TEc "A good squeeze" - Why budget balance and debt to GDP must be checked

It is known that there are no rules so rigid as to apply evenly across the full spectrum of economies to produce intended results.
What cannot be dismissed is that every economy demands safe accounting and good housekeeping permanently.
The rules of sound governance with realistic targets to aim for are universal.

If evidence suggests debt burdens cut down growth or have the potential to seriously undermine it then debt necessarily needs to stay checked.
Whether the goal is 60% to 90% or more of GDP is a matter to be determined by responsible government in full knowledge of implications to future generations.
Japan can sustain its exceptionally high debt level.This is owed to a number of reasons not applicable to say Greece.
Yet Japan's rate of growth was severely handicapped over a 20-year period.
But it might be argued that the country was by then a mature economy, its sluggish growth not entirely debt-related.

While co-relations do not always match, small to medium economies overburdened with debt are likely to experience far greater pain than big ones.
Besides I would imagine that running up debt is only feasible - indeed welcome - if it should lead to accrued wealth generated within an economy.
There have been instances in many a country's history when there was hardly a choice.Economies had to grow, societies stabilise and debt to GDP peaked to gradually start falling.
If, on the other hand, debt is used to finance a costly, inefficient profligate State - that has got its spending priorities wrong - at some point in time it becomes unsustainable.

Most countries - large, medium and small - mainly the OECD grouping of rich economies have rightly targeted budgetary adjustment as a priority lasting several years.
This is simply to check revenues against spending.
Debt to GDP ratios are set to continue rising to peak at different levels.

The squeeze forced itself in which if well managed, might prove a winner.
Most governments are now tasked to do what would otherwise not get proper attention and follow-up.
Cutting fat, doing the same or more on the same budget or less.
In short, every department must be asked to be pound-wise while at best affording to be penny-foolish.

Concurrently private business must be encouraged to expand and invest where whichever growth engines are identified.
When meaningful growth rates finally return then only current gloom and doom will start fading away.
A tough balancing act that will see a number of economies doing much better and faster than others.

The race is already on.