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IMF Sees G7 Net Debt At 200% Of GDP By 2030; 441% By 2050
The IMF has issued a series of papers today whose sole purpose is to assuage fears that the world is headed for a sovereign default driven inferno, authored by Carlo Cottarelli and two other staffers, which concludes that markets currently "significantly overestimate"
the risk of sovereign debt default in the advanced economies. The idea for the papers, according to Cottarelli, was born out of a "sense of
frustration" after talking to two financial market analysts in Europe
who had "no focus on numbers, but more a feeling, a sensation things are
going bad and would continue to go bad." Well, actually the numbers are there, and as the IMF itself concludes G7, debt to GDP for the G7 countries which is currently 77%, will reach 200% by 2030 and 441% by 2050. But since the IMF paper is only focusing on a few months into the future, it may very well be right. In the meantime, we will stick with Morgan Stanley's recent analysis on the topic by Arnaud Mares, which concluded that sovereign defaults will happen, and likely in dramatic numbers, the only question is how.
While the bulk of the paper is nothing but a validation that the author has never read any of the works of Reinhart and Rogoff, the only relevant chart is the one below.
And yes, the very author who says, there is no need to worry about sovereign defaults, adds the following: "Under the current and future pressures on public finances—large primary gaps and rising health care and pension spending—public debt would spiral out of control in the absence of fiscal adjustment" and hilariously adds: "The surge in debt in this scenario, however, does not even take into account the possible negative feedback effects that higher debt could have on interest rates and economic growth."
The bold section, as opposed to the several hundred of other superfluous pages, also explains why the IMF has recently expanded its key credit facility to have virtually no borrowing cap.
But aside from all of that, the "sense of frustration" or "feeling" if you will, that "things are
going bad and would continue to go bad" is certainly soothed.
In other words if one takes Jim O'Neills perpetual hockeystick projection for G7 GDP which the Goldman analysis likely sees at about $200 trillion by 2050, then associated debt will be about $1 quadrillion. Congress: have fun with that debt ceiling.
Those who wish to join the group of lemmings with a castrated feeling of frustration and imminent dread, should read the IMF papers:
- Long-Term Trends in Public Finances in the G-7 Economies
- Default in Today's Advanced Economies: Unnecessary, Undesirable, and Unlikely
and there is a third one that completes today's Koolaid trifecta, but we are too hyponotized looking at the to S&P flatline to look for it.
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Oh boy so this means we have to grow! Get out the shovels! Let us pay this interest. "Whistle while you work!"
...this tune.
http://www.google.com/url?q=http://s0.ilike.com/play%23Depeche%2BMode:Master%2BAnd%2BServant:12348:s378708.8668646.4909319.0.2.48%252Cstd_bb89cb77091f4882bb674e4c0c498839&sa=X&ei=N61-TL7gJsP6lwfBnuHrAw&ved=0CBYQ0wQoADAA&usg=AFQjCNFjXe8AWgaSKWvBkwcburtcH_9hFg
Jobbed.
Why are these people allowed around anyhow?
And they see that as a workable, viable level???
Sure! They're just numbers after all.
Malthusian theory was debunked as well. Can trees really grow to the sky?
There will be new financial time bombs invented to keep this puppy on track...
Or not.
Have you ever seen an elephant fly?
I did the math. Those trees will be chopped down way before that -- they'll all be turned into paper - money. Printed on one side only, to save ink.
As an historical example:
They can predict debt levels through 2050 but they can't tell that Greece will default anyways?
Maybe we should start an IMF fund for sending them history books on hyperinflation.
Ok but our fund is taxing them. An "education" tax if you will.
Alfred E.-
We're about to be hit by a hurricane's outer bands, or maybe not. And that is in 24 hours.
Even the Old Farmer's Almanac has equal predicitve power as the US Weather Service 72 hour forecast.
Don'tcha know.
- Ned
"The G7 will not default...tomorrow! Ok yes they will default on their debts and obligations, but not tomorrow. Now get out there and buy up song long term debt!"
Also who in their right minds thinks that any of the G7 could handle 400%+ debt to GDP?
Right--the existing system is sent to dust looong before 2020.
Dear IMF: "Pppfftfhtfhtfhtfhtfhtfh!!!!!!"
Nice chart but it is not nearly parabolic enough.
If it were parabolically accurate (ooh, I just made that up), the timeline would shorten considerably.
Yeah, they have this sudden inflection point, as if today is the day that it's going to stop getting so bad so fast.
It's just Bugs Bunny money at this point.
A ZILLION SIMOLEONS!!
The chart is actually quite unintentionally funny. I mean, if you just take the current (known) slope of debt to GDP you get to 400% long before 2050. Heck, you get there (eyeballing, here) sometime around 2020 by the looks of it.
We won't, of course, get there. Not in 2020, not in 2050.
This chart is premium.
moved
I will not miss this time on earth...
wont be around in 2050...they wont
Does this mean I should buy Google and hold it till 2050? I'm confused. What if I fucking croak?
In 2030 I'll release my hit single, "I wanna be a Trillionaire, so freakin' bad."
No problem. We'll print more.
The battle of the FIATS is on....
What you will see happen for the most part is a coordinated effort to not single out a blackball currency.....but for "all" to be unattractive within the same time intervals...thus no huge bias for any meaningful length of time...
"Stuck in the mud"....fun for everyone....
"Wink wink" international government policies....
Updated S&P500 charts:
http://stockmarket618.wordpress.com
Someone, please, tell these guys the housing bubble has burst
Who cares about 2030? These analyses are more impotent than those done by current Wall Street analysts.
why wait? if 100% is good now, why not make it 200% next year?
Take a short time period, say 3/4 of the time it takes to get an erection, and measure the percentage growth change in size then extrapolate that rate of change out to 2050 ... I suppose this analogy is consistent with both the error of extrapolating trends far into the future, as well as the theme of consistently growing debt, since by 2050 you could probably f%$! the whole planet with that thing ....
For #uck sakes...
Why in the name of #uck, would any idiot continue to expound on the bankrupt Keynesian gruel of further deficit spending???? This is just beyond me. Are there any sane people left in government?
When I see tools like Krugman on cnbc saying that we need further deficit spending, I have to ask myself - did this Nobel laureate attend a special school that didn't require math, or did he flunk first year economics? Even a dummy can see that this balloon is going to bust... and when it does... we are looking at robots moving not millions, not billions, but trillions of dollars over the course of minutes... and if you doubt me, think how much money was moved in the flash crash over the course of minutes.
You know, we need to give the Europeans some credit... this report is from the IMF and just confirms what we here in Oz have been saying for some time.
Eventually, you'll see the use of logarithmic scales on charts to capture the descent into financial mayhem and darkness that is coming.
OT: futures ramping up afterhours again
This is a precursor for the Black Swan event so they can say
"See it was getting better"
I would imagine they are uncrating it now !
Maybe Earl is pre-packaged ?
I personally think it will be a "shaker" in "Cali" (HARP)
(The Black Swan)
Change the title in Figure 11 to read: Generalgouvernement
Much more appropriate.
That was about the stupidest chart I've ever seen.
Child-with-a-crayon level.
Where did they work in the impact of Greenland melting and raising sea levels 7 meters? How about some religious cult nuking a European city? Or the US dollar losing reserve currency status? Or the entire US Pacific North-west seceding from the union?
Anyone projecting past even 2015 anything more complicated than compound interest on a simple savings plan is an absolute lunatic. I'm serious. This is lunacy of a very high order.
At the moment, running any sort of compound interest calculation on a savings plan seems like lunacy.
Don't tell anybody, but we already did. I don't think it was in the papers though.
McNews
Well, since everything is going to be just dandy, I wasted a couple of hours reviewing the old King News MacGuire and GATA interviews.
100X leverage on physical gold is nothing. We can easily hit a gazillionX leverage without breathing hard.
Funny money is funny money and will climb to infinity unless damn people get in the way and stop it. That's it. The world would be perfect if it was not for the damn people.
Note to self ...
That's what that crazy guy at the Discovery Channel building said.
http://www.financialarmageddon.com/
http://www.financialarmageddon.com/2010/08/the-consumer-is-totally-wrecked.html
Anybody want to take over my maxed out Visa?
It's down 25K!
You can have it for 50K and a pony!
OK
Well, it is the "Currency of Progress" now
VISA
http://www.currencyofprogress.com/
This World is getting Scary
LOL
Unf%cking real !
Absolutely huge day for banks:
Gold stocks will probably be liquidated:
And yet another "Dash for Trash" cocaine binge will follow:
These "analysis" reports get stupider and stupider. Will the IMF still exist in 2020? Not if they continue to be a covert funding organization that forces un-asked for debt on the American taxpayer.
not if they keep selling there gold.
Yeah, but you have to remember one thing. It was never their gold in the first place. The profit is a lot beefier that way though.
Personally, I was wondering why they stopped at 2050? Why not go all the way to 3000? Oh hell, why not do a logarithmic chart to 25,000AD...
I see this as an opportunity for a global lender of last resort to consolidate power. Of course governments will overspend, that's human nature and especially the norm when it is other people's money. So, it's all going according to plan? Who will own the underlying assets of the sovereigns if they default? This is the same game just on a larger scale, right?
So the IMF is the DIP of last resort? I like it.
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I suppose that when blowing something up (like Fiat), one would want to use lots and lots of explosives to make sure the job is done right the first time. Unlimited funding would seem to qualify as "enough" I would think.
Whistle while you hyperinflate.
You should see my chart of IMF vs Pretending to do math. It shows that IMF instances of pretending to do math will rise over 9000 percent over the next 2 years.
http://www.youtube.com/watch?v=SiMHTK15Pik
Shorted (via OEX Puts) back on July 27th, took some heat but it turned out okay. Still waiting for another opportunity to do so, but my stuff says it will pop up before I can ride the roller coaster down again.
I'm biased towards shorting because my longer-term market model says pain until the end of october. Even though the last swing down wasn't the 'big one', I'm just getting in when it just might crack apart again.
We'll see...
Flash Forward 2050
Gold is 100k oz
SIlver is 1500 per oz
Right... We're only all screwed if they can't keep this going. Who's to say musical chairs can't go on for another 50 or so years?
Since wealth is only created by human labor, you can only keep an economy going on with most people working at some kind of productive job. And since more and more of us don't have a job, productive or otherwise, the end is clearly indicated.
Shuffling green papers around the globe only feeds the bulldog until the cupboard is empty. Look around and notice the shelves are slowly becoming bare as fewer and fewer of us are able to refill them.
Civilization isn't a shared hallucination, despite what most people would like us to believe. When things bottom out, whoever is left will be working their butts off trying to rebuild the dream.
It's not that bad, people. Joke.
Seriously, this cocaine binge of debt is unsustainable. And so it will change.
An Overview of China’s Fake Mortgage Loan Industry
http://israelfinancialexpert.blogspot.com/2010/09/chinas-shark-loan-ponzi-finance.html
Please don't tell me that the IMF is striking to take the jobs of the CBO "static scoring" crowd. Wow, U-6 must be evident at the highest levels.
- Ned
ok. me no economist supremo, but even i could tell it was half baked when i was reading it on me train ride home...
Curious to see the I.F.M sherpa-ing up the mountain
of debt, while on the other side of the cliff 'Doctor'
Trichet hammers that the ratio has to go down
from 90 to 60 %, asap
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