6
The debt alarm clock
The Economist has a new tool for showing the mounting debt of countries around the world -- a clock that is updating every few seconds. Tick, tick, tick, BOOM?
Access the clock here. As I'm writing this, it shows the clock at $35,026,768,823,356 worth of global public debt. Of that, almost of a fifth comes from the United States. You can look back over the last 10 years and look forward two years to projected debt. The US figure climbs above $10 trillion by 2011. As a percentage of GDP, it's 66%.
You can look up any country and see how they compare. Not surprisingly, the debt lies here, in Canada and in Europe. By 2011, the UK's debt as a percentage of GDP is pegged at 93%.
The Economist writes:
"The worst global economic storm since the 1930s may be beginning to clear, but another cloud already looms on the financial horizon: massive public debt...
Today's debt surge, unlike the wartime one, will not be temporary. Even after the recession ends, few rich countries will be running budgets tight enough to stop their debt from rising further. Worse, today's borrowing binge is taking place just before a slow motion budget bust caused by the pension and healthcare costs of a greying population. By 2050 a third of the rich world's population will be over 60. The demographic bill is likely to be 10 times bigger than the fiscal cost of the financial crisis."
This seems like a pattern in modern economics. After the countries develop their resources and industry becoming a "rich" nation, they reach a pinnacle where they try to keep up productivity and that pathway to greater riches, lifestyle, etc. However, because poorer nations can produce goods at a cheaper rate and have lax environmental standards, they import the industry from the "rich" nations. To keep their standard of living, the "rich" nations must borrow and increase taxes to a high level to sustain the services the government has provided. This happens to stocks as well when the potential for forward growth is diminished (meaning they have filled the total market)
Can't people see that this is the issue at hand and not racism? I don't want to live in a country where people rely on the government for direction and well being provided by taxes on the people who will work and debt. Jimmy Carter is just blind.
I think that's as big part of it. The richer nations also benefit, probably unfairly, because their currency has more value on the world than the currency of developing nations because of their industrial history.
That said, Australia seems to be doing pretty well, only 14% of GDP in debt. Probably in part because of their natural resources exports.
I will admit that the currency value tends to be bias, but in nature, the being at the top tends to dictate the rules.
Are there any other pathways that nations can take besides the European path? Can't the officials in the government encourage and support and gain higher end jobs, protect lower end jobs, and keep people working? I think it would take some protectionism to keep us #1, but some people think that's a bad thing.
Common sense tells you that America WILL default on its debt obligations by printing money. Bernanke already proven in this last episode of the ongoing fiscal crisis that he is willing to do it. This will happen long before 2050, probably within the next 5 years, 10 years at the very most. The collapse of the dollar will be unlike any calamity this country has ever experienced.
"You reap what you sew." -- God of the Universe
Good stuff from Economist.
One of my favorite clocks is the Poodwaddle clock, especially the energy clock which has a countdown on world oil reserves:
http://www.poodwaddle.com/clocks2.htm
It shows about 14,700 days of oil left.
