Posted on 12/01/2011 8:22:21 AM PST by blam
CHART OF THE DAY: KYLE BASS: This Is What The End Of The Global Debt Super-Cycle Looks Like
Joe Weisenthal
Dec. 1, 2011, 10:39 AM
In his latest investor letter (via Gurufocus), Kyle Bass lays out his case that a wave of hard defaults is coming.
His basic argument: The world is just saddled with too much debt.
Throughout history, he says, total debt-to-GDP only ever breached 200% when nations were spending on war. Today we're at 310%.
Says Bass: "There is no savior large enough with a magical pool of capital to stafe off this unfortunate conclusion to the global debt super cycle. We think hard defaults are imminent."
(Excerpt) Read more at businessinsider.com ...
Sorry, but the debt-money system can NEVER contract - it must ALWAYS expand. It is the one true universal policy driver. That is why immigration, illegal & otherwise, is unofficial policy, regardless of what 'citizens' want. You can use this same top-down exercise to explain any growth in debt, both public (government) and private.
It's why the Fed is now bailing out Europe. The balance sheet must ALWAYS expand. It doesn't matter what "assets" are purchased/swapped eg Treasuries, toxic MBS, Euro bonds, etc.
My advice is to forget 'solutions'; this baby was designed to fail from the day the Fed was created on Dec 23, 1913.
I thought he meant "stave," but after reading the definition of "stafe," he may have chosen a better word:
I thought he meant "stave," but after reading the definition of "stafe," he may have chosen a better word:
Touche.
I admit I was only looking at the absolute raw numbers.
My student pointed out one stat that certainly would make me poop twinkies....the core inflation rate is currently 30%.
Granted, not as bad as Zimbabwe’s whatever it is inflation rate, but still not good, either.
Of course, as she said, it’s still better than Afghanistan or Pakistan.
Posting a link to a common mathematical tool is not building a model.
What you've presented isn't even a syllogism, let alone a model.
“In, why was a debt-money system that was designed to fail adopted by the USA....”
I thought Kyle Gass was Jack Black’s less famous partner in the rock group “Tenacious D”
I don’t think you will be disappointed... there is pain coming unlike anything any American has ever endured.
LLS
It happened because some were enemy agents of evil... and others just SCREWED UP.
LLS
I was talking about what will be important to the USA after the global economic collapse. Right now I don't think there is the political will to anything more then kick the can, I submit the failed super committee as evidence. I also submit Ron Paul, cut 1 trillion now, at 10% as more evidence. For some strange reason, folks seem to think we can just continue to spend 43% more then we earn forever. And that is just at the federal level, local gov and state gov are just as bad.
I do not know how to help them to see the truth.
LLS
I live in a small town and I know people like that here. I am always telling them to stock up, but they won't. I am hoping we will get a few weeks notice that things are going to get bad so they can stock up at least a little bit.
This is something many overlook:
“And that is just at the federal level, local gov and state gov are just as bad”
While the Federal mess (currently being hidden by the warm-up band that is the Euro meltdown), is of epic, historically unprecedented proportions, people overlook the heinous fiscal shenanigans occurring in their own municipalities.
Just off the top of my head: Legions of “educators” allowed to retire in their early 50’s with full, gilt-edged, blue ribbon benefits, fire captains walking away with 3/4 million dollar pensions on which they've contributed a microscopic fraction.
The unavoidable financial Armageddon headed our way will be deep, fundamental and widespread.
The problem is that, if things get rough, they will remember your advice and assume that you took your own advice.
Therefore, you must have stuff put away. They will want a share of the stuff that they believe that you have.
That could get serious.
The designated way out is the power of compound inflation. There will be failures but not all the debt will be swept away.
The value of the debt will decline as the result of compounded inflation
IMHO, the man knows what he's talking about.
Problem is the creditors won’t like being paid back in devalued currency. Someone who loans enough money for a house expects enough back to buy two houses - not two bicycles. They’re not going to just sit there and accept that fate.
There’s just too many claims on too little wealth. Downgrading the representation of that wealth doesn’t solve the problem, it’s just another way of kicking the can around.
Yup but if things get that bad and they might for a few months, then it would be a good idea to take in a few to help guard things. But don’t show up empty handed with nothing to offer. I’m well stocked and could last 6 months, plus I live right on a bay so I can fish, I have a large garden, a fresh water well and 2 wood burning stoves for cooking. I do need a little more ammo, I have been putting that off for some time now awaiting for a sign that the time has come to spend some of my cash reserve.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.