Friday, April 22, 2011

Book Review: Rework


Fried, Jason and David Heinemeier Hansson. Rework. New York; Crown Business, 2009.

This is an odd book. It was at once insightful and pie in the sky. Inspirational yet meaningless. It's most distinguishing feature was its rampant tree murdering by taking up every third page with a little doodle.

Labels:

3 Comments:

Blogger Yoel Natan said...

In FaceBook you said that the US was a long way off from default on its debt. I recall you suggesting that a country could borrow up to 150% of its GDP and still pay it off eventually.

Here's my theory. A country can owe 150% of its GDP as long as the creditors are mostly in country, but only 100 GDP if all the creditors are mostly outside of the country.

In the case of the US, paying down WWII helped the economy since the govt was paying off its own citizens. By contrast, Greece's debt was only 105% of its GDP in 2007, but it went downhill fast because three-quarters of that debt was owed to foreigners, so govt austerity measures were required just to pay maintenance on the debt, and that caused a contraction in Greece's money supply, thereby causing a recession, thereby cutting govt tax revenue and eroding the ability of the govt to pay down debts in the future.

As of 2011, 47% of US national debt is held by foreigners. Maybe that means the US can borrow up to 125% of GDP without defaulting if it maintains the current domestic/foreign ratio, not that I'd like the US to test that theory just to see:

http://www.csmonitor.com/USA/Politics/DC-Decoder/2011/0204/National-debt-Whom-does-the-US-owe
47 percent of the national debt, with China and Japan owning the biggest chunks.

See graphic for how 3/4th of Greece debt was owed to the Germans, French, etc:
http://www.nytimes.com/2010/04/29/business/global/29banks.html

7:12 PM  
Blogger Yoel Natan said...

Greece debt was 105% of GDP in 2007 before things went downhill - see graphic:

http://www.spiegel.de/international/europe/0,1518,765318,00.html

7:13 PM  
Blogger Octavo Dia said...

Here's my theory. A country can owe 150% of its GDP as long as the creditors are mostly in country, but only 100 GDP if all the creditors are mostly outside of the country.

I can see that, but not for the reason you propose.

A democracy is far more likely to default on foreign creditors than it is on domestic ones, so the creditors become antsy much sooner.

9:37 PM  

Post a Comment

<< Home