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Debt-To-GDP Ratios Demand Debt Jubilee
In the 1980’s, Canada was governed by (at that time) the most incompetent, fiscally irresponsible regime in the Western world: Brian Mulroney’s “Conservative” government. In a mere eight years; Canada’s national debt tripled, and its debt-to-GDP ratio soared to what was (at the time) an astronomical level above 70%.
Canada was considered to be in an official “debt crisis”. What is meant by the term debt-crisis? It’s all a function of simple arithmetic. It is where the total debt-load approaches a point where it is no longer mathematically possible for the economy to remain viable over the long term.
While the precise quantum where an economy passes “the point of no return” is somewhat dependent upon economic assumptions; a very crude standard is the 100%-level. Once an economy accumulates a mountain of debt equal to its entire, national, economic output; that economy no longer has sufficient financial/economic mass to (responsibly) “service” this mountain of debt.
In other words, once past that point-of-no-return, as a simple function of arithmetic it is inevitable that total debt (and thus total interest payments) must just continue to go higher and higher and higher, until…? Outright bankruptcy. The economic Holy Grail of a “balanced budget” is no longer even mathematically possible; maintaining the same fiscal course is nothing less than economic suicide.
With the only possible (long-term) outcome being national bankruptcy, and with every year a government continues past the point-of-no-return inflicting enormous, additional, economic harm; once past the point-of-no-return any legitimate/responsible government would immediately look to either “restructure” (i.e. reduce) its total debt-load – or simply default (i.e. declare Debt Jubilee).
In the case of Canada, its debt-crisis of the 1980’s led to a new, fiscally responsible government taking power: Jean Chretien’s Liberal government. Its harsh fiscal management produced a full decade of budget surpluses, where the debt-to-GDP ratio was roughly cut in half.
It was an example of successful “Austerity”, the only such success, anywhere in the Western world, over the past quarter-century. It was successful precisely because Canada had not yet passed that economic point-of-no-return.
Flash ahead roughly a quarter century. Canada has a new Conservative regime, meaning another woefully incompetent/grossly irresponsible government. Not only has Stephen Harper undone all of Canada’s previous debt-reduction during his “reign of error”; but Canada’s debt-to-GDP ratio has exploded to a level more than three times higher than the “debt-crisis” created by the last Conservative regime.
Canada’s debt-to-GDP level has skyrocketed to more than 220%. It is not simply (way) past the economic point-of-no-return (mere insolvency); this nation is bankrupt – in blatant economic terms. Continuing to service this obviously unsustainable debt is nothing more than economic sadism, perpetrated by Stephen Harper against the people of Canada.
However, as indicated in the chart below (originally produced at Zero Hedge); Canada is far from alone. Membership in the international Bankruptcy Club has soared to roughly 40 nations. Canada’s previous “debt crisis” would no longer even earn it a place in the world’s “top-40” of most-indebted nations today.
A quarter-century ago, discussing nations being economically past the point-of-no-return was theoretical and predictive. Today, the 21st century’s Bankruptcy Club provides unequivocal, empirical proof (in the form of dozens of examples) that continuing to service these unsustainable debt-loads is pure sadism, and thus effectively economic treason, on the part of all of these illegitimate regimes.
In collective terms, the unequivocal proof that these regimes must (immediately) declare Debt Jubilee comes in many forms. We start with the fact that none of the members of the Bankruptcy Club ever manage to improve their fiscal standing (i.e. lessen their level of obvious insolvency). While there may be occasional, annual “blips” in the economic self-destruction of these nations; examine the balance sheet of any member of the Bankruptcy Club over five-year increments, and their fiscal position is always worse.
What is the colloquial definition of “insanity”? Repeating a past (failed) policy, but expecting a different outcome. What is the definition of economic treason? Continuing to pursue the same, failed economic policies year after year, despite their self-destructive consequences, but pretending that repeating this failure will lead to a different outcome.
For many years (decades?), “extend and pretend” has been the unofficial mantra of the entire, U.S. economy. Roll-over the corporate debt, despite the fact that much/most of it is unsustainable. Roll-over the municipal debt, despite the fact that much/most of it is unsustainable. Roll-over the state debt, despite the fact that much/most of it is unsustainable. And roll-over the gigantic debts/obligations of the U.S.’s federal government, despite the fact that its $100+ TRILLION in debt/liabilities is roughly ten times greater than what can be sustained by this crippled, and relatively tiny economy (tiny relative to the size of its gigantic obligations).
The reality with an entire economy based upon “extend and pretend” is that it has no future. The economic suicide/self-destruction continues on and on and on until…? Total economic implosion. It begs the question: why wait? Why inflict more and more damage on their own economies, when any politician capable of operating a calculator knows that the only, possible long-term outcome is national bankruptcy?
In the corporate world, honest management teams never prolong such financial/economic death-spirals, because it is a well-known economic reality that “resolving” insolvency as early as possible minimizes total harm and economic loss. It is only the corporate entities run by fraudulent individuals where bankruptcy is a “sudden” event – i.e. the fraudsters managing the corporate entity are forced to acknowledge their insolvency when the entity literally implodes financially.
The fact that no Western government (other than Greece’s new government) is (a) acknowledging its own, obvious insolvency, and (b) taking concrete steps to seek to reduce (or simply erase) these gargantuan debts is prima facie proof that none of these other regimes are legitimate. They represent not their own peoples, but the banksters who are continuing to rape us for “interest payments” on these ridiculously excessive/unsustainable debts.
As noted in previous commentaries, Debt Jubilee is a long-standing economic “tradition” of our species, as financial mismanagement (at the national level) is an endemic problem of our species, irrespective of the historical era, or the system of government. Arithmetic is arithmetic. Continuing to (attempt to) “sustain” the unsustainable is at best economic suicide, at worst economic treason.
Moreover, our own sovereign debts are fraudulent, on several different levels. Wiping away these gargantuan debts, and restoring solvency to the Western world is not only economically necessary and morally imperative, it is legally justifiable. The “legal remedy” for fraud is a very simple one: the fraudulent transactions (i.e. our debts and accumulated interest) are instantly rendered null-and-void. For injured parties with “clean hands”; they can seek restitution for any losses through the branch of law known as Equity. Needless to say there would not be any bankers standing in that line.
Clearly if Western governments were ‘merely’ drowning in debt-to-GDP ratios of roughly 100%, then they could still argue that attempting to manage these debt-loads was legitimate rather than treasonous. However, Germany’s government (debt-to-GDP of 188%) can no longer make that claim. Nor can:
Canada’s government (221%),
Austria’s government (225%),
the U.S. government (233%),
Finland’s government (238%),
Norway’s government (244%),
the UK government (252%),
Italy’s government (259%),
France’s government (280%),
Sweden’s government (290%),
Denmark’s government (302%),
Spain’s government (313%),
the Netherlands’ government (325%),
Belgium’s government (327%),
Portugal’s government (358%),
or Ireland’s government (390%).
Further absolutely irrefutable proof that all of these Traitor Governments are past the economic point-of-no-return comes in the form of all the failed examples of European “Austerity” following the Crash of ’08. Unlike Canada; which produced budget surpluses and cut-in-half its debt-to-GDP ratio; not one of these debt-bloated governments has been able to produce a single budget-surplus (despite the most-extreme belt-tightening possible). Every one of these European “debt crises” has simply continued to worsen.
Unless we are to believe that only (some) Canadians are capable of managing an economy in an economically competent manner; then the only possible conclusion that we can reach is that European Austerity has failed (again and again) because it was never possible to succeed. They have proven that they are all past the point-of-no-return.
If a nation (or any entity) can never reduce its debt – even under the most-extreme financial management – but rather its (enormous) debt simply grows larger and larger; that is the literal definition of insolvency. It is a state of existence which must inevitably result in outright bankruptcy. Yet when Greece attempts to stand-up to these corrupt governments and argue that its debt-load must be reduced (and not increased ad infinitum), every one of these traitorous “extend-and-pretend” regimes is endeavouring to bully Greece into bowing to the will of their true Master: the One Bank.
Pay the bankers their interest. Increase the debts until these bankrupt economies literally collapse under the weight of their own interest payments (as has already happened to Greece once). The politicians are too corrupt to care. Our Zombie populations are too stupid to notice/understand – apparently none of them can operate a calculator, either.
When Western debt-levels began soaring past the point-of-no-return at the beginning of this millennium; it suggested that the West (and thus the whole global economy) was due for the latest Debt Jubilee. When these already-excessive debt levels exploded to a ludicrous level, following the so-called “bail-outs” (to these same bankers) from the Crash of ’08; this required an immediate Debt Jubilee. However, the insane/treasonous numbers in the previous, current chart shout out an even simpler message: we demand Debt Jubilee.
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Complete Communist Bull Shit.
Every debt is someone else's asset...cancel the debt and you have cancelled someone else's present or future likely income producing asset (likely with leverage involved)...with the asset gone you will need to unwind more debt and this thing will spiral.
The reason no one stops this now is because there is no answer that doesn't lead to chaos. True chaos. Even for a realist like me, this is scary. No way to know if this would be a 3 month period of chaos or 3 decade or 3 hundred years. We've gotten ourselves so far out over our skis we will tumble and we just don't know if we can arrest the fall before we hit the cliff?
In my posts I make it clear what a shit show this is...and a bankruptcy would be the right thing...theoretically very possible, just highly politically and socially implausible.
http://econimica.blogspot.com/2015/02/fundamentally-flawed-chapter-1-advanced.html
I read to the end of the article hoping the author would make a convincing point, only to be disappointed. I want my time back.
Chambawamba has this. United States at 233% is much too low. Chambawamba is looking at this now and has some help. He has been working to pull together the data from news sites. He will have an update soon.
From the outside, Russia has a very low debt and is a better capalist than D.C.... Imagine what the US could do if we had a real american for president, that followed the constitution.
You being a scummy Russian troll would prefer maximization of damage of course, so don't pretend to me you give a fuck about the 'host', or anyone else in the west, arsehole, let alone about the topic.
Julia @ AILS
So the CONSERVATIVES fucked up and the LIBERALs fixed it---here BOTH the CONs and the Libs fuck things up
(dont whine to me that in Canada they mean different than they do here-one is essentially right, the other is left)
What debt? Just central government debt, or state and local government debt, or corporate debt, or private debt to nationally chartered banks, or the lunch I owe my buddy, or the sock in the jaw my brother owes me?
Fed printing *is* already forgiveness, we're there now, been there for a while. At some point they will make it official.
The frightening thing is that it isn't the debt service that is killing us now, its all the rest of the budget. Even if you remove the debt service we're still in deficits that get worse with every year.
i dont see RUSSIA on that list so in what universe should their bonds be considered junk?
The debt levels reported are government PLUS businesses PLUS private persons. But I tend to agree with the conclusion : the present debt levels are way out of any real possibility to get paid back/serviced.
Clearly there is no such thing as government debt. It is a strawman. Governments have only balance sheets. There is no such thing as negative money. Think of it as the imaginary component in a complex financial system. The choice to pay or not pay a debt or to declare a debtor in default is a political choice. Author should get real
A debt Jubilee won't happen without a significant amount of bloodshed. Real bloodshed.
While not taking exception to any of the points made in this piece, nor diminishing their collective significance, it is my recollection that these debt ratios are public and private totals.
Could you let me know a week in advance of the debt jubilee?
Ive always valued paying as you go, and id like to ramp up my debt in advance, so my thriftiness wont have been in vain.
The ultimate short. Few have the nerve for it though.
What a debt jubilee mean for all the savings people have in banks that are invested in sovergn debt? I don't care about central banks, but I do care that we have conned the average person into thinking we can make banks a safe place to park their life savings while we continue to allow banks to invest in the debt of countries with >100% debt to GDP as if they are ultra safe investments.
It means you will loose your savings. I NEVER bought any bonds the last 10 years since it is apparent the debtors will default more and more. Especially governments. Buy physical gold if you really want to safeguard your buying power and keep it OUT of the banking system.
Good point, what about the balance my bank "owes" me?
Our world-wide debt predicament may be—at least in part—an inherent weakness of democracy. Why? Popularly elected governments have a hard time imposing austerity on their people. Obviously, democratically elected governments answer to the people through elections, and if there is anything that governments want, it is to remain in power—to be reelected.
Any popularly-elected government that removes the debt candy from its citizenry will be faced with a severe austerity backlash. How then can democracy exist? The American founders seemed to have two answers: small and limited central government, and a congress elected by state legislators—not popular referendum. We have jettisoned both of these protections. Now we have what the founders feared and Tocqueville warned us about: a leviathan that robs from the politically weak to give to the politically strong. Unless we can find a new fix, well like the Zero Hedge maxim states, “On a long enough timeline the survival rate for everyone drops to zero.”
Agreed. I think there is no more damaging idea to individual freedom than the concept that democracy is equal to freedom and that democratic dovernments are just and fair. Protection of individual freedom from the will of the majority is what creates freedom.
Absolutely! You sound like the delegates to America's Constitutional Convention. They knew that too much democracy was the enemy of freedom. Most people are too simplistic about government. They assume that more democracy is always good. America's founding fathers knew that a strict plebiscite, where all matters are decideded by the majority,would destroy freedom. Still, we won't get voters to cede their power any more than we will get elected officials to do the right thing in the face of terrible personal consequences. Therefore, we need to look for alternatives. Maybe the flat tax would help. That would keep some of the people from imposing costs on others that they themselves expect to avoid. A spending limit might help some, too. Still, our problems are worldwide problems, and the fix will need to adopted by many countries--obviously more than forty. Otherwise, the profligates could bring down the world's economy even without our help.
There is no debt. It's a Monopoly game. Have you been brain washed by the tribe? If you believe that Greece needs to borrow more Euro in order to simply hand it right back to the Jewish German regime, that is a clear sign that you have been tricked into believing the propaganda that the dark forces have been spewing out like diarrhea.
Sorry, greed does not give a shit about "long term thinking"...
I once put my hand on the Liberty Bell, back when it was still permited. There is an inscription on it which is a Bible verse taken from the book of Leviticus 25:10 and it reads, “Proclaim liberty throughout all the land unto all inhabitants thereof.” This first inscription was appropriately engraved into the Liberty Bell because in the biblical verse directly preceding verse 10, the Bible references “the fiftieth year.” which is a Jubilee, Coincidence? Probably not. I do believe freedom cannot return without a fiftieth year which is a declaration of freedom from all debts! Then we can start with a clean slate! The founding fathers WERE NOT! dead beats but highly educated and were aware that throughtout antiquity the state or king or temple priest allowed for a reset to occur because of the business cycle, I see it will come , the reset that is , the poor and unfortunate will always evolve,but this release allows for society to remain intact without the loss of her members to the ravages of debt slavery and or asset mining ! tears and pain in the eyes of these people that live in desperate straits and the laws that our leaders pass to control the people who cry against the austerity and inequity the poorest has understandably been hurt by the this inhumane nature , Ask the ninety year old who was arrested for feeding the homeless because the rich didnt want to see the poor attracted to their neighborhoods for food! but they, The rich will not relinquish their claim on the debts of anyone of us alive or yet unborn, as it will take generations to pay off these debts before they realize its futile or its too late! 03
checkout Kipling's take on this
http://www.poemhunter.com/poem/the-gods-of-the-copybook-headings/
Thank you for this link again. i have spent a few hours reading on this poem. Worth expanding:
with all respect the copybook headings of the time:
Here is a partial list of copybook headings:
I TRULY THANK you for this link. and the poem.
thank you for that link.
A debt "jubilee" only works correctly when it appies to all of society, and is set for some date decades so far in advance that every participant in the economy has the opportunity to enter into new contracts and to negotiate price and terms with the full knowledge that on a date certain, any debt that remains unsettled will be severed and rendered moot.
This is the Biblical version of a debt jubilee which happened on a 50 year cycle.
Any sudden declaration of a debt "jubilee" is a force majeure that enriches some at the expense of others. Even the hint that such a release might take place is enought to greatly inhibit people from lending and investing.
But it only applied to NOT ALL of society. It applied only to domestic debt. Foreign debt was still maintained and not forgiven.
When you hit private debt saturation it will happen informally via default as aggregate demand rolls to a halt and jobs die on the vine anyway.
We are approaching that again now.
So you can either do it in an orderly way with direct injections, before that, or in complete disarray and collapse informally after that.
Even if you only do it partially, in a small way at first, it will cushion the system and slow the decline, as you sort out the details to make it work in a more formal and viable way, with international coordination.
Yeah but if you wanted to declare martial law and "no hesitation" some people you'd keep on pusing it the way it's going until it inevitably ends in social chaos and collapse. Ain't gonna be no jubilee. There will be a new world currency, with great fanfare and adulation from the masses, after the fall that inevitably comes with continuation of current policies. If some grandmas and kids have to die, what's that to a sociopath?
Never happen
They will reduce the planet to ash and slag before they will let go.
Wear the grudge like a crown of negativity.
Calculate what we will or will not tolerate.
Desperate to control all and everything.
Unable to forgive your scarlet lettermen.
Clutch it like a cornerstone. Otherwise it all comes down.
Justify denials and grip 'em to the lonesome end.
Clutch it like a cornerstone. Otherwise it all comes down.
Terrified of being wrong. Ultimatum prison cell.
People first.
That's the rub: can the free market find a way to deliver the goods and services promised to millions of retirees? Obviously the government has to be reduced in size dramatically, but retirees are $100 trillion short of what they will need (under current conditions) to maintain their current stanard of living. Any 'solution' will involve massive dislocation.
Social Security is T B T F.
In America the Police Are the Terrorists.!
https://www.youtube.com/watch?v=CksSslF5j8Y
A jubilee is a good idea but it is too late. The global debt bubble is already bursting and the collapse is going to be so quick and and so violent there won't be time to formalize an organized approach. There will be a jubilee, of course, but it won't be voluntary on anyone's part.
http://www.globaldeflationnews.com/anatomy-of-a-bubble-how-the-federal-r...
Not true.
Direct injection of funds into private bank accounts can arrest the decline in less than a week and provide the funds needed to service debts and pay back principle.
It is a matter of decision and will.
You're suggesting printing moar money and giving it to people? Do you really think that this will somehow pay back sovereign debt?
Did I say Sovereign debt?
I said, "private bank accounts".
How is sovereign debt going to be paid via direct injections into private bank accounts?
Central banks are monetizing debt already, that is, funding it with NOTHING.
Are you OK with re-inflating TBTF bank assets and eliminating mark to market, but not re-inflating a dieing real economy and paying down private debts via direct injections in to private bank accounts?
The comment I responded to asserted it was too late. Well it isn't. In first half of 2009 two direct injection payments were made to all working Australian's bank accounts, and while virtually all other countries fell into deep recession, Australia grew, aggregate demand went UP! And the mineral and energy boom exploded into action with the biggest expansion the country has ever seen.
People can have an ideological cow about that if they think it changes things, but Australia has not had a recession in almost 24 years. I don't know if there's another country that can say that today.
As I said, it's a matter of decision making and will.
So if someone asserts it's "too late", they're wrong.
Money does not have to be given to collapsed insolvent too-big-but-failed banks. CBs can address the real economy problems via direct injections that pay back private debt and thereby reducing private debt loads, which will also reduce defaults, plus increase disposable income from the debts that no longer needing to be paid off, so personal reserves rise and the ability to spend increases thereby raising aggregate demand, which will also serve to halt the tendency to deflation, and employment will increase, oil prices will rise as demand comes back.
What you are advocating is a means of servicing the existing debts. The longer they are serviced the worse things will get. It's better than paying the banks, but it doesn't do anything to address the debt. Somehow, the notion that governments can borrow for anything aside from war or disaster must be discredited, or they will permanently enslave humanity.
Here's the thing...if TPTB wish to keep the debts, they will have to 'print' a whole lot of money and somehow get it into the hands of the payers. You can argue over the methods and means, but that is what has to happen.
Here's the conundrum. If you do that, you have to 'create' so much money that you render it all worthless. You'd create so much inflation that all those debts would end up being worthless anyway, by destroying the currency the debt is valued in.
The patient is only valuable as long as he is moribund, on his hospital death-bed. The patient's value is in the fees that can be extracted for his "care". Cure him, and he gets up and leaves, and the fee-generating bed is empty. Although that is the optimal solution, and supposedly the ultimate goal, in reality it can't be allowed to happen. The goal must be changed, to one where you keep the patient sick enough to have to stay, but always "on the cusp of recovery", so his family doesn't decide to pull the plug early.
Any hospital that did that to patients would be shut, and it's administrators arrested.
Extract even more from the host and hand it over to the parasites?
I don't think so.
The 'host' is broke fool, huge bills, no money to pay, spiral debt ceiling, insolvent. Budget kaput. Why the hell do you think they resorted to debt monetization to give abstract QE to insolvent TBTFs?
You being a scummy Russian troll would prefer maximization of damage of course, so don't pretend to me you give a fuck about the 'host', or anyone else in the west, arsehole, let alone about the topic.
Debt forgiveness before balancing the budget simply results in the need for another debt forgiveness somewhere down the road. The debts did not magically arise, they are the result of failed policy by the governments that incurred them. Without restricting a government's ability to continue failed policies all a debt forgiveness does is reinforce the benefits of bad behavior.
Oh, but given that all you've really cited as cause for these debts was a shift of political parties, all Canada really needs is a return to Liberal party politics. Not sure how this swipe at local politics got in to your article, but reading it made your whole article come across as whiney. Your audience knows what happened in the 1990s and what happened 2008 thru 2014, and the political parties in charge can only be considered to be responsible for the outcomes in so much as they ALL gave central bankers free reign. Liberals were no more the authors of Canada's success in the 1990s than Bill Clinton was for success in the US. It happened because of the actions taken by the world's financial controllers, and the success of the 90s has come at the expense of the current failures.
The 90s was the beginning of the information age. Western economies performed well in spite of their masters.
CMHC is basically like the ING of the subprime US mortgage collapse and can never actually pay out banks who have too many forclosures.
The one good things is that housing prices are pretty much inflated only in Vancouver and Toronto/GTA. I don't think CMHC insures anything over $1,000,000 too so that helps as well.
If housing prices collapsed and the government was smart -- they would just change the rules and do a reverse bail in and take the diffrence from the shareholders to cover the losses.
If you think debt is bad right now in Canada, wait until all the CMHC contingent liabilities arising from their guarantees of subprime mortgages have to be brought onto the GoC's balance sheet as the housing market continues to fall.
Nothing will happen because to most people public debt isn't personal. It's some distant, nebulous thing that the media talks about but that's it. In America the public debt per person is roughly $811,000. If everyone was told they have two years to pay off their portion of the debt then it becomes personal. Or maybe it should be proportional by net worth. If Warren Buffet or Jamie Dimon had to cough up a few billion dollars they'd be part of the solution wouldn't they? As long as debt is a non personal footnote then people won't give a damn how much it is until their money is extinguished by way of inflation. By then it's too late. Just ask the folks in Germany or Zimbabwe.