The Treaty Of Versailles, which was enacted in late 1871, seeks to dictate what is supposed to be the correct relationship between a nation and its creditors. If a debtor’s credit rating falls below a certain level, they are threatened with a haircut on their debt. In some cases, the borrower’s home may be seized in order to repay the loan. There are some who will argue that these measures were adopted by Germany in order to save their economy from total collapse at the hands of the financial markets.
However, there are those who say that it is the very nature of capitalism to make things happen on their own, and that nobody could have predicted what would happen. For example, what happens when there is a recession? People can no longer afford to buy the houses, or even to rent them. That is why some are saying that the monetary policy of Germany was clearly not in accordance with the markets’ demands.
But if a recession strikes anywhere in the world, including America, the government must make sure that everyone is supported. They do this through the tax and borrowing systems, which allow them to fill the banks and other financial institutions with money and provide them with tax support.
Many people feel that this has put the Western market into a position where it cannot survive. They argue that, if the government would not allow its citizens to get away with such massive levels of debt, the Western market would suffer too much and eventually collapse. There are many who believe that this is a dangerous argument to make.
There have been several recessions in recent years, so many in fact that the amount of borrowing would cause a critical mass to be reached, and therefore the market would start to struggle. But then again, a downturn like this could be beneficial for the majority of Western markets, such as the technology and IT industries.
However, there are those who argue that the economies of western markets are not strong enough to withstand such a fall. Thus, there are economic experts who would argue that the rates of interest in the debt markets would actually skyrocket, making it impossible for the average person to maintain control over his finances.
Others would argue that the debts could also be blamed on the fact that there are not enough jobs for all the individuals who are trying to enter the Western markets. They feel that the unemployment rate in America is still higher than that of all the other developed countries.
If you think that it is these two factors that are causing the current downfall of the Western markets, then you would be correct, but there are others who think otherwise. In fact, many think that the Treaty Of Versailles worksheet answers to the questions asked above.