Thursday, September 18, 2008

If Uncle Sam's Top Hat Lands on Chance...



Earlier today James Shaddock asked me the question "Can a governemnt file for bankruptcy?" after I'd posted this. Well it appears I haven't been the only one asking the question.


A games manufacturer founded in Salem, Massachusetts has this to say about Bankruptcy in the rules of a game you may be familiar with:





"You are declared bankrupt if you owe more than you can pay either to
another player or to the Bank. If your debt is to another player, you must turn
over to that player all that you have of value and retire from the game.In
making this settlement, if you own houses or hotels, you must return these to
the Bank in exchange for money to the extent of one-half the amount paid for
them.This cash is given to the creditor. If you have mortgaged property you also
turn this property over to your creditor but the new owner must at once pay the
Bank the amount of interest on the loan, which is 10% of the value of the
property.

"The new owner who does this may then, at their option, pay the principal or
hold the property until some later turn, then lift the mortgage. If they hold
property in this way until a later turn, they must pay the interest again upon
lifting the mortgage.

"Should you owe the Bank, instead of another player, more than you can pay
(because of taxes or penalties) even by selling off buildings and mortgaging
property, you must turn over all assets to the Bank. In this case, the Bank
immediately sells by auction all property so taken, except buildings. A bankrupt
player must immediately retire from the game. The last player left in the game
wins."



So what if Uncle Sam's Top Hat comes to land on a chance square picks up the card and it says you own your debtors X trillion dollars. But who exactly of the other players on the board would the money $9.6 trillion go to?

Well 40% is owed to the USA government or the Federal Reserve. Yeah strange isn't it but by issuing treasury bonds against itself it would owe.

However the other 60% about $6 trillion is owed to , corporations, US states, and foreign governments. It breaks down to about $2.7 trillion (that's $2,700,000,000,000 for those who like their zeroes) of overseas debt and two months ago over $1.3 trillion was owed to just three countries, Japan ($593 billion), China ($519 billon) and the United Kingdom ($291 billion).

Only 4/5 countries had a Gross Domestic Product (GDP) in 2007 higher than the US foreign debt, the USA, Japan, Germany, China and the UK. Which puts the fact that America is struggling financial into startling terms.

2 comments:

jamesshaddock said...

Thanks, that clears things up. Seems odd that in times of economic crisis we lend $291bn to a foreign country rather than use it ourselves, but one expects that if we hadn't the consequences would be dire.

Oh, and its Shaddock, not Haddock. Don't worry, its a common mistake.

Stephen Glenn said...

Well the debts have been there for a little while just we're currently owed that much.

The misspelling of your name must be similar to be getting the inversion of surname and given name. Happens all the time I understand that, however has been corrected.

LinkWithin

Related Posts with Thumbnails