First; I know nothing of how world finance models operate, but with all this
talk about financial crisis around the globe I'd like to understand at least
how the model operates (or is supposed to operate).

So, who's got the cash? With the UK and as far as I can see most of the
European countries running a continual deficit, not to mention USA et al,
where do the loans come from. Who's got the cash? Are privale/organisations
lending to governments - is that it? Is the entire system doomed to failure
if the world would simply stop inventing more money?

Can anybody point me to a site that would illustrate how all of this works
on a high level. I don't need detail - it would only swamp me - something
concise but tells the story.

Cheers.

"Slainte" wrote in message
...
First; I know nothing of how world finance models operate, but with
all this
talk about financial crisis around the globe I'd like to understand
at least
how the model operates (or is supposed to operate).

So, who's got the cash? With the UK and as far as I can see most of
the
European countries running a continual deficit, not to mention USA
et al,
where do the loans come from. Who's got the cash? Are
privale/organisations lending to governments - is that it? Is the
entire system doomed to failure if the world would simply stop
inventing more money?

Can anybody point me to a site that would illustrate how all of this
works
on a high level. I don't need detail - it would only swamp me -
something
concise but tells the story.

People buy government bonds (gilts). They are used as "safe"
guaranteed investments by the likes of life companies for annuities
etc. They're usually regarded as rock solid, which means government
pay less interest than commercial companies would, but in these time
investors are starting to worry - look at Greece, we may be next...

--
Andy

"Andy Pandy" wrote in message
...

"Slainte" wrote in message
...
First; I know nothing of how world finance models operate, but with all
this
talk about financial crisis around the globe I'd like to understand at
least
how the model operates (or is supposed to operate).

So, who's got the cash? With the UK and as far as I can see most of the
European countries running a continual deficit, not to mention USA et al,
where do the loans come from. Who's got the cash? Are
privale/organisations lending to governments - is that it? Is the entire
system doomed to failure if the world would simply stop inventing more
money?

Can anybody point me to a site that would illustrate how all of this
works
on a high level. I don't need detail - it would only swamp me -
something
concise but tells the story.

People buy government bonds (gilts). They are used as "safe" guaranteed
investments by the likes of life companies for annuities etc. They're
usually regarded as rock solid, which means government pay less interest
than commercial companies would, but in these time investors are starting
to worry - look at Greece, we may be next...

Ah, the mists begins to thin a little. So we see that they are not actually
'safe' at all then. Are they guaranteed in any way?

Is that *it* - fundamentally? Countries borrow cash from investors (the
likes of Life Companies - commervial organisations), who presumably obtain
it (drip-feed) from customer policy premiums. I used to understand that a
country's value was based on Gold reserves. Am I correct in believing this
has been done away with for some time? If so, what has replaced it - a
balance sheet?

I realise the actual management of this model is complex and obviously
volatile but the concept seems to be staggeringly simple. I don't quite
know what I was expecting to hear but I guess it was something more widely
structured and based fundamentally on the intrinsic wealth of countries
moving capital between themselves rather than the investment
companies/general public funds -- simply naive of me!

Thanks for the quick insight Andy. I'd still like to learn more (high
level) about the model so if anybody would like to share their take on it
please do.

(Slainte) wrote:

Am I correct in believing this has been done away with for some time?

A long time. :-) Being tied to something solid was a horrible handicap for
politicians. They had to live within their means and weren't able to dive into
cesspools of Keynesian debt to get their countries through difficult periods.

what has replaced it - a balance sheet?

As far as I can tell the backing is 100% reputation, and 0% net worth. As long as
investors think you're a safe bet for paying it back eventually (ie you have the
power to milk obliging, law-abiding taxpayers), and not inflating your debts away
to nothing, then they'll happily hand over trillions for governments to p*ss down
the drain.

The world is a very curious place these days. I can't help wondering if the Roman
Empire went through a similar period towards the end.

Only back then they were nibbling bits off the coins to make new ones, not adding
zeroes to the BoE's spreadsheet. They were paying over the odds for increasingly
rare wildlife to slaughter in the amphitheaters, not bidding to run up the Olympic
overdraft. And they were supplying cheap bread to the citizenry instead of tax
credits.

On reflection.... no, they were nothing like us at all. ;-)

Andrew McP

I realise the absolute administration of this archetypal is circuitous and acutely airy but the abstraction seems to be awfully simple. The apple is a actual analytical abode these days. I can't advice apprehensive if the Roman Empire went through a agnate aeon appear the end.