Financial woes

Debt reduction

 

Everyone is trying to do it. Most European countries are desperately trying to reduce their debt by taking extreme measures. Greece for example has pushed up its VAT to 23 % trying to tax people who otherwise cheat on their taxes. Taxes on cigarettes have also gone sky high in so many places that it is common practice to smuggle cigarettes. Some countries have taxed cigarettes close to 300%. Israel a country where the economy has fared well in comparison to others has just recently raised its taxes on cigarettes. This may discourage the sale and usage somewhat but probably not very much. Some smokers will deny themselves food but continue to smoke so the regular microeconomic rules go mostly by the wayside. Many countries justify these measures on cigarettes at least on the massive money spent to deal with cigarette related illnesses. Medical costs for cigarette related problems are extreme and the taxes are supposed to mitigate those costs.  That is the debt of countries and governments. But it all really starts with the individual his fiscal planning and attempts to keep his head above water. The world crisis did start with unscrupulous financial institutions but there were irresponsible people who went way over their heads when trying to secure loans for homes. They should not have taken such huge mortgages and put themselves in a vulnerable position of credit despair. They did of course and the repercussions of their irresponsible actions are reverberating around the world.

The world is in debt crisis and doesn't seem to be pulling out of that crisis anytime soon. The emerging powerhouse of the world China is having some trouble in pulling itself out this mess. The Chinese stock market is at a 4 year low as deep concerns over the world economy continue. Europe is the grips of a crisis unprecedented since the end of the Second World War. In the backdrop of this is the looming showdown with a possible nuclear Iran and the repercussions that might have on the world economy.

In essence the Economies of the world work around the concept of going into debt and having borrowed money circulate freely. This allows for businesses to have access to funds they need for expansion. All this spurs growth. But sound economic principles have evolved into irresponsible fiscal planning. The little guy can shield himself from all this with proper spending practices.

Its people and not governments that have the solution.