Where does all this money come from?

[lynbrown]

The UK owes billions, and now Greece has borrowed £100m. Who has this money to lend? Is it real money or just paper transactions?

[deggers316]

good question lyn
i would like to hear an answer to that

[thetruthhurts]

Yes, and when are the bailiffs calling to collect the money this country owes? If I owed £1000 I would be hounded for the cash. Britain owes billions and no one bats an eyelid.

[rojash]

"f I owed £1000 I would be hounded for the cash. Britain owes billions and no one bats an eyelid."
You've obviously never had a mortgage or a credit card.

[thetruthhurts]

rojash It was a hypothetical statement. Of course I've had a mortgage, several in fact. And credit cards.

[boxtops]

I agreed with tth - if you owe thousands, "they" keep on at you about payment. If banks owe thousands, it's good business.

[thetruthhurts]

Thank you boxtops that was the point i was making.

[Prudie]

I have wondered this in the past and asked a relative who works in finance/hedge funds. He said most of it was owed to the arab countries.

[sandyRoe]

If you owe £1000, and can't repay it, you worry. If you owe a million , or so, the lender worries.

[rojash]

"Thank you boxtops that was the point i was making"
It may be the point you were making, but it simply ain't true.
If you borrow money you don't get hounded to repay it unless you break the terms of the loan - and in the case of a credit card, the last think the finance company wants is for you to repay it - their ideal is that you pay the minimum monthly repayment, thus maximizing their interest.

[modeller]

It is virtual money and never paid back . It becomes the national debt never to be paid only the interest. Its like an interest only morgage. The capital is the property or assets of an economy . The problem arises when a person or a country can not generate enough cash flow to service the interest. Many Arab countries are also in debt but they maintain their credibility because of future sales of oil. We don't generate enough wealth at the moment and therefore like Greece and a few other countries we have to cut down on the money we pay ourselves. This will take years.

[zita-green]

The Chinese have this money. They save rather than spend. They (among others) are lending this to us and it is real; that's why things haven't ground to a halt.

[Buenchico]

Governments raise money by the sale of interest-bearing bonds (called 'gilts')
http://www.dmo.gov.uk...age=gilts/about_gilts
Since gilts are tradeable assets, they can end up in the hands of anyone. In practice that means that they usually end up in the hands of those governments which have a financial surplus (or with the banks of those countries, which are often state-controlled anyway).

As Zita-green indicates. the country which currently has the most 'financial clout' is China. The Chinese could bankrupt the USA overnight if they exercised their option to call in the debt owed on US bonds. (They would never do so because the resulting financial chaos would harm the Chinese economy just as much as that of the USA).

The system works well as long as countries can be trusted to repay their debts. Greece was close to the point of national bankruptcy (which could have resulted in the type of chaos experienced in Zimbabwe) but has the support of other Euro-zone countries to call upon. To a lesser extent, Spain, Portugal and Ireland are in a similar position. The UK has broadly similar problems to those countries but, unlike the other countries mentioned, it can't call upon fellow Euro-zone countries for assistance.

Chris

[Dolly1308]

All this so-called affluence and yet everyone in debt -what progress we've made in the last 60 years !