Cultural differences in economic thinking

I found two interesting posts in NPR’s planet money blog. The first was a podcast (“The Tuesday Podcast: Discipline And Forgiveness”) comparing mortgage systems in the U.S. and Spain. The major difference is recourse mortgage, where the bank can take other items when the borrower stops making payments. The podcast mentions that most developed countries (Europe, Japan, and Australia) have recourse mortgages. I tried to find a list of countries with this system, but did not find one. I also wonder in how many countries this also applies to other type of loans, such as credit card debt. How are bankruptcy laws different in the U.S. compared to other countries?

I think the differences in the banking systems of different countries is a reflection of the way different cultures view money. If there are significant repercussions to not paying one’s debts, one will probably think very carefully before borrowing from the bank and deciding what one can afford. Maybe there wouldn’t be so many people filing for bankruptcy from credit card debt. I feel that the U.S. economy is very much geared towards borrowers than savers. Low interest rates do not help the savers. I don’t think it is as frowned up on in the U.S. to owe money as it is in other countries, especially Asia. I’m not an economist, and this is only from a cultural perspective.

The beginning of the podcast mentions the second thing that I found interesting, which was the post directly before the podcast, “The U.S. Owes China $1.2 Trillion”. The global imbalance of imports and exports means that the U.S. owes a lot of countries a lot of money. This means that the global economy is really closely tied. China, Taiwan, and Hong Kong are listed separately, and each are within the top ten countries that hold U.S. government debt. The podcast mentioned that the $1.2 trillion is roughly one quarter of the Chinese economy. I wonder what percentage of U.S. government bonds make up the economy of the top ten countries?

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