Interesting to me:
U.S. debt 'serious' concern for Canada, Flaherty warns
The pertinent section:
...the debt-to-GDP ratio in the United States is expected to surpass the 100% threshold in 2012...
Brutal.
What the U.S. National Debt Is:
...Even before the economic crisis, the U.S. debt ballooned 50% between 2000 - 2007, growing from $6 - $9 trillion
It's all about the Republican fiscal conservatism.
The debt is now 83% of GDP, up from 51% in 1988...
Now what does that all mean? Hmmm, not totally sure. It doesn't sound good though!
I found this older article also interesting, back in Feb:
Debt-To-GDP Chart "Wrong," US Debt Levels Fine
So at what point would the economy become unsustainable? Is it already past that point? Is it all pointless speculation as a sustained growth economy is pointless/impossible anyways?
Just some random reading and thoughts.
A further thought, from theMilitary budget of the United States:
By the end of 2008* the U.S. had spent approximately $900 billion in direct costs on the Iraq and Afghanistan Wars. Indirect costs such as interest on the additional debt and incremental costs of caring for the more than 33,000 wounded borne by the Veterans Administration are additional. Some experts estimate these indirect costs will eventually exceed the direct costs.
* and still going, of course. It's even more amazing, looking at these numbers, that Obama increased troop levels.
Soooooo, can't afford a switch to renewable energy that would actually be more efficient and save money with actual costs counted and can't afford health care - but on top of the $500+ billion annual military budget, there was a couple trillion lying around for overseas adventures....
You can really see why Clinton preferred cruise missiles. It's amazing how much it costs to beat up and pillage/rebuild a couple of third world countries.
on Debt and economic stability
I wish I understood more about this stuff, but I do know that at numerous points in the past the US has been on the brink of economic collapse because of debt-GDP ratio issues. This is not the first time, but it might be the first time that it happens while the US is already in economic difficulty with their dollar in free-fall, which is significant and I'll get to that.
When it occurs in general, the standard response is to have a foreign nation purchase the troubled nation's bonds thereby pumping money back into the economy which can be invested internally to promote growth and stability. It also gives the impression of dollar-demand, which floats the currency higher on international markets.* In principle, everyone has problems, so ideally the debt flows around in circles and everyone owes everyone so it's not a big deal.
*(This is all done on paper since the abolishment of the gold standard. For an introductory discussion of this, see Fractional-Reserve Banking.)
It can be thought of as a temporary crutch, with the point of it being that on recovery the government would pay out on the bonds and restabilize itself. So as mentioned, the payout could also be the lending of money in the opposite direction so that the debt "cancels out". In recent decades in the US however, the lending has been increasingly flowing in only one direction, which is where the problems start to happen - the system only works if its two-way. US bonds issued to its lenders are paid off with more bonds instead of cash or negative debt.
Even still, this process can continue ad infinitum until the lender nation pulls the plug and says "No, I will not buy your junky bonds because you never pay me back anymore, and we don't need anyone to hold any debt for us either." As the lender expresses concerns that they won't get paid back, the credit rating of the debtor nation is lowered by lenders, and smaller lenders capable of absorbing less risk drop out of the running.
This has already mostly occurred, which is basically why China is the only one left in the running. They're really big, they are booming so they don't need to take out loans, and they are the only ones capable of lending money anymore on that kind of scale. If they decide it's too big for them? Well... at that point the US is forced into international bankruptcy, defaults on its loans, and the economy essentially goes into a catastrophic collapse.
This is something we've seen occur numerous times in developing economies whose growth fails to surpass the loans they've taken out, but we've never seen a major nation fail this way. It is made more unique because in this case the lender is almost entirely a single foreign institution - China. The implications of that are... not widely agreed upon.
(Aside: China's dollar is being artificially held down expressly for this purpose. You don't pay back your debts to lender nations with your own dollar, you do it with theirs. Again, see fractional reserve systems, and pay close attention to international transfers wrt M3. The US is no longer publishing M3 data - a peculiar move with considerable controversy surrounding it.)
Just as a person who buys a house with a mortgage doesn't really "own" the house, the US - if debt surpasses GDP - no longer has a majority stake in its own economy. That's kind of profound to think about; a big powerful country not actually owning its economy. Given how a country is currently defined, it's hard to imagine that meaning the country is even a country anymore. And again, it's more profound when the lender is almost entirely a single nation. We all know what happens when we default on a mortgage held at a single bank, and we just saw the same thing happen to numerous huge companies.
Bottom line: The underlying story here is that the US is decreasingly in control of their own economy. China and US are still trading partners, but that relationship is increasingly resembling a parent giving a cranky spoiled child an allowance, and beginning to question whether this is just "enabling" the child to continue their bad habits.
Crazy. Thanks for the
Crazy. Thanks for the analysis. I have heard/read speculation that China could be in just as much trouble as the US over there overly close economic relationship. So would this be the ultimate case of "too big to fail" - the US economy?
China in trouble?
There were a lot of people speculating that China would be hit so immeasurably hard by this recession in the US and Europe, but they really weren't. China was exhibiting problems back in 2008 and they were projected to grow in 2009, but instead those problems just disappeared. There were a lot of speculative economists who did not realize the extent to which China has changed. They're still obviously heavily export oriented (as a percentage of GDP, but nowhere near so much as they used to be. They're making their own stuff far more than making stuff for others now.
So whereas the recession rocked the US whose economy shrunk (and whose debt-to-GDP rose dramatically), and the EU, Canada, and Japan who all held roughly steady, China "shrunk" down to a growth rate of just 9%. Yeah, they're year-to-year economic growth alone already paid for 20% of their debt increase (they had a ~$4 trillion stimulus).
China is still the world's manufacturer, but that's just a side job for them.
A couple of pre-recession numbers that may surprise folks:
From CIA World Fact Book (2008 estimates, in Billions)
Country / Imports / Exports / Foreign reserves / External Debt
US / $2,177 / $1,277 / $80 / $13,750
China / $1,074 / $1,435 / $1,955 / $401
Incidentally, Canada's external debt will be sitting around 65% of our GDP for 2009. This is a frightening number in itself, but we do have some hope of paying it off because exports make up a third of our economy... we're selling off our raw resources to pay our debt.
(I have no idea why the table won't work in this post... it did before in other posts, but it keeps stripping it now.)
Time to start working on my
Time to start working on my mandarin
GDP
I should add that the 2008 GDP for US and China were $14,440 billion and $4,327 billion respectively (and adjusted for exchange - which is being artificially manipulated remember). After the stimulus spending and crash of 2009, you can see why China is doing just fine whereas the US is hovering at the 1:1 point.
Side note
Heheh... looking at those numbers, I was reminded of a craze that hit the world of news a few years back. It was supposed to be shocking to us all then that China would pass the US and become the world's largest economy in 2040. Post-2009, that's looking more like... 2016? Maybe even sooner. That 2040 number was only conceived of three years ago. Just goes to show... economists don't know shit when it comes to predicting things.
They really need to get their
They really need to get their environmental issues sorted out ASAP.
They sure are investing in infrastructure though. The trains at least seem like a good idea.
The US/China comparisons here are pathetic:
http://money.cnn.com/2009/08/03/news/international/china_high_speed_bullet_train.fortune/index.htm
investment
A sizeable chunk of their investment is going into solving environmental issues. I kid you not, the one thing that came out of Copenhagen is that China looks like it might just go and steal the show in terms of reversing human environmental habits. Democracy is too slow. Totalitarian states are more nimble and can make more drastic changes. China knows full-well that if it leaps on new green-tech - designs its own green technologies using its own companies and own intellectual capital - it will own the world in short order. They're already a manufacturing giant, and they're fast becoming the best educated people on the planet, so they are the best suited to help the world fix our mess.
(This is not a point lost on Prince Charles, by the way, who seeks to exert more influence in political matters using his "god given" powers.)
Huh
I missed that about Charles. Hmmm
Values
I don't think that democracy is necessarily slow. If we valued nimbleness more, there are lots of things we could do to achieve it while maintaining a form of democracy.
-Dan
comparative
I meant that comparatively. No matter how you slice it, democracy will always be slower than totalitarianism. The only time it isn't is when democracy mimics totalitarianism. Is it too slow in general to act accordingly? No, I agree with you there, it certainly doesn't have to be.
Chucky
Isn't there some sort of plans being made to try and skip him in the succession? Go directly to his oldest son, uh, William isn't it?
not really
The law is entirely clear on who is next in line. It can't be skipped except where the choice compromises the integrity of the nation or some such thing, in which case the prime minister can step in and force the monarch to abdicate to the next in line. CBC Doc Zone is currently streaming a doc on the monarchy and this particular controversy.
Interesting
There are certainly some good arguments to remove the monarchy, especially from Canada however that opens up a potential constitutional mess here, right?
There are worse things than a politically active, environmentally aware King. I don't know much about Charles, the implication is that he's a bit of a crackpot but I found it astounding to hear the line where it was said with derision (not a direct quote): "by the time he's King, we're going to know his opinion about everything!"
I get that he's considered opinionated and he's only supposed to be a figurehead - but he's still a political figure and there is worse things than knowing where he stands on a variety of issues.
I find all the talk about his "unfitness" due to his divorce ridiculous.
One of the great advantages of a monarchy is being able to push an unpopular yet urgent agenda (i.e. climate change) without worrying about how you are going to get elected in 4 years. Of course, if the person is an idiot you're stuck with them.
Canada
It would require a constitutional change, but I don't think it would be one that would take long to resolve. As for any constitutional change, support for the change would have to be unanimous across the provinces. For something like this, unanimity would be pretty easy to get just because of the huge degree of public support for getting rid of the monarchy. A premier voting against the public on something like that would probably get their ass kicked.
I'll have to look into this
I'll have to look into this more. I vaguely recall something I heard on CBC radio where the person being interviewed raised some concerns. Was it something about Quebec? About other changes that people might try and put in once constitutional amendment was on the table?
Can't remember.
The way our govt is officially structured does seem rather silly.
i think so too.
I think so too. I'm not convinced a Republic is the way to go either though.
If it ain't broke (that bad) don't fix it?
Or a more radical change in mind for Canada?
radical and not so radical
I have a lot of radical changes that i'd rather see happening, but i'm realistic about my expectations here. So on the likely side, I don't think we need to adopt a republic style of governance. We already have a functioning bicameral system that doesn't depend on the GG to do anything in particular that couldn't be handled by someone else or by a written procedure instead.
If you look at the way the house operates, for all intents and purposes, the Speaker sort of handles what one might consider to be the day-to-day management of the democratic process that would otherwise fall to a monarch. They're the pit-boss of the entire process. If we got rid of the GG, it would be very easy to continue on as normal with the PM handling regular head-of-state operations and the Speaker handling the operational side.
Sounds reasonable.
Sounds reasonable.
Would you like to see a more effective senate? Or remove the senate?
ideally..
Ideally I think we should merge them with the house. That would require a new parliament building though, or some massive reconstruction, so I think just an elected senate would be good. One thing for sure though, senators cannot serve indefinitely anymore. That and it's ridiculous that the minimum requirement for any job be to show up for ten minutes and vote twice a year, that should be changed immediately as it is.
So you would like to see them
So you would like to see them take a consistently active role?
As for elections, do you think they should be elected for terms or one election and in?
Do you think they should alter the numbers to be more representative by population?
What's India's situation
What's India's situation like? Weren't they expected to surpass China?
No
Not that I've ever heard. The last I heard about India was that they might pass the US in 2050 give or take. Again that was pre-recession, and it came from economists, but they're already a lot smaller than China, less organized than China, growing slower than China, and engaging in terribly economically risky behaviour. I don't see how they could pass them in our lifetimes.
Pretty astonishing
Pretty astonishing numbers.
It's amusing/scary to consider the implications of a US economic collapse. Let's just say that it doesn't drag down the world economies due to Asia and Europe's strength but leaves the US (and probably Canada) in a disastrous economic setting.
So people freak out about Russian nukes getting sold on the black market? Can you imagine the sheer number of weapons floating around the US? The massively largest producer of weapons (by money spent) in the world as well as the largest exporter of military weapons in the world? Yikes. Over 40% of the worldwide arms spending is done by the US (China is about 6%). That's a lot of unemployed pissed off people with big guns.
I wonder if I can get my own tank for 50 euros...
criminals
It's interesting you mentioned the black market the way you did. I recently saw a TED talk on that topic and it got me doing a little digging. There's not a lot of information, but it does indeed seem that the global black market has shifted to Euros.
And yes, I think it is really scary too. A lot scarier than climate change in a way... the United States is one of the most religious countries on the planet, and is by a HUGELY long shot the most zealous among developed nations. Religion and economic collapse do not have a history of playing nice (witness Hitler's Germany most recently). I don't think that war, both civil and external, is out of the question in the next few years. There are real problems down there.
Euros
That's a really really bad sign. The USD has been such a worldwide currency, from Mexico to Thailand, people know it and trust it. If it's no longer considered stable for criminals...
Hell I remember reading that Gisele Bundchen (supermodel) refuses to be paid in anything but Euros and she lives in the US.
Civil war does seem very likely. The war spending is truly out of control but how do you scale back? So many groups involved. It's crazy that their entire system for passing legislation, getting funding or really doing anything requires legal bribery.
There are so many military and paramilitary forces too under the control of such a variety of different people and government orgs. Private mercs like Blackwater (I posted before the extent of their military and its proximity to DC), National Guard, citizen militias, numerous independent branches of armed forces (air force, navy, army, marines, various SF), DHS, DEA, the laundry list of police orgs - it's crazy.
The sheer number of recent combat vets is also disturbing. That's a lot of people that are used to killing, highly trained, have access to a large number of weapons (personal if nothing else) and have a variety of bones to pick and unresolved issues:
- war on Islam/Terror
- radical Christianity
- anti-government, both US and the UN "world govt"
- race issues
- isolationist tendencies
- internal regional issues, hatreds, conflicts
- immigration and border issues
etc etc
yep
I just hope Canada fades into the periphery of their sight. Good thing so many don't know where it is.
lol
Yep, good thing all their maps end at the border, haha
Unfortunately Harper (and not just him) seems intent on joining us at the hip with our southern neighbours.
We have a lot of goodies up here, we'd make a nice snack.
Harper on the US
Actually I think Harper is deeply confused about the US. On the one hand, he worships it and wants Canada to be under their administration, evidenced by his constant deferral of Canadian international decisions to them. On the other hand, he's done more than any other recent pm to expand ties with other nations and blocs.
Explanations?
Split within the party? Covering his bases? Someone else making trade decisions or influencing them? A case of liking the concepts but not liking the current US economic/political situation?
Or maybe Harper recognizes that putting us more in line with the Americans is not a popular concept (?) - the guy wants to get reelected of course.
Book
I read an interesting book recently, it's self published:
The Modern Survival Manual: Surviving the Economic Collapse by Fernance "Ferfal" Aguirre
It's about his experiences living in post 2001 Argentina.
FYI, if someone actually buys it, it's very poorly written, as I said self published, basically unedited, strange format and English is not his first language. Lots of good tips though. I enjoyed reading it but I don't know if anyone here would.
However I was a little disappointed as it didn't give as much detail as I would have liked regarding his actual experiences. It's more generic and has a lot of (justified) comments disparaging typical survivalist concepts. I'm going off topic here.
Anyways, the part that really struck me was him talking about the disbelief of the populace.
By his description, Argentina at the time had a large and thriving middle class, well traveled and relatively well educated. It was a predominantly white, modern and "western" country. The absolute collapse of their economic system should not have been a surprise, there were signs a plenty, but most definitely it caught nearly everyone off guard. He also wrote about how Argentina's collapse is mostly written off as another banana republic collapsing under the weight of its own corruption yet, in his opinion, their disastrous financial policies were heavily influenced by the IMF and not that different from those of other countries. Though I think the 1 to 1 Arg. Peso to USD strategy was unique?
Some other interesting details about the frozen bank accounts, the govt converting USD accounts to pesos, limits on ATM withdrawals, difficulty getting cash, etc.