever odd reason), public works projects on highways that were constantly under repair but always flooded afterward again as before, and a public transport system and airline that never seemed to have finished modernizing but always ultimately looked the same after massive amounts of money were spent.
So, now as a citizen, I am being forced to triple pay property that I inherited, triple pay an SUV that I was able to buy after thirty years of working 12-hr days in the private sector, and all of this so money can be paid back to German and French banks, in that order. Ironic that it was the German, French, British, Swiss, US companies that paid the bribes to the ministries, politicians, etc for public works, defense, transport, telephone, airport projects etc. Ironic that the products we buy in the retail and food market are mostly German, French, British, Swiss, US, etc. Ironic that Greece is being forced to sell off their strategic interests to these countries under the guise of a 'bail out' rather than 'buy out' package. Interests such as petroleum in the southern Aegean, uranium deposits in the north also play a silent role. Germany already depleted the country out of massive amounts of raw materials (not to mention the killing off of thousands of women and childr
en) during Hitler's years and occupation, and still owes Greece billions for this. The UK British stole the Elgin (Acropolis) marbles under the guise of protecting them, but under difficult economic circumstances that they themselves faced, never returned them.
So, as a Greek citizen, yes I would like to see some massive debt forgiveness for debt that I never benefitted from or created. All the euro meant to me so far has been increased prices for everything and increased European imports that never tasted as good as our own fruits and vegetables, not to mention imported mad cow disease, nitrates in chicken and pork issues, German sprouts, and a cheap Danish cheese under the guise of 'feta' which tastes like rubber.
I would much rather see EU/IMF specialists push for faster and deeper and broader Top down reforms and spending cuts on out-of control ministry budgets and programs that are not needed, rather than raping the underdogs some more. I would like to see the EU/IMF help identify embezzlement of public funds, the bribes, the Swiss accounts, the off-shore properties of politicians and past ministers of the past 20 years. I would prefer the EU/IMF know-it-alls donate their time to reform the Greek ministries and civil offices and to teach the true meaning of public service and actually the true meaning of a democracy where the representatives of the people actually do represent them, and pass laws and measures that are truly for the good of the majority of citizens, and not for the few: banks and a new European colonialism that reeks of Hitlerian foundations.
80% of Greeks do not support the new austerity measures. 10% are too old or two young to say so, and the other 10% can no longer afford a telephone to participate in the survey.
This is the reality of the situation that the EU under Angela Merkel and the IMF under Lagarde is and will be imposing on Greece.
- Ruth Rama
- Research Professor, CSIC (Spain)
A reason why some nations are currently indebted is that information on budgets and expenditures incurred by governments are not publicly available. Therefore, the parties in the opposition and the press have been unable to control properly or to criticise governments' expenditures. This is obviously a failure of democratic institutions. The other week there were thousands camping in the squares of Spain to request, among other things, a law of free access to information and statistical data. The US and most of the EU countries have one. Sweden's dates back to the 18 century. There is not such a law here.- Gaurav Goel
- DGM
Any nation that takes debt from external entities and fails to manage its finances is in high probability being run by incompetent leaders. In many cases, these leaders are corrupt and are reason for failure of the projects for which the debt is taken. Their efforts to keep power to themselves and siphoning of the money to personal assets lead to economic crises. In such cases, how is it justified for financial institutions to penalize the citizens of the country for the misdeeds of few?I think that financial institutions need to be more prudent in ensuring that funds lend by them are used properly by the leaders of these nations. Situations where corrupt leaders create personal fortunes at cost of their country's financial health must be discouraged.
- Ravindra Edirisooriya
- Senior Accounting and Finance Major, Missouri Southern State University
#44 Georgia Kollias, MPA, Athens, Greece, deserves great credit for exposing the inner workings of governments in developing countries, like Greece and many others. The question is why does it happen and how do the politicians do it? The inner workings of governments (and missionaries) in developed /almost developed countries is to ram their ideology, and world (and religious) order down the throats of the developing countries either by force, bribing, corrupting or aiding and abetting the dark side (unethical behavior)of human (animal) morality of some politicians (and some of the population) in the developing countries. Some large corporations and global institutions like IMF and UN (corrupt) also practice the same "mind bending" techniques because they are mostly creatures (run by handpicked faithful) of the developed countries.Studying American history would inform you that some Congressmen, some Senators, some Presidents, some State Secretaries behaved unethically, and it is an ongoing trend. A recent study from Brown University says the true estimated cost of American Wars in Iraq and Afghanistan (and Pakistan) is 4.3 trillion dollars plus (and drones cannot distinguish between enemy combatants and civilians but they are fired anyway. Who is violating human rights here? Should the US not demand to investigate itself like it is doing from other countries or should we hold US to its lesser standards? It is over to you Madam Secretary of State.) This was not the picture shown to (framed for) the American public by then President George W. Bush and his cohorts in the Congress. The remnants of those cohorts have now tuned virtuous and extremely frugal (in the opposition) to the extent that they are so blinded by tax cuts (only other way, next to deregulation, they seem to know and want to try growing
the economy) and reduce or eliminate necessary (spending) expenditure on education and infrastructure to modernize American (and world) economic base to be competitive in the 21st century. Developing the capability to "colonize" other habitable planets (hope we do not have to slaughter and marginalize native species like Americans did to the Native Indians) is paramount to survival and development of the human race and our systems need to be geared for it.
We the human race as human animals are unethical but we could transcend this state to become human humans, which one should not expect for another 1000 years. I previously thought that it was impossible since our thinking and activities seem to be at times circular, zigzagging and random the way nature designed it, I suppose. Should we or should we not be optimistic?