Saturday, March 29, 2014

This time is finally different. The world will truly go dark, if we don't find new reserves of fiat. :(

   (Commentary posted by Roger Erickson)

OECD countries’ debt ‘to top’ post-war highs 
"The combined debt burden of the biggest developed economies will surpass this year record levels seen at the end of World War II, adding pressure on governments as they roll over post-crisis debts, the OECD said on March 28.
Gross public debt in OECD countries for which long-term data is available will top the World War II peak of 116 percent of GDP, reaching an estimated 117 percent this year, the Organisation for Economic Cooperation and Development said. 
The OECD’s 34 members include mostly wealthy countries such as the United States and European countries. Some emerging economies such as Mexico and Turkey are members although bigger developing countries such as China and India are not. 
Not only are debt levels high, but a growing share comes due in the next three years with nearly 30 percent of long-term debt needing to be refinanced by the end of 2016, the Paris-based organisation said in its annual sovereign borrowing outlook. 
While such a high level of refinancing is not unprecedented, rolling over debt will be made all the more complicated by uncertainties created by the U.S. Federal Reserve’s unwinding its bond-buying programme, the OECD’s head of public debt management issue, Hans Blommestein, said. 
“If you have to go to the market because you have to refinance, that’s a challenge,” Bloomestein told Reuters. “It’s not impossible, but it’s not a piece of cake.” 
Taking redemptions into account, the combined borrowing need of OECD governments was seen easing slightly to $10.6 trillion this year from $10.8 trillion last year. 
Japan will be the biggest issuer this year with plans to borrow the equivalent of 64.7 percent of its national output. Its borrowing alone would make up 35 percent of the OECD total."

Never have so many, been so indebted ..... to themselves?

This is what happens when mass mania leads a people to try to peg the volatile growth of dynamic public initiative - aka, fiat - to any particular form of static asset.

May as well constrain an expanding universe to a theoretical economic black hole, from which no logic may escape?

How on earth do engineers, PhDs and so many educated people carry on conversations without even stooping to define the terms they're attempting to use? It's a Blommen catastrophe.

This news article fails logic 101 so badly that all involved should be thrown out of class for failing to master even the minimal pre-requisites. Just random data minus context .... yet again.

It's like showing up for work without even having learned how to dress yourself, let alone read, or write, or reason ..... or usefully interact with co-workers.

What does OECD REALLY stand for? Operationally Excised Cerebral Debris? Anyone interested in actually growing a group brain for your country, please contact me. rge (at) OperationsInstitute (dot) com


Peter Pan said...

All your money belong to us. If you cannot pay it back, you're doomed. Muwahahaha!!

Peter Pan said...

BTW, the debt levels at the end of WWIII won't matter.

Ralph Musgrave said...

There was a letter in the Financial Times yesterday saying the "national debt" might as well be called "national savings". Kenneth Rogoff will be baffled.

Unknown said...

They should do what Keynes said and bury lots of fiat in the ground. Then they could dig some up whenever they ran out.

Unknown said...

Money is a promise. Promise that goverment will collect taxes..

The Just Gatekeeper said...

When those space aliens come to collect, we'll all really be screwed ;)

Matt Franko said...

All of this is a marginal issue...

"In as much as you do it to one of these, the least of My brethren, you do it to Me."

We're not going away, we're over 7B now and climbing, and we were able to accomplish this with one arm tied behind our backs under the metals for centuries...

The ongoing challenge is for us to get on top of it all in this era but for the benefit of the least of those among us... it is possible now that we are out from under the metals...

The current impediment is those among us without the knowledge that we possess.


Tom Hickey said...

Of course, there is the opposing viewpoint put forward by Rodger Mitchell, Kimball Corson, etc, that inequality is being imposed as an agenda by social Darwinians.

This is too orchestrated, including the institutional repression, to be due only to stupidity. It's the outcome of extremist individualism that ignores or denies interrelationship and interdependence and uses institutions and systems and controls to further objectives and thwart actual and potential adversaries.

Unknown said...

"there is the opposing viewpoint put forward by Rodger Mitchell, Kimball Corson, etc, that inequality is being imposed as an agenda by social Darwinians."

Do you happen to have any links to those?

David said...

Let's head for the high seas and intercept some Chinese galleons with paper treasure in their holds, While there's still time! Before they "call in their chits" and "sink the dollar" forever!

Tom Hickey said...

Roger is continually posting this POV at his blog and chiding the MMT economists for not signing on to it.

Kimball blogs hereand also posts in various groups on FB

Here is one lifted from FB:

The Consequences of the Republicans and Obama Cutting Spending

The CBO now estimates that tax revenues will be about $240 billion lower in 2022, the year the Republicans have targeted for bring the budget into balance. All told, the CBO says its gloomier economic outlook here means $1.4 trillion in lower tax revenues over the coming decade than it projected just last year. I submit these estimates are still way low.

I argue that, with the continuing cuts planned and likely, revenues will be $2.6 trillion less than predicted over the coming decade and the slump in our economy will grow seriously worse thereby compounding and augmenting the problem. State budgets are also being cut. We are slashing our way into a worse recession-like state than we have now, when we ought to be doing just the opposite.

A negative economic multiplier is now at work. The economy is being forced to contract by these Republicans and our tag-along, fightless monarch of a president.

Balancing the budget is nonsense as every person who understands anything about MMT well knows. The smarter Republicans understand this as well. They simply don't care if the by product of their scorched earth policies trashes the economy as long as their passions of envy and resentment and their desires to wreck government and rout vacuous liberal politicians are met. They expect the oligarchy to protect and support them as long as they do their bidding. For the oligarchy, the short run losses justify the long term goal of undermining government so as to render it too weak, ineffective and too controlled to wage a war on income inequality, the oligarchy's greatest on-going fear.

Matt Franko said...

Tom that institutional corruption is just a result of defensive acts by those acting in self interest who have the means to be manipulating the institutions....

They are still stuck in the 'gold standard mentality' and think 'money is scarce' so they are going to make sure they get and keep and preserve theirs if they can at all help it...

What you see creeping in now is the specter of "inflation" even with the people we have led to at least see that we are NOT "out of money"... look at that series of tweets that Warren posted up over at TCOTU this week... it looks good for a while and then comes crashing down when the fear of "inflation" creeps in to stop it cold... the fear of "inflation" is related to the selfish desire to 'preserve' the value of "money" by those who possess large amounts of it and are caught up in it... rsp.

The Rombach Report said...

"the fear of "inflation" is related to the selfish desire to 'preserve' the value of "money" by those who possess large amounts of it and are caught up in it..."

Inflation hurts the middle class and working poor far more than the 1% who have the wherewithal to shield their wealth from the ravages of currency debasement.

Roger Erickson said...

True in the short term, Rombach. Yet fear of inflation degrades the Middle Class, that the 1% live off of.

Long term, it's suicidal for all.

Roger Erickson said...

It's not isolated to Turkey.
the rhetoric from Turkey to Japan is mind-numbingly vapid

Japanese shoppers brace for tax hike after long deflation

"Japan is bracing for its first sales-tax rise in years, with last minute shoppers buying up a host of goods from gold to ice cream, as the government tries to tackle its crushing national debt."

Japan hasn't been crushed by it's fiat "debt" for what, 34 years now?
how can any aggregate be crushed by it's own fiat?

the whole world seems to be either drunk, stupid or easy prey for propaganda

even the propagandists don't have a credible Desired Outcome for their developing end-game, other than a novice parasites goal of killing it's host!

what to do, what to do .... (when the whole world has gone mad)

Roger Erickson said...

gotta tell the rubes in Idaho something

blame it on the economy

Severe winter holding up economy? :)
Coeur d'Alene Press

I'd like to see an index tracking how often the phrase "experts believe" shows up in the financial press;
who knows what such an index might correlate with