National Debts

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National Debts

Postby EWang » Sat Apr 24, 2010 9:29 pm

Model United Nations
Topic: National Debts
April 28th / May 12th


When we usually think about the important issue of national debts, we consider the question from an American perspective. What can Congress do to increase revenue and/or decrease expenditures to reduce the enormous public debt? However, it's important to realize that many countries in the world have the same problem, some in even worst situations than the United Nations (Greece and Iceland went bankrupted; Great Britain and other countries have higher portions of debt to GDP). From an international perspective, what can the United Nations do to alleviate this problem? Do research and discuss here on the forums.

Introduction
Currently, the debt of the United States of America, one of the richer countries in the world, the national debt is over 12 trillion dollars. The national debt is almost exactly what it sounds like, being the total of all the obligations to pay back money that was borrowed. This is just one example of the increasing debt that countries are beginning to shoulder. Part of Goal 8 of the Millennium Development Goals is to help alleviate the burden that countries are starting to carry due to their debts. The concern of the United Nations is that the debt, even though it is carried by the government, it carries over to the people, and the UN is worried that many 3rd world countries that take out loans from other countries won’t be able to pay the loans back, so the debt will compound, and then be transferred over to the people, who are already poor enough.

Money Trouble
Across the world, some country’s national debt is so large, that it seems impossible for the country to even attempt to pay it off. For example, Japan’s national debt is now almost 180% of its GDP. The US is in a much less financial crisis, as their national debt is only 8.3% of their GDP. With debts this high, it is a worry that it will become almost impossible to pay back these debts, when your GDP is almost half of what is owed to other countries.

The country of Afghanistan, emerging from almost 30 years of nothingness and turmoil, not only economically, but governmentally, had almost $10 billion (USD) in debt to the countries of Russia, the United States, and Germany. 2 years ago, these three countries decided to waive the debts owed to them from the country of Afghanistan.

UN Steps
As of June 2008, 33 of 41 possible countries qualified for debt relief from the Heavily Indebted Poor Countries (HIPC) Initiative. From this list of 33, 23 had met the requirements for “full debt relief”. Collectively, they have received $48.2 billion towards alleviating their debts. Also, the value of the exports from these low-income countries has increased significantly after the debt relief has taken effect. Additional money is also given to these countries after they are deemed “fully debt relieved.” This is a great step in the correct direction, but we need to further the advance, as it is not only 3rd world countries that have debt issues.

Links
http://en.wikipedia.org/wiki/National_debt
http://www.un.org/millenniumgoals/global.shtml
http://www.brillig.com/debt_clock/

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Re: National Debts

Postby SRaghavan » Mon Apr 26, 2010 3:23 pm

This topic is very pertinent to Canada, a nation suffering from a large debt similar to several other countries such as the United States, India, Russia, France, Italy, and much of Europe.

Currently, Canada's staggering national debt amounts to 814 billion, which amounts to 64 percent of our GDP, according to http://www.visualeconomics.com/gdp-vs-n ... y-country/, which lists the major countries, their debts, and respective percentgae of their GDP.

In the topic brief, it is mentioned that the national debt of the USA amounts to only 8 percent or so of the GDP, whereas in the site mentioend above and a few other ones as well, it is clearly stated that the USA's debt of over 10 trillion dollars is closer to 60 percent of the American GDP. Can someone please clarify this?

Currently, Canada is in full support of the HIPC plan and numerous other debt-relief schemes as well: The current Canadian Federal Debt amounts to paying nearly $14,000 per each resident. Without fixing the national debt, funding in many sectors like education, finance, infrastructure, agriculture, etc. will be stopped, so the national debt is possibly the most important priority for all nations currently.

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Re: National Debts

Postby EWang » Mon Apr 26, 2010 9:34 pm

The topic brief probably means 83%. By my calculations, the US national debt by proportion of the Gross Domestic Product is around 88% ($12.9 trillion debt out of $14.6 trillion GDP) right now.

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Re: National Debts

Postby VSharma » Tue Apr 27, 2010 2:54 pm

Turkey's national debt is 45% of its GDP. Like all nations, Turkey emphasizes on the fact that plans for debt relief need to be proposed. First, countries should be cautious if not already about which banks or foreign nations governments will sell their government bonds to. 60% of Turkish government bonds is held by domestic banks and, in any nation, this could prove risky if the banks losely loan that money to any individual(s). Turkey encourages nations to have tighter regulations on domestic banks which have proven effective in Turkey in order for the Turkish government not to lose mony in unecesarry ways.

Nations should only seek help from the International Monetary Fund to help strategize ways to pay off national debts if their debt is close to the bankrupcy range. Otherwise, nations should make their economic decisions independently.

Turkey suggests that the Un should propose to all nations a goal for nations to decrease borrowing money from other nations by half by 2025. Nations need to focus now on paying off debts rather than increasing them.

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Re: National Debts

Postby athakker » Tue Apr 27, 2010 7:52 pm

Austria has the 23rd highest national debt (on basis of GDP) having a debt of about 68.20% of the GDP of Austria. That is about $220,354,200,000 that Austria owes in debt. Like many of have said before, the issue of having a great debt which some countries cannot afford is only detrimental to the economy of the country. Therefore, this issue must be resolved immediately and the United Nations to assemble tomorrow must find ways to stop these increasingly large debts from affecting countries and in the future, reduce the reasons for which the countries have debts.

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Re: National Debts

Postby VSharma » Wed Apr 28, 2010 3:33 pm

Resolution 6-1
Sponsors: Turkey, Austria
Signatoris: Sudan, Slovakia, Canada, Germany

Acknowledges that nations borrowing and loaning money is inevitable

Emphasizes on the fact that nations need to improve their present policies to improve their present economic conditions

Understands that reducing nations' national debts is a long term goal



Be it hereby resolved by the United Nations assembled:

1. Suggests nations to place stricter regulations on national banks on who the banks may loan money to.

2. Promote borrowing of money from nations rather than from international banks due to the fact that the loans may be paid back as either money or services.

3. Encourages the creation of an organization under the United Nations called the Discretionary Spending Evaluation (DSE) that suggests to each nation that is associated with the United Nations on the first three areas of discretionary spending should be cut back on by 2012 in order for nations to effectively reduce spending. Three more areas of discretionary spending that should be limited on per nation will be suggested by the DSE every three years afterwards if deemed necessary.

4. Asserts that monetary penalties should be placed on nations that allocate loans inadequately.
Last edited by VSharma on Sat May 01, 2010 8:58 am, edited 1 time in total.

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Re: National Debts

Postby SRaghavan » Wed Apr 28, 2010 8:40 pm

Resolution 6-2

Sponsors: Canada, The United Kingdom, The Republic of France, Japan, Honduras.

Signatories: Turkey, Austria, The United States of America, China.

Alarmed that national debts throughout the world are huge and continuing to increase annually;

Aware that current regulations on national credit lending are inadequate;

Understanding that national debts will continue to hinder countries economically and socially;

Cognizant that plans to lessen national debts will be long-term and progressive;


Be it Hereby Resolved by the United Nations assembled:

1. Encourages more efficient spending in countries to reduce expenditures by:

a. Spending more efficiently on infrastructure within the nations.
b. Reducing the amount of money spent on the armed forces during periods of inactivity.
c. Increasing public awareness about the national debt crisis so that citizens may be educated about the problem and willing to take the necessary steps needed to alleviatge the problem.

2. Recommends the creation of a subcommittee under the United Nations solely focused on assisting nations to eradicate their national debt.

3. Condemns the use of tax havens and encourages nations to cooperate in:
a. Reducing offshore savings;
b. Increasing taxes marginally, especially for the wealthy, in order to generate more funds to pay off the national debt.

4. Instructs governments nationally to exercise sounder judgment in the lending of loans to foreign nations and cut expenditures in appropriate areas.

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Re: National Debts

Postby VSharma » Thu Apr 29, 2010 4:36 pm

There are several flaws to section 1 of resolution 6-2. First, there are countries that already not spending much money on their armed forces and do not have a standing army such as Iceland, Haiti, Costa Rica, etc. How can these countries reduce spending on military if their spending on military is so low? Resolution 6-2 does not focus on these countries. Also, why would the United Nations spend money during a recession on something as pointless as keeping individuals "updated" on the current international debt crisis that they already know about.

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Re: National Debts

Postby SRaghavan » Thu Apr 29, 2010 6:31 pm

Actually, Resolution 6-2 doesn't require all countries to reduce military spending. It is suggesting reducing money spent on armed forces during PERIODS OF INACTIVITY. If you had read this clause, you would have understood the intent of the resolution. The main target is countries such as Canada, US, and European nations which are spending far too much money on the armed forces when it is really not needed.

Also, spreading awareness is vital. Contrary to what you have said, saying that everyone knows about the debt, etc., many people are not fully aware of what a growing national debt may do to their quality of living. For instance, take countries like Haiti and Costa Rica, which you wrongly said that Resolution 6-2 does not cover. Some of the population is not fully aware of how severe their national debt is and how it may impact their lives through increased taxes, budgets cuts, reduced funding, and so forth. Clearly, spreading awareness is important.

Also, instead of just criticizing the sections of a resolution, try to come up with a possible amendment. By just pointing out "flaws", you are not improving the quality of the resolution. If you feel that your point is truly significant, please suggest an amendment so that 6-2's sponsors may consider them.

As for Resolution 6-1, I like the core points, but Sections 3 and 4 have to be amended. For 3, state what "areas of discretionary spending" you are planning to reduce spending in. For Section 4, it seems impractical for monetary penalties to be placed, so consider eliminating this section. I will submit an actual amendment after asking the other sponsors.

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Re: National Debts

Postby VSharma » Sat May 01, 2010 8:58 am

Well I just wanted to clarify that I knew you meant during periods of inactivity when reffering to a decrease in military spending. And for section three of resolution 6-1, the area of discretionary spending which will be cut will be determined by the organization i have named. Thats why it is vague because we do not decide the areas of spending that will be cut. We will give that job to an organization that knows which areas of optional spending is not benefiting each nation. We cannot name one area of spending such as military spending during periods of inactivity and say that all nations that are spending money on military during inactivity should cut back on it. The areas of spending that should be cut back on vary from one nation to another. Overall, resolution 6-2 is a solid resolution and i feel certain sections of both resolutions should be combined.

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Re: National Debts

Postby BeWang » Mon May 03, 2010 5:34 am

Besides from section 3, Japan would like to question the merits of Resolution 6-1. The various sections within the resolution seem either unrelated to the topic, or pointless because of the situation of the world. This is most evident in section 4, where monetary penalties are recommended against countries that allocate loans improperly. This point seems absolutely absurd, because many of the nations of the world are already billions, or trillions of dollars in debt, and on the brink of financial disaster. Imposing monetary sanctions would quite easily tip those nations over the edge, and the aftershocks would profoundly affect the world economy as well.

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Re: National Debts

Postby galukal » Mon May 03, 2010 3:02 pm

News update: A bailout plan for Greece has been agreed upon, with Greece promising necessary things like higher taxes and fiscal austerity in return. This could set a valuable precedent for future efforts to sort out national debt problems. If there must be bailouts, they must be conditional- no nation which has bankrupted itself deserves a free handout so it can do it again.

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Re: National Debts

Postby Jfanders » Mon May 03, 2010 5:45 pm

Honestly, Austria and Turkey, your like my bros man, but I have to also qestion the intergrety of 6-1. I'm going to be frank with you, I don't like some of the sections of this resolution. Let take an example:

VSharma wrote:Encourages the creation of an organization under the United Nations called the Discretionary Spending Evaluation (DSE) that suggests to each nation that is associated with the United Nations on the first three areas of discretionary spending should be cut back on by 2012 in order for nations to effectively reduce spending. Three more areas of discretionary spending that should be limited on per nation will be suggested by the DSE every three years afterwards if deemed necessary.


Here is something Austalia doesn't get, your acting like the minute you snap your fingers that this organization is going to be created and that it is magically going to be able to do this in two years. NO WAY! First off, to get a fully fuctional or simi-fuctional organization like this will take about a year to get everything set up and longer to get things properly organized. I get the poin tof the organization and the intent behind its creation, but don't you think the International Moetary Fund (IMF), whose sole purpose is to over see the global finacal system (which includes matters like this) would be better suited for this job. I mean, whats going to happen to this organization once the problem happen to be solved, what then. Plus, what if it interfers with what the IMF does since they would be seprate and probably not communicate. It would make more sense to have the IMF do it instead that way it would not interfer with their work and because they have a better understanding of the world wide finacal sector. As for the time frame, agian, terrible time frame, especially since it is the same year as the world would end (didn't think of that, did you?).If you really are so intent on creating this new organization, set a realistic goal like 2015 or 2018.

I also would like to express my biggest anger of all, section 4:

VSharma wrote:4. Asserts that monetary penalties should be placed on nations that allocate loans inadequately.


Now, let me get this striaght, your going to drop a monetary "bomb" on people who use their loans "Inadiquitly". OK, first off, difine "inadequate" here because everyone has their own perception of what is right and wrong. Here, your leaving that open to interpritation which will cause more problems. Also, what about actully helping these people. While I admit, if a government does something stupid, yes they are at fault. But giving them more money problems won't bring them out of debt. Would this also apply to money given by the World Bank or countries as well? Please specify more if you really want to keep this section.Lets take a look into this section, say the USA does something "Inadquate" with a loan they get from China. Their debt is already in the Trillions and you got some guy at a desk filling out the paper work to add to their debt say, "Well, they got what was coming to them." Wrong answer. What about Sudan (Which I don't know why he signed it since it would ultimatly hurt him and his country), this resoultion states that if they use their money wrong, well then their going to be fined for it. Come on man. That why I move for the deletion of this section.

I also have problems with the rest of these sections which are section 1 and 2, but I'll save those for another time. Overall (agian, no offense guys), but I think that this resolution should not be allowed to pass.

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Re: National Debts

Postby EWang » Tue May 04, 2010 8:33 pm

Revised Resolution for 6-1

Resolution 6-1
Sponsors: Turkey, Austria
Signatories: Sudan, Slovakia, Canada, Germany

Acknowledges that nations borrowing and loaning money is inevitable

Emphasizes on the fact that nations need to improve their present policies to improve their present economic conditions

Understands that reducing nations' national debts is a long term goal

Realizing that the issue of national debts is an issue that countries must work on individually with the help of an international committee

Be it hereby resolved by the United Nations assembled:

1. Encourages nations to adopt a credit history rating system to place stricter regulations on national banks on who they may loan money to so that:
1. Money is not given to untrustworthy individuals;
2. Banks can ensure that the money is returned back to banks;

2. Encourages the creation of an organization under the United Nations called the Discretionary Spending Evaluation Committee (DSEC) that:
1. Can suggest to each nation associated with the United Nations on the first three most important areas(decided by the organization) of discretionary spending that should be cut back on by 2015 so that:
• Nations can effectively reduce spending;
•Reduce their dependency on foreign nations for funding;

2. Additional three areas of discretionary spending that should be limited on per nation will be suggested by the DSE every three years afterwards if deemed necessary;

3. Suggests that nations cut expenditures in the areas mentioned by the DSEC;

4. Recommends that countries work with other nations that have strong, long-lasting and trustworthy ties with them to:
a. Co-operatively reduce both nations’ national debts;
b. Take additional aid to solve national debts issues if necessary;

5. Requests countries to look into their country’s economy to find areas that need reform to save the government money.

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Re: National Debts

Postby athakker » Wed May 05, 2010 7:38 am

Thanks for posting that, Eric. I was just going to do it. Anyways, the new version on 6-1 is more efficient, solid and effective than the previous one and is open to more suggestions. I think that the resolution gives some good recommedations and suggestions to countries and attacks the core problems of the issue of National Debts.


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