US Debt overtakes GDP on per capita basis

CriticalSilver · Oct 19, 2011

Source: zerohedge.com

Guest · Oct 19, 2011

It's a sad state of affairs but the big elephant in the room.

Even if the US taxed their working population 100% of their wages, they STILL couldn't cover the INTEREST on their outstanding debt alone.

In other words, the US is already in a permanent debt spiral and have no choice long term but to default. It's now just a question of how long they can kick the can down the road to make it someone else's problem.

fishball · Oct 19, 2011

Related to this topic, just saw this.

http://www.smh.com.au/business/us-already-half-way-into-a-lost-quarter-century-20111020-1m8q7.html

A Pascoe article but he's pretty on the ball with this one.

Although not too sure if the US will manage to be like Japan because their population don't exactly save all that much money, unlike the Japs.

CriticalSilver · Oct 20, 2011

fishball said:

Related to this topic, just saw this.

http://www.smh.com.au/business/us-already-half-way-into-a-lost-quarter-century-20111020-1m8q7.html

A Pascoe article but he's pretty on the ball with this one.

Although not too sure if the US will manage to be like Japan because their population don't exactly save all that much money, unlike the Japs.
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He is always pushing some barrow of "TPTB" isn't he. Guess what it was this time:

US already half way into a lost quarter century October 20, 2011 - 8:19AM

Forget the usual threat of the US facing a "Japanese" decade of stagnation. It's already half way into a quarter century of going nowhere if it's lucky.

The truly big stories, the ones that roll for years, changing the world, often happen while we're looking the other way or are distracted by the daily noise. So it is with the sad case of the US economy and the relative demise of the 20th century's greatest power.

It wasn't the sub-prime crisis and the subsequent GFC that flat-lined the US it was already going nowhere but no-one noticed because the stagnation was papered over by its debt explosion . . .

. . . The growth of the emerging world is what drives the proposed super cycle of demand for commodities, a driver that is giving Australia enormous opportunities while most of the developed world stagnates.

You've probably noticed the headlines about China's GDP figures yesterday, growth falling to 9.1 per cent. It was noise.
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Distilling it down:
1) USA is halfway in to its problems, so it is by extension halfway out. :lol:
2) The USA has printed copious amounts of money to "paper over" its problems, ignore what this means for the repricing of dollar denominated assets. :lol:
3) Chinese growth has fallen, ignore that this is the 3rd consecutive report of reducing growth and the dependence of the Chinese mercantilist economy on Europe and the USA. :lol: and
4) Forget completely that the Chinese Economy is governed by 7 to 12 men in the communist politbuo lording it over everyone, including all Australians, and that such economic systems have been shown to be unstable, unreliable, corrupt and not aligned with the interests of the people being governed.

He really is a great propagandist isn't he. . . China. Stronger for longer! . . . That is the unstated message there.

I suspect he is trying to counter yesterday's Daily Reckoning, where Dan Denning observed:

--Now, let's talk about China. You probably wouldn't call GDP growth of 9.1% slow. But by Chinese standards, that's the slowest annual pace since 2009. And remember, the official inflation for September was an annualised 6.1%. What you're looking at then, is a maximum of 3% GDP growth in China - assuming GDP isn't over-estimated and inflation under calculated.

--China consumes 40% of the world's copper. It wasn't a surprise, then, that copper traded as low as $3.25/lb in New York after the news of China's slower growth came out. If the universe can't expand forever, then China can't either. That truth is immutable. The question is, is China's expansion slowing down? Or is its economy due for a contraction?
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edit: And do not even dare to imagine that Europe, the USA, Japan . . . AND China might be in a lock-step economic death spiral. . . . :/

CriticalSilver · Oct 20, 2011

Actually, Chris Zappone in The Age today, seems to be comptemplating exactly that kind of alignment of debt problems (USA, Europe, Japan, China).

China debt bubble worries investors
Chris Zappone

. . . Investment bank UBS estimates the Chinese bank's domestic credit is equal to about 145 per cent of the nation's nearly $US6 trillion annual GDP, with the ratio swelling to 170 per cent when so-called off-balance lending is included. By comparison, domestic credit in US institutions totalled just over 100 per cent of GDP in 2010, UBS said.

Australian interest

Australians are among the outsiders with the most at stake should soaring bad debts prompt Chinese banks to hit the lending brakes. China accounts for about a quarter of Australia's exports - nearing $65 billion in the year to June - and its growth has helped fuel demand in many of Australia's other main export markets in Asia.

"The rising risks of banking sector bad debts together with significant tightening of monetary policy over the last twelve months have heightened concerns about increasing risks and vulnerabilities to the Chinese growth outlook," said Singapore-based IHS Global Insight Asia Asia-Pacific chief economist Rajiv Biswas. That in turn has "weighed on domestic equity market sentiment, particularly for the banking sector, pushing Chinese stock markets significantly lower this year" .

In other words, Australians can't take for granted that China will shield it from Europe's protracted debt wrangling and stagnating growth.

Russell Jones, Westpac's global head of interest rate strategy, said that although China's growth is strong by global standards, there's also mounting discussion about its credit problems.

Read more: http://www.theage.com.au/business/china-debt-bubble-worries-investors-20111020-1m8u8.html
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