Foreign Debt and Economic Recovery

Have a look at Foreign-Owned Debt for 2008 and 2000-2007. There is too much money owed to foreign countries. Although optimists say that this money is being used to finance economic growth and it is a good thing, I think it depends on whether we can repay all that money back.

Read article (pdf) on China owned US debt. This is slightly old. China has already overtaken Japan as the largest holder of US treasuries, although the trends have not changed. There is still a minute risk that China or any foreign country can start a "run" on US treasuries causing it values to drop and interest rates to rise.

I think that is not how things will go. When we get out of this global recession, the country or institution that starts making profits again will get all the wealth diverted to it. We can only hope that it is the US so that foreign countries are assured to keep their dollars in US treasuries. If some other nation breaks out of the slowdown first, then there will be a sell-off of US treasuries and money will get diverted there. After all who would want to keep their money in US treasuries with low interest rates? If that happens, US interest rates would have to rise in spite of the fact that the US isn't out of a recession yet. This will cause bad inflation during a recession (stagflation).

The only reason why US can accumulate large debt is because it has no competition. US has done well economically all these years and foreign govt think that in the future US will continue to well. Foreign govts don't have much choice there and so US can get all these "loans" at low cost. All countries are doing badly in this global recession. If there is any competition in the future (who recovers first?), the large debt accumulated by the US govt will be a big problem.

Improving Primary Education in India

In response to this, see the Indian budget.

get rid of ALL departments except:

Department of Atomic Energy
Ministry of External Affairs
Ministry of Health and Family Welfare
Department of School Education & Literacy + Department of Higher Education == Department of Education
Ministry of Law and Justice
Department of Space
Ministry of Home Affairs
Ministry of Defence
Ministry of Finance

I don't see why we need all those other departments. Concentrate on the problem at hand, reduce the bureaucracy and get the job done. If something is well done in the private sector (textile, steel, agriculture, etc), no need for any govt control.

In fact, due to corruption and inefficiencies, I would recommend that we privatize everything (except police and army), even education. Increase the number of courts and ensure rule of law (at least the reasonable ones). It would be hard at first but things would improve in the all sectors. India has spent 60+ years in govt controlled system but nothing much has improved. Improvements have occurred in less regulated sector of govt like IT showing the direction for other sectors.

The usual argument is that people may not be motivated to educate their children or be educated, hence it is necessary for govt to enforce this. The point however is that people don't have motivation now, so the primary education is so bad. Another argument is that poor people cannot afford education. Anything worth something should have money spent on it, so education is not going to be miracle and due to govt inefficiencies, there will be a lot of money spent if it is still public. Private sector is going to ensure efficiency and it will lead to lower fees in the long run.

People will learn the hard way without govt funding, how to earn money and that education is important. Once they are motivated and they have enough money in the free market economy, they can get their children educated.