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The Happy Warrior
Joined: 10 Feb 2010
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 Posted: Thu May 13, 2010 4:39 am Post subject: The US has as much debt as Greece . . . |
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. . . if you add the GSEs, particularly Fannie and Freddie.
| Daniel Indiviglio wrote: |
If you include the GSEs, the ratio is currently very close 115 -- the number that resulted in Greece's default. Sanders proposes that the GSE debt should be brought on balance sheet for the sake of transparency.
The U.S. suffers from a similar problem as Greece. It spends like a socialist nation, but it taxes like a capitalist nation. And like Greece, the U.S. will be guilty of a failure of debt transparency until it recognizes all of its obligations to investors. It should start with the GSEs. |
Lovely. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Thu May 13, 2010 6:09 am Post subject: |
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The US helped bail out Greece @ 50b. Who will bail out the US? Well, first the US will have to bail out California. It will be interesting to see how they hide that (maybe in an education bill? military bill?).
No. They're going to print their way out of debt. Gold broke the high yesterday. It isn't only a few people on eslcafe who have figured out how this will go. |
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visitorq
Joined: 11 Jan 2008
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| Posted: Thu May 13, 2010 6:11 am Post subject: |
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Here's my prediction in a nutshell: the euro bailouts won't work at all (they never do), and in very short order Greece, Portugal, Spain, Italy etc. will cause volatility that will collapse the euro. The pound will be the next to go (the external debt of the UK is around 400% of GDP), which will subsequently, directly lead to the collapse of the dollar (as huge dollar reserves are held in London and would have to be sold off if the main British banks get caught in a panic). All the while investors will be flooding Asian currency markets, leading to huge volatility, especially in the yen. Basically the entire financial system around the world is unraveling and it would seem there is no stopping it.
Lovely indeed. |
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The Happy Warrior
Joined: 10 Feb 2010
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| Posted: Thu May 13, 2010 6:24 am Post subject: |
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| I'm pretty depressed about this. If Obama had the courage to tell us the truth, I might be able to be optimistic. But if he, and the rest, are trying to hide our problems, we as a country are screwed. |
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.38 Special
Joined: 08 Jul 2009
Location: Pennsylvania
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| Posted: Thu May 13, 2010 6:42 am Post subject: |
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So... if the whole world economy bites the biscuit, how will the USD stack up to currencies in the developing world, such as rural South America and S. E. Asia?
In other words, what's the likelihood that folks with savings in USD and Euros and Pounds can sun-out the worst of the crisis in cheaper countries? |
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visitorq
Joined: 11 Jan 2008
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| Posted: Thu May 13, 2010 7:32 am Post subject: |
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| .38 Special wrote: |
So... if the whole world economy bites the biscuit, how will the USD stack up to currencies in the developing world, such as rural South America and S. E. Asia?
In other words, what's the likelihood that folks with savings in USD and Euros and Pounds can sun-out the worst of the crisis in cheaper countries? |
This in an interesting point (been wondering the same myself). It would depend on how bad the meltdown is. If it's just a total, outright collapse and hyperinflation and chaos ensue from massive dollar dumping around the globe (the USD being the global reserve currency and all), then I'd say it's pretty hopeless (unless you have gold). That's like Road Warrior scenario though...
A 'better' case scenario would probably be devaluation of the dollar. But exactly how that will play out against lesser currencies, I'm not sure. I assume all lesser currencies (many of which are pegged to the dollar) would be wiped out. The dollar is really the lynch pin for the whole system. |
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jaykimf
Joined: 24 Apr 2004
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| Posted: Thu May 13, 2010 8:39 am Post subject: |
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| mises wrote: |
The US helped bail out Greece @ 50b. Who will bail out the US? Well, first the US will have to bail out California. It will be interesting to see how they hide that (maybe in an education bill? military bill?).
No. They're going to print their way out of debt. Gold broke the high yesterday. It isn't only a few people on eslcafe who have figured out how this will go. |
So which is it, massive deflation or hyperinflation? |
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mithridates
Joined: 03 Mar 2003
Location: President's office, Korean Space Agency
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lithium
Joined: 18 Jun 2008
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| Posted: Thu May 13, 2010 11:53 am Post subject: |
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| Thank you Obama and Dems...... |
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.38 Special
Joined: 08 Jul 2009
Location: Pennsylvania
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| Posted: Thu May 13, 2010 1:45 pm Post subject: |
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I don't get it. 
How can interest rates on savings bonds make the incredibly brazen deceleration that money is free and debt harmless?
Someone ought to tell that to Greece... |
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rollo
Joined: 10 May 2006
Location: China
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| Posted: Thu May 13, 2010 2:32 pm Post subject: |
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| I f the U.s. goes , what will happen in Canada and the rest of the world? Belly up I would think. I mean really bad. The new center of the world is Shanghai and the world is reverting back to 1500 when Asia was the leader in finance and science. |
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The Happy Warrior
Joined: 10 Feb 2010
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| Posted: Thu May 13, 2010 5:47 pm Post subject: |
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| Galbraith wrote: |
And those forecasts are driven partially by the assumption that health-care costs will rise forever at a faster rate than everything else and by interest payments on the debt will hit 20 or 25 percent of GDP.
At this point, the whole thing is completely incoherent. You cannot write checks to 20 percent to anybody without that money entering the economy and increasing employment and inflation. |
25% of gov't bonds are to foreign entities. From wiki:
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At the end of first quarter of 2010, the gross debt was 87.3% of GDP, of which 56.6% was held by the public, and 44.4% was intra-governmental.[3] Within the remainder of this article the phrase "Public Debt" is employed as a shorthand for "Debt Held by the Public".
U.S. Treasury statistics indicate that, at the end of 2006, [when 57% of the debt was held by the public], non-US citizens and institutions held 44% of federal debt held by the public. About 66% of that 44% was held by the central banks of other countries, in particular the central banks of Japan and China. In May 2009, the US owed China $772 billion. |
So 25% of the debt are to foreign holders, and 2/3ds of that are held by other central banks, 2/5ths of which are Japan + China.
As for a lot of that intra-governmental debt? Its held by the Fed.
Here are some links: estimated ownership of treasury securities, holders of national debt, estimated ownership by category.
| Galbraith wrote: |
You also want to encourage rich people to recycle their money, which is why I support the estate tax, which has accounted for an enormous number of our great universities and nonprofits and philanthropic organizations. That's one difference between us and Europe. |
Philanthropy in the US is encouraged by tax write-offs as much as the estate tax. In most countries around the world, when you pay money to charity, you cannot deduct it from your taxes. The US allows you to do so.
| Galbraith wrote: |
What people worry about is that the federal government won't be able to sell bonds. But there can never be a problem for the federal government selling bonds. It goes the other way. The government's spending creates the bank's demand for bonds, because they want a higher return on the money that the government is putting into the economy. My father said this process is so simple that the mind recoils from it. |
This is the key to Galbraith's argument. Is he right? The debt is higher than its ever been, and somebody has to pay it, at some time. So, when he tells me the gov't can always sell more bonds, and always come into more debt, that really just scares me more.
| Galbraith wrote: |
On the other hand, look at Japan. They've had enormous deficits ever since the crash in 1988. What's been the interest rate on government bonds ever since? It's zero! They've had no problem funding themselves. |
You've gotta be kidding me. Japan's example is supposed to comfort me?
| rollo wrote: |
| The new center of the world is Shanghai and the world is reverting back to 1500 when Asia was the leader in finance and science. |
Nah. |
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visitorq
Joined: 11 Jan 2008
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| Posted: Thu May 13, 2010 8:20 pm Post subject: |
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| rollo wrote: |
| I f the U.s. goes , what will happen in Canada and the rest of the world? Belly up I would think. I mean really bad. The new center of the world is Shanghai and the world is reverting back to 1500 when Asia was the leader in finance and science. |
No chance in hell. China is an authoritarian state that imports all of its technology from abroad. It is a captive market and incapable of leading the world in innovation (not because Chinese people aren't smart, but because it is not a free society). China is going to collapse into itself as soon as the double digit growth (fueled by an insane asset bubble and unsustainably high exports) runs out. They can barely keep the social unrest under wraps as it is. If the dollar falters China is toast. Period. |
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jaykimf
Joined: 24 Apr 2004
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Fri May 14, 2010 10:20 am Post subject: |
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| jaykimf wrote: |
| mises wrote: |
The US helped bail out Greece @ 50b. Who will bail out the US? Well, first the US will have to bail out California. It will be interesting to see how they hide that (maybe in an education bill? military bill?).
No. They're going to print their way out of debt. Gold broke the high yesterday. It isn't only a few people on eslcafe who have figured out how this will go. |
So which is it, massive deflation or hyperinflation? |
That depends on what the government does. Don't you know that? You should know that. It's elementary. |
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