Originally Posted by JJJ
But this is really a silly way to look at it. Just like all businesses should have some debt all countries having reasonable levels of debt is just good business.
Lets say you only have only two countries in the world and each holds 10% of each other's debt. Is that a good thing or a bad thing? 100% of economists will tell you it is a good thing. But the entire world in this case is in debt by your definition.
When debt levels get above 50% of the countries GDP then it is time to start getting a bit worried. There are about 50 countries in the world above that level including us. These countries must put in austerity measures to get the debt levels back to healthy levels.
If you are dealing with perceived or fabricated levels of debt that is a true statement but we are in unprecidented territory. Countries are not lying about debt they don't have. They are lying about capital that does not exist.
It's not an unfixable situation if governments were not in denial about where things really are. Countries rarely wake up to circumstances until the situation forces this upon them.
I think there are always opportunities for investors as long as SOMEBODY has money to invest. I am not soliciting business for this guy or supporting his business in any way. It just helps explain my point a little better. Apologies if it seems tangential.
Word of the day: Screwflation
Finally – we’ve got a word for what most
of us in the so-called middle-class have
been feeling the last few years – Screwflation.
As far as I can tell, Doug Kass at TheStreet.com
invented it back in Oct of 2010.
He defined this way:
“Screwflation, like its first cousin stagflation,
is an expression of a period of slow and uneven
economic growth, but, its potential inflationary
consequences have an outsized impact on a specific
The emergence of screwflation hurts just the group
that you want to protect -- namely, the middle class,
a segment of the population that has already spent
a decade experiencing an erosion in disposable income
and a painful period (at least over the past several
years) of lower stock and home prices.
Importantly, quantitative easing is designed to lower
real interest rates and, at the same time, raise
inflation. A lower interest rate policy hurts the
savings classes -- both the middle class and the
elderly. And inflation in the costs of food, energy
and everything else consumed (without a concomitant
increase in salaries) will screw the average American
who doesn't benefit from QE 2.”
If you’re a middle-class saver/investor, I’m sure you
can identify with this. And, if you want company,
there are lots of pundits out there who are willing
to tell you just how screwed you are. That’s not what
I’m going to do today. I want to talk to you about
how to get unscrewed.
Once you figure out how the system works and that
you’re not part of the elite that it’s designed to
serve, you’ll either sink into depression and say WTH
or get smart and figure out a way to work it.
One of the best ways to beat the system is to figure
out how to make a lot more income – so much that you
enjoy paying lots more taxes on it!
You know your employer isn’t going to see it quite
that way so take a look at your skills and find a place
to use them in your own side business. Many investors
like rental real estate and with the current environment
of low interest fixed rate mortgages and reduced prices;
if you find a good property you can expect a dependable
monthly cash flow.
Some folks are finding ways to sell goods and services
online and you might want to look into internet based
businesses you can run part-time. But, my favorite is
(no surprise) learning to trade the financial markets.
It’s not for everyone but don’t think that because you
don’t have an MBA or accounting experience that you
can’t learn to read the charts and trade profitably.
The markets don’t discriminate but they do favor people
who learn and apply a couple basic skills. Primarily,
those who can rein their emotions in and trade a proven
So, it’s up to you.
While most of the ordinary people who make up the
backbone of this country get Screwflation:
• Investment portfolios with zero gains (at best) after
the bubbles and busts of the last decade
• Values of their hard assets (like their homes) trashed
• High household debt levels
• Plus the well paid jobs being eliminated while skilled
workers settle for part-time work and low-paying service
jobs with few benefits.
Screwflation is killing the retirement savings of millions
of Americans as it slashes their spending power and
standards of living. As long as Washington isn't producing
solutions, it's up to enterprising Americans to look for
Politicians say America may remain in a high-unemployment,
low growth mode for another four or five years. We haven't
seen that kind of outlook since the Great Depression.
But, unlike the Depression, there are impressive areas of
growth and wealth in our economic system.