DEBT, DEBT AND MORE DEBT - Your enslavement by numbers.

Here is a list of the top 20 countries in order of their debt to GDP ratios. I have also added a couple of columns showing the average wage in each country and the payback time required if we all worked full time and paid all of our earnings in tax.

Click table to enlarge

Nearly all mainstream political and economic commentators have been making a big fuss about Portugal, Ireland, Italy, Greece and Spain (collectively known as the PIIGS).

Why this focus on these countries in particular. Is it a form of Northern European economic fascism?

Sure, Ireland is in big trouble. However there are some big players up there too. Why are they so quiet about UK, Switzerland, Holland, Sweden and even Germany to name a few.

Going back to the repayment terms, lets take the UK as an example.

George Osbournes austerity measures have caused an increase in tax take and a decrease in jobs and wages equivalent to about 6% (which is a lot for people to deal with). Therefore instead of the 3.34 years payback time the actual payback time is more like 55.7 years.

That 55 year target is coincidentaly the same period of time that people will have to work according the a recent independent actuarial audit on UK pensions. Mmmm! retirement at 73 years old.

The reason why the focus is not on the major Northern European countries is because the credit ratings agencies like Moody's, Fitch, Standard and Poors are in bed with their neo-con paymasters. Its just an illusion.

The war has started and it's almost over before we've even noticed.
Time to reset the clock.  Abandon all forms of capitalism now.

ROLLING BACK THE LANGUAGE OF ECONOMICS - Part 2 : STIMULUS

Various Western governments have introduced stimulus plans. These measures have also been called 'quantitative easing' (QE) among other things but basically they amount to printing money.

The mirage created with QE is that the central banks created electronic money out of thin air and used that to buy their own government's bonds. These bonds are basically IOUs and in time the governments will have to repay those debts to the central banks with interest. When the payments are recovered the central banks will then electronically destroy the imaginary money.

This process of printing money causes a devaluation of the 'fiat currency' due to the laws of supply and demand. If you make more of it, each piece of it is worth less.

As the majority of all money 'exists' only in a digital form, it can also be argued that what is actually being printed is digital debt.

The problem with introducing a stimulus is that you have to maintain that stimulus for a significant period as global markets take time to react to the change in the economic system. By maintaining that stimulus, the system can become dependent on it. This happens when a sick person is treated with stimulus drugs. They can soon become addicted to the stimulus and side effects appear. The side effects can be harmful. Even more harmful than the original disease.

These unorthodox processes are hitherto untried and untested, and it is only because it is mathematicians offering these 'solutions' to governments and banks that any credibility at all can be given to the process.

WARNING !!! These are the same breed of mathematicians that sold the financial services industry the ideas of complex derivatives including 'securitization of mortgages' and 'credit default swaps'. Watch out for Global Banking Crisis II, coming to a town near you soon.

SELF FULFILLING PROPHECIES - And other sheep based tomfoolery

The financial houses use complex mathematical models in a vain attempt to predict the direction of the markets.

These models spew out huge data streams and occasional fixed numbers known to economists as technical levels.

The markets get very excitable when these technical levels are approached, so much so that they buy or sell as these setpoints are neared.

The problem here is, when a significant basement technical level like S&P at 1040 is approached the sheep and the virtual sheep sell, sell, sell. The fear that ensues causes them to sell further as though this number signals the end of the world.

Recently a number of these technical levels have been skirted with and it is only a matter of time until the panic will develop to such a degree that the machines will set a new base technical level. The new level is arrived at by looking further back in 'data time' on the assumption that we have been here before so what happened next in the past is likely to happen again in the future - WRONG!

Unfortunately the algorithms, differential equations, fibonacci projects etc are about as sophisticated horoscope birth chart analysis. You only beleive or act on the bits you want to beleive in. The mathematics of economics is just plain flawed.

The closest real world phenomenon that could be compared to market sentiment and future gazing is Brownian Motion.

Sadly, brownian motion really is impossible to predict.

Trouble is, when the sheep wake up and realise this, they will all sell everything.

Should be fun watching though.

UK DEBT – Myth, legend and reality.

Everyone is being conned regarding the scale of our economic problems.

All political parties and the media constantly talk about the debt and the debt reduction plan.

The austerity budget has been sitting in Whitehall for a considerable time and would always have been implemented regardless of who had won the recent general election. But even that plan will barely scratch the surface.

The media and the politicians talk about a deficit of £163 billion pounds. They also talk about a budget plan to cut the debt by half in four years. THAT IS A LIE !

£163 billion is just THIS YEARS debt.

Their plan will only reduce the year on year debt to £85 billion by 2014.

The total outstanding debt is already £908 billion ( http://www.debtbombshell.com/ ) rising to £1375 billion by 2014.

That’s equivalent to £53,000 per tax payer.Imagine how long it will take the average person to save that.

Or imagine receiving a tax bill for that amount.

Just the interest on our debt for this year will be £43 billion. That's £1,900 for each and every household in the UK.

Remember this debt was largely created by bad practices in the Private financial services sector. All that has happened is that PLC debts have been transferred to Public Debt which will be addressed through 'Austerity Programs'.

PEAK OIL - A big story the media refuse to report on.

Unfortunately fuel prices will continue to rise and rise and rise.

Within the next few years (10 at most) the price will be out of reach for all but the wealthiest and elite classes around the globe.

We have already passed a significant milestone in the post 'gold standard' petro-economy. That point is known by economists as 'Peak Oil'.

Essentially when that point was reached, the world entered an era where the demand for and production of oil exceeded the volumes of newly discovered reserves.

Over time this problem will be compounded due to emerging market countries insatiable demand for energy.

It took 200 million years for the sun to convert carbon to plant and animal waste and subsequently to oil. It has taken just over 100 years for cars etc to reach the 'Peak Oil' point with a relatively gentle upward demand slope and a steep new reserves curve.

Looking at the numbers now, 10 years is actually optimistic regarding the affordability of the remaining reserves.

As we are probably as greedy as our parents and grandparents, I don't hold out much hope for an alternative scenario to emerge.

Google 'Peak Oil' for more information.

Comments welcomed and encouraged.





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