Friday afternoon chatter, from John's Tweetstream, beginning here...
Sandmonkey (Mahmoud Salem) I find the current debate over the US budget & the debt ceiling fascinating in a very morbid way. The US current debt is 14 trillion, and their debt ceiling is 14.3 trillion. Last time to raise it is mid may. If they raise the debt ceiling, they will have a debt that's greater than their GDP, i.e. They will have 0 equity in the country. But if they don't raise it, they won't have enough money to pay the interest on their treasury bills, which means they would default.
A US default would mean the US government declaring bankruptcy, & their treasury bills will be worthless. And US treasury bills r the foundation of the international financial system. Those 14.3 trillion r owned by every central bank in the world This would mean every bank & financial institution would be hit, world economy would collapse. Armageddon.
So everyone who is taking their money out of the country, well, good luck with that :)
@NigazSqueeze ur choices r either cut military spending, or social programs. Either would be catastrophic.
@JKroul I don't disagree
@NigazSqueeze please do@Sandmonkey equity = assets - liabilities. GDP is assets produced in a year, not all assets held currently (the latter is much much more).
@dyanaaziz the numbers r there though. What to do?
@Sandmonkey ...&don't think taking it neighboring Arab countries cz their currency is fixed 2 the dollar so they will b down the toilet as well Yes, we are screwed either way. And Emperor Nero/Obama is on fundraising tour in hopes to bring us more hope & change!
@MoxietheCat let's hope. So far it doesn't look good or sustainable
@Sandmonkey not true most wise money is in Gold and Silver now check the graphs
They can't default. The Chinese won't let them.
Wisdom of the day: Got a penny? Spend two pennies.
Global economy is 2012ing.
God help us all.
I'm reminded of Peter Maurin's Easy Essays.
Here is one called Creating Problems.
CREATING PROBLEMS
Business men say
that because everybody is selfish,
business must therefore
be based on selfishness.
But when business is based on selfishness
everybody is busy becoming more selfish.
And when everybody is busy
becoming more selfish.
we have classes and clashes.
Business cannot set its house in order
because business men are
moved by selfish motives.
Business men create problems.
they do not solve them.
>> If they raise the debt ceiling, they will have a debt that's greater than their GDP, i.e. They will have 0 equity in the country.
ReplyDelete"0 equity in the country"?
So if I'm making $50,000 a year, and I still owe $51,000 on my mortgage, by this wonky reasoning, I would have zero equity in my house.
This reasoning gets even wonkier if I have the ability to, at will, lower my spending, raise my income, legally print more money for myself, or make investments that would substantially increase my income -- not to mention the ability to do all four simultaneously.
One of the lines in this interchange made exactly the same point.
ReplyDeleteequity = assets - liabilities. GDP is assets produced in a year, not all assets held currently (the latter is much much more)
...which is why raising the debt ceiling is not that big a deal. As the world's strongest economy the US represents the biggest accrual of assets, many of which do not actually rest in the country. If several shadow economies are included the US economy is even bigger than it officially appears. The US economy also generates income from off-shore enterprises, legal and otherwise, a large and growing "grey" market (flea markets, yard sales, private transactions and off-the-record earnings such as compensation for child-care and unreported rents) and untapped mineral and other reserves yet to be officially listed as assets. (The petroleum people sometimes call oil wells "disappearing assets" but arguments can be made that even those assets are durable.)
I'm not as interested in the content or accuracy of the conversation as the fact that it is happening so far away. Most Americans don't realize how important our behavior is when seen from a distance. We are like a nation of substance abusers who expect others (co-dependent allies) not to notice. But a time is coming when our enablers will apply what drug counselors call an "intervention."