Peak Debt = Peak Capitalism?

[wayneL]

Re Chicken Little.

The sky might not fall, but things like stock markets, currencies, nations/governments... even civilizations periodically do.

IOW, Chicken Little is a false analogy.

 

[Uncle Festivus]

Since the start of the financial crisis, industrial country public debt levels have increased dramatically. And they are set to continue rising for the foreseeable future.

A number of countries face the prospect of large and rising future costs related to the ageing of their populations. In this paper, we examine what current fiscal policy and expected future age-related spending imply for the path of debt/GDP ratios over the next several decades.

Our projections of public debt ratios lead us to conclude that the path pursued by fiscal authorities in a number of industrial countries is unsustainable. Drastic measures are necessary to check the rapid growth of current and future liabilities of governments and reduce their adverse consequences for long-term growth and monetary stability.

So says the Central Bankers bank, the[FONT=Arial, Helvetica, sans-serif] Bank of International Settlements.

http://www.bis.org/publ/work300.pdf?noframes=1

The next phase has begun - hung parliaments - as the populace can't decide on who will save them. The UK, Germany, Philippines and possibly even Aus with Rudd Co now 50/50 with the alternatives.
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[drsmith]

http://www.theaustralian.com.au/bus...und-for-eurozone/story-e6frg90x-1225864426160

It casts aside long-held notions that each EU nation should manage its own finances, opening an era in which members of the common currency take on unprecedented responsibilities for each others' fiscal troubles.

Another finger in the dike to try and plug the leak ?

How many fingers are left ?

 

[drsmith]

Crikey Moses!

The S&P500 futures likes it. Up 3.6%.

Guesses for where the index will end today's session and what it will mean ?

 

[wayneL]

Crikey Moses!

The S&P500 futures likes it. Up 3.6%.

Guesses for where the index will end today's session and what it will mean ?

Investors have been deluded into liking pseudo Keynesian bailouts... or should I say punters?

 

[Whiskers]

Watch out Chicken little!

It's coming from the other direction! :

 

[cutz]

Crikey Moses!

The S&P500 futures likes it. Up 3.6%.

Guesses for where the index will end today's session and what it will mean ?

Have no idea but one thing's for sure, it's getting pretty exciting.

at last

 

[Uncle Festivus]

TOKYO (MarketWatch) - Japan's central bank joined five major global counterparts Monday in reopening temporary U.S. dollar-liquidity swap facilities as part of coordinated global central-bank efforts to maintain normal money-market function.

Crank up the 'copters Benny, another $US1TRILLION please .
The Sara Lee Debt cake - layer apon layer apon layer..........
Or the Sovereign debt chocolate wheel - where it stops nobody knows.....
Or the no doc central bank bailout - print some more IOU's......

 

[basilio]

Promise of $1trillion dollars to support Greece et al and hold the Euro. The cavalary has arrived in the nick of time and all the punters can jump back into the market secure in the knowledge that we will have peace in our time, a chicken in every pot and a perpetual rise in national living standards.

I think I'll believe it when in 6 months Greece, Italy, England, Spain, Portugal USA , in fact all the debtor countries, start demonstrating a reversal of debt expansion - and somehow still manage to keep the economies alive. Otherwise it will just be the last big bang before the inevitable bigger bust.

Just don't really want to think what that sort of bust could look like.

 

[explod]

Just don't really want to think what that sort of bust could look like.

Maybe we will see the trees basilio, ar huh ""Idea"" the seppos could start with jungling Detroit maybe.

 

[Uncle Festivus]

If a measure of peak debt is when the government debt to GDP ratio goes above 1, then we have post peak debt right now.

And we have the US pointing the fiscal finger at the Euro zone with a 'get your house in order' frown, when the US is in a worse condition already?

The real state of the global financial system is actually several times worse, because the chart does not include unfunded off balance sheet items!

Chart source - Now & Futures

 

[basilio]

Ugly set of figures isn't it Uncle !! Just can't see how it can have a happy ending no matter which way we massage the figures. There will have to be truly monumental change in accounting and reality to keep most of us smiling as this play unwinds.

Incidentally if/when we have a significant recession/depression then the debt to GDP ratio will climb even higher as GDP falls

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That is a fascinating series of charts you have linked to . Thanks

 

[basilio]

I've just spent some time on the World of Possible Futures website that Festivus used as a reference for his recent post. Quite fascinating. In considering where the current financial crisis might take us it's worth looking at what happened during the 1930's depression as debt was unwound around the world.

* "A common feature of all these earlier troubles [panics such as 1907 and 1914] was that having happened they were over. The worst was reasonably recognizable as such.

The singular feature of the great crash of 1929 was that the worst continued to worsen. What looked one day like the end proved on the next day to have been only the beginning.

Nothing could have been more ingeniously designed to maximize the suffering, and also to insure that as few as possible escaped the common misfortune. The fortunate speculator who had funds to answer the first margin call presently got another and equally urgent one, and if he met that there would still be another. In the end all the money he had was extracted from him and lost.

The man with the smart money, who was safely out of the market when the first crash came, naturally went back in to pick up bargains. (Not only were a recorded 12,894,650 shares sold on 24 October; precisely the same number were bought.) The bargains then suffered a ruinous fall.

Even the man who waited out all of October and all of November, who saw the volume of trading return to normal and saw Wall Street become as placid as a produce market, and who then bought common stocks would see their value drop to a third or a fourth of the purchase price in the next twenty-four months.

The Coolidge bull market was a remarkable phenomenon. The ruthlessness of its liquidation was, in its own way, equally remarkable."
-- From The Great Crash of 1929 by John Kenneth Galbraith

http://www.nowandfutures.com/great_depression.html

 

[Aussiejeff]

I've just spent some time on the World of Possible Futures website that Festivus used as a reference for his recent post. Quite fascinating. In considering where the current financial crisis might take us it's worth looking at what happened during the 1930's depression as debt was unwound around the world.




http://www.nowandfutures.com/great_depression.html

But, apparently we are much smarter and tech savvy now. We've had years more experience since then. Those poor old timers were sucker dummies, eh?

We New Agers are better educated and know better than to be fooled like that.

Thnak god for modern civilization and it's endless benefits & resources. We are The Gods Of Debt!

Bring it on....

 

[GumbyLearner]

This 11 minute video is interesting. For those interested in economics take a look. The academics final point about who to vote for is very amusing. Enjoy

 

[againsthegrain]

10 years ago things were looking like the peak, money printing dropping rates worked back then so kick the can down the road.

Here we are 21/22 things looking like heading into the peak, but this time rates are more likely going up then down, printing is stopping.

Is there a way out this time?