Schuldenkoning USA maant schuldenbeer Rusland.
Kredietorgie’s komen in de agressieve fase.
Furious Russia, Downgraded To Just Above Junk By S&P, Proposes “Scorched Earth” Retaliation Against NATO Countries
It’s the Debt, Stupid
The single, major global problem is too much debt. Much of the commentary and analysis I read is misguided. Everyone’s talking about the consequences (results) of the problem yet few understand that the elephant in the room is too much debt.
Global debt has passed the $100 trillion mark, an increase of $30 trillion since 2007. To put this into perspective, global GDP is slightly more than $70 trillion. Here’s another perspective; global debt is 137% of global GDP. This is far beyond the 90% mark demonstrated by Rogoff and Reinhart (despite a few minor formula errors) as ‘beyond-the-point-of-no-return’.
The last Great Recession triggered by the Global Financial Crisis was caused by too much debt – private debt, government debt, corporate debt, Sesame Street debt, all kinds of debt – we have debt up the yin yang and it keeps growing.
The chart below shows that today’s mountainous debt level makes the debt prior to the last Great Depression look like a molehill. The debt/credit excesses of the 1920’s led up to the stock market Crash of 1929 and the Great Depression that followed. Can there be any doubt where today’s enormous debt level is leading?
Some of Aubie Baultin’s comments on the chart above are instructive:
“By 1982, with the memory of the 1930s Depression almost completely faded, policy makers once again began to “stimulate” the economy with borrowed dollars. By the mid-1990s we had exceeded the excesses of 1929 both in terms of the total amount of debt and in terms of stock prices.”
“As of 2014; there is currently 30% more debt worldwide than at the last peak in 2007 and we are experiencing one of the weakest recoveries of all time.”
“The bubble is much bigger than in 1929, [when] we as a people were much more self- sufficient and so the economic destruction will be worse damaging to the individual than in the 1930s!”
“We may have engineered a very anemic recovery and new highs in the stock market, but we haven’t solved the underlying problem of too much debt. Rather, we have made it much, much worse and that’s not even mentioning Derivatives in the Quadrillions.”
“When the boom ends, the accumulated debts do not.”
“A year before the 1929 crash, interest rates started rising while commodity prices fell indicating a risk of deflation – or collapse in prices. The same scenario is true today.”
“[China is] are probably in the worst trouble of all, as they discover that their Socialist Capitalism must still follow the Economic laws …”
“There isn’t a snowball’s chance in Hell that we will be spared the consequences of our leaders’ incompetence and corruption.”
I’ve already covered government’s incredible incompetence, but the corruption is all the new debt that has benefited the banksters and their cronies, but not the people. It has enriched Wall Street by impoverishing Main Street. Worse, as headlined by Washington’s blog, “By Choosing The Big Banks Over The Little Guy, The Government Is Dooming BOTH.” He further headlines “The Elite Financial Players Are Manipulating the Game So that They Get the Stimulus … and the Little Guy Gets the Austerity.”
Do you think this will ever stop? Dream on. The great ‘Vampire Squid’ will suck every drop of blood out of the system that it can. To protect yourself you must ‘Get Out of The System’ or GOTS as Jim Sinclair says.
Here is his GOTS checklist for those with wealth to protect.
1. Your equities are held in certificate form. [Gerold comment: paper stock certificates]
2. You have no Federal retirement funds. [Gerold comment: expect governments to confiscate pensions and turn them in to soon-to-be worthless government bonds. Cash out private pensions, take the tax hit and buy assets with the cash.]
3. You have no CDs and investments in bonds. [GIC’s in Canada]
4. You have modest money deposited among selected BRICs countries.
5. You store your own precious metals. [gold & silver]
6. You have no mortgage obligations.
7. You keep cash on hand for 6 months expenses.
8. You have no consumer debt at all.
9. You have a small hobby farm for protein and veggies outside of where you are living with no mortgage debt, set up green.
10. You have a gas, diesel or electric car with high fuel mileage for the farm.
11. You have a generator with large fuel capacity for the farm.