Fox News says we just rolled over $16 Trillion Debt for the USA, though this Dept Clock
says said it’s just a bit more to go:
While this one is already over $16 Trillion:
This interesting site gives it as a percent of GDP for many countries:
Just crazy… So crazy, in fact, that I don’t have a lot more to say about it.
I’m going to paste in here a comment I made in another thread. I’d intended to wait until I polished it a bit more, but it is appropriate to this moment of Max Debt with No Headroom:
A Fiscal Cliff is not made better by building the debt higher before you leap off…
Well, I’ve been watching the news out of Europe and Asia and “it’s not good”… so it isn’t just the USA lining up for a SHTF moment. Been trying to find a way to grab a handful of that Jello to make a decent posting out of it. So far, no joy.
Short form? China is having an economic slowdown. Why? Lack of sales into Europe. Even Germany has had a rollover in auto sales as China has slowed down buying BMWs and Mercedes. So the German Miracle is no longer ‘net flush cash’ to bail out the PIIGS, who are auguring in at great speed… The USA is trying to decide “Socialism or Revolution, decisions decisions” and is just doing ‘kick the can’ at ever higher frequency, and expecting China to loan us $1 Trillion a year more indefinitely. China has slowed / stopped the net buying of Treasuries (see above note about economic slowdown and lack of sales…) so isn’t available to be that spark plug just right now… which means that the European Central Bank and The Fed are both buying all the debt they can. Which is fine, except that it isn’t actually real productivity backed money that is handed over to the PIIGS and US CongRats. Given the basic mantra of Economics: “Who, makes What, for Whom”, that means it is only ‘redistribution’ and not going to create new wealth. Redistribution from the taxpayers and anyone with wages / cash income, into the pockets of the Government Employees (who as we all know have been just SO stellar about creating new net wealth… /sarcoff;> ) So the proposed “solution”? Print more money to hand to the government in exchange for more IOUs… while chasing real productivity out of the country and driving it out of existence with more heavy handed Government Mandates. Repeat until dead.
But it is just so damned slow that folks get mesmerized by it and think they are doing something else. So we’ve got a ‘Race Condition’ between the Socialist Tortoises running for the cliff. Who will get there first? Euro Zone? UK (better than many, but with a recession starting again)? Australia (who have shown some limited signs of sanity, perhaps too late)? Japan? Aging into a stagnation of mutual dependency and self absorption). Communist China (exuberant but discovering that it’s a bad parasite that kills the host)? South America (where Chavez and Friends are trying to make a New Socialist Union of South America, fed by massive influx of Euro and US Oil Money – see above about printing paper…) that’s dependent on China, EU, and USA that are all ‘having issues’? Or the USA which used to have a vibrant and flexible economy but now is mostly just “customer of China, Saudi, and OPEC” and wants to consume a few $Trillion more than it makes every year for the next few decades? Where the BEST that looks achievable is a Japanese Style “Lost Decades” that lasts for 30 years.
I have little hope that even the best possible outcome, a Romney win, can turn around the momentum of the US Economy toward that cliff. He ‘worked well’ in Taxssachusetts and that sets your habits as “compromise and die more slowly”. But it’s the best shot we’ve got. The EU is 100% dedicated to the phantasy solution method (money shuffle and fiat games) and not to reality based POV. (Things like actual production of goods). China is not interested in changing and is happy to be the parasite sucking all possible resources out of the ROW. South America has never got it right and only decides it was a Bad Idea to once again play with the Socialism Shiny Think after it blows up and kills many, burning most. So it looks to me like we are mostly in a “beggar thy neighbor” race to consume all the seed corn (and net productivity) before the other guy. Everyone is just sort of hoping that China will somehow transition to an internal consumption model and become a new ‘engine of the economy’. It won’t. It’s a sweat shop run to enrich the Politburo. They don’t want more internal consumption for all. Basically, The West wants to retire and consume for the next 30 years to excess, but has no money. The East wants to ‘invest’ in the west and provide those goods for the next 30 years, but expects some real value for them. So we’re printing pictures of Dead Presidents and they are starting to say “What? More of that junk?” While the EU is trying to find a legal way to Bugger The Euro too…
It’s all just such a mess and I can’t help thinking that these folks actually believe they have the ‘answer’ when it is really ‘exactly wrong’… Focused on printing paper and “debt as wealth” instead of looking at real net wealth creation as the only way to increase total aggregate wealth. “If we only had a BIGGER credit card then we’d be wealthy! This time for sure!!!” … /sarcoff;)
To which Simon said:
Simon Derricutt says:
4 September 2012 at 8:25 pm (Edit)
EM – that should maybe have been a new post. There’s enough meat in that for a good feast. There’s a lot of the current money-shuffling that to me seems plain dishonest. After a few times of someone you know borrowing money again without paying back, you tend to just say No but it seems that the politicians think that people won’t remember last year’s promises, let alone ones made before the last election.
There comes a time when the people actually working and paying the bills go galt and the whole house of cards tumbles. Unless there’s a miracle, looks to be soon.
Prompting me to post another idea that’s been rattling around in my head too, that is appropriate to this moment:
Once I get it more neatly organized, and with some appropriate links, it will be a posting. For now it’s just an off the cuff rant ;-)
FWIW, I have a nascent / forming thesis that whole national economies can ‘go Galt’ despite few individual actors doing so.
So the USA has a very high corporate tax rate and a hideous regulatory burden. The various companies make reasonable rational investment decisions; the net result of which is to not invest. (ROI projections under hurdle rate. Raise costs, you must have a higher hurdle rate to cover them while your ROI is lower from more input costs too, so fewer things ‘make it’.) In some cases, disinvestment sets in. (Closing coal fired power plants before expected End Of Life. Closing coal mines in Spain. Net net less electricity at higher costs, leading to lower wages and incomes, fewer employed, MORE companies large and small having ROI not exceed hurdle rate.. wash and repeat…)
So, in effect, the Productive Economy writ large can ‘go Galt’ and just stop working as the costs get too high and the return too low. Look at Spain as a stellar example. Youth unemployment over 50%. People in their prime productive years, that ought to be making goods, services, and wealth and moving up the productivity ladder faster than at any other time of their lives; instead ‘on the dole’ and effectively “Gone Galt”. Similar things in Italy and Greece, if a bit less intense. USA not adding jobs net due to no idea what the hurdle rate needs to be (as the cost basis is ill defined and constantly changing) nor what the regulatory burden will be nor the energy costs. So Small Business stopped hiring to ‘wait and see’.
GM was “saved” by handing it to the employees (and buggering the Bond Holders who ought to be at the top of the capital structure). Now no one will want to buy bonds from a highly union industry in decline, knowing that the Government will take their wealth and redistribute it. Higher costs to borrow mean a higher hurdle rate means less investment means less jobs… ( I know I’ll never buy an automaker bond nor an airline bond while this is the law of the land… nor bonds in any newly socialized medical facility… nor…)
In short: I think that whole industries and national economies can “Go Galt” as a natural consequence of the way Hurdle Rate drives decisions and the way UNcertainty drives hurdle rate requirements. Add in lower costs in China and, well, manufacturing moves out of town… you end up with 20% general unemployment (headed to 40) and 50% youth unemployment (headed for 100%). Begin national tax spiral and entitlement leach driven spiral decent into collapse… See Stockton California as an example… or San Bernardino… or Valejo… or California overall…