Europe 1-2-3

Tyler Durden's picture

Submitted by Mark Grant, author of Out of the Box

Europe 1-2-3

“Paying attention to simple little things that most men neglect makes a few men rich.”

 

                           -Henry Ford

The Simplification of Europe

I am under no delusion nor are they my audience; nothing that I write will change much of anything for the public and so I am not passing out knowledge at the supermarket. There are a few of you however that pay attention not to who I am but to what I think. Europe has become so complicated and so riddled with the obtuse and the fractured that I thought I would take some time today to try to simplify the process. All of my life I have listened to economists, who always seem to want to make things more and not less complicated to make themselves sound more intelligent I have always supposed, and I have read research reports that offered forty pages of excuses mostly in an attempt to sell you something. To be perfectly honest; I have never found either of these tacts useful. I would guess that ninety-five percent of what I write is to warn you away from the pitfalls and very occasionally I think something is of interest and might be useful and I point it out. The point of my commentary is to try to keep you out of trouble which is an increasingly difficult task these days as the European Union is the most confusing government on Earth bar none.

Instruction begins today with an assessment of just what we face each day which is why it is all so bewildering until it is explained and then it is not. Many things in life are like magic tricks. They appear to be magic and everyone applauds until someone explains the trick to you and then it is just ho-hum. Today I am going to try to make all of the European magic ho-hum.

The EU is made up of seventeen nations that use the Euro as their currency and a total of twenty-seven nations in total with ten using their own currency. The ten nations in the outer ring have very little influence including Great Britain. Each day the seventeen nations individually pump out “stuff” from their own propaganda machines so we have seventeen spewers of “stuff.” Then we have the European Parliament which lives under the delusion that eventually they will run Europe and they have their own Ministry of Information, rather like something in Harry Potter, that also pitches out its own “stuff.” Then we have the European Union’s various commissions and departments which hands out their own “stuff.” Finally we have the European Central Bank who we are told is independent, which is about fifty percent accurate, who tosses out their own “stuff.” This is twenty-one then individual manufactures of information with each one representing their own interests. So they blow it out and the markets react and I would venture that about eighty percent of the time they react incorrectly and then the news flat lines and then reality sets in while a lot of money is lost betting on the wrong outcome because all of the information is taken at face value and not graded for importance. If anyone thinks that all of the propaganda has the same worth then they are making a disastrous mistake.

What is Important and What is Not

Germany holds the title for the most important propaganda machine. When they discuss what they will and will not pay for you may grade the accuracy as a ten and believe exactly what they are saying. If Germany says “No” or they say “Yes” then that is exactly what to bet on and period and end of the story. Nothing in Europe will get done, when it comes to the outlay of cash, without Germany agreeing to it and that, my friends, you can take to any bank you like. When Germany talks about future events and “support at the appropriate time” and that they welcome the ideas of so and so and whomever then you should read this as fluff and the polite rolling of German eyes and pay no attention to it whatsoever. When it is about money the German rank of importance is a ten and for the rest; just don’t pay attention.

Next when it comes to the troubled nations; Greece, Portugal, Ireland and Spain you may be very little to no attention to what they say about almost anything. Each of these countries has one aim and one goal and that is to get Germany to pay for their troubles and they will roll out any rumor, any scheme, any plan and any fantasy to try to accomplish this goal. They will say it with style and grace and panache but it is all just drivel and should be discarded in your mind.

The machine located at the European Parliament has all of the use of a paper boy on the street corner in Topeka, Kansas. He sells a few newspapers but the value of it is about the same. Brussels is the Hall of pomp and circumstance and lavish dinners where everyone gets congratulated for nothing by everyone else. It is the creation of Berlin in a rather good attempt to keep the Court away from what really matters and so not to be distracted by the throng and it is also useful for the Germans to have it in another country so they can claim the spreading of power which is very useful politically for them. What Brussels sends out then is about as useful as one of the pieces of fluff found by Winnie the Pooh in the forest

The ECB has two printing presses, one for money and the other for information and you should pay attention to both. This is certainly true as it relates to what it will do or won’t do as a matter of fiscal policy and for anything else; ignore it. Further, for anything of importance, whatever they do must be approved by Berlin and if it is not, as was demonstrated Friday, the eventual outcome may be overruled by Berlin. The ECB made a move to ease collateral requirements without permission of Germany and the reaction was swift. The ECB may allow looser collateral rules but the Bundesbank will not and given that they control the Traget2 financing the charade was ended. Now the markets did not understand this and rallied upon the news of easier financing but the markets, once again, did not get it right. The ECB made an unauthorized attempt to ease collateral and then the Bundesbank said “No” and that will be the end of that. There will be no announcement made and Germany will not embarrass the ECB but the decision was made and the easing for collateral will not be taking place and so the independent action of the ECB was dead at arrival. So much for the independence of the European Central Bank, a lofty notion, an inaccurate piece of data.

Finally there is the Bureau of Magic which resides at the European Union. You may live under the delusion that the EU and the European Parliament are the two oversight groups for Europe but this would be a colossal mistake. They are both firmly under the thumb of Berlin. They each present a useful distraction so that Europe does not think that Germany is running the show but then sleights of hand and distractions from the obvious is what politics is all about. You must anchor this firmly in your mind; there is Germany and then there is everyone else and all important matters of policy and all matters of funding are decided in Berlin and that is the exact way of it.

Growth

France is demanding growth, Italy is demanding growth, Spain is demanding growth; all very nice. All of Europe is in a recession except for Germany so certain calculations were made in Berlin. If the average profit margin for German industry is 10% and all of your main trading partners are in a recession then a 1% hand-out for growth is a useful enterprise and so was agreed to by Germany. The 1% cash outlay means an increase in purchasing power for the buyers of Germany’s good and services and so the net profit margin may only be 9% which is much better than a 3-5% decline in orders and so, voila, Germany agrees to the growth measures. Not any more complicated than that I contend and a good strategy for Germany but do not be misled in terms of their agenda; all for Germany, Hail the Reichstag.

In the Coming Days

There are two significant events that will be decided in the forthcoming days. Each will change the face of the European Union. The first is Greece; a little country with a total debt of $1.3 trillion and likely to default. The calculations in Athens are how to get more money out of Germany and the calculations in Berlin is whether a default is less costly, both politically and economically, than giving Greece more money. Debt forgiveness has never even been mentioned so I think we can rule out this possibility as it would have been floated by the German public for review and reaction. The Troika shows up Monday in Athens, they will find all targets missed, all promises unkempt and all hopes for salvation dashed upon the Greek floor along with the plates. The Greeks will beg and plead and threaten and the Germans will decide. In the end I think Greece will be allowed to stay in the EU to preserve the dream, that they will default, that they will return to the Drachma and that they will receive some kind of debtor in possession financing so that the country does not collapse. That is my best guess. Cheaper tourism and cheaper ships will help with their competiveness but it will be years before Greece is allowed back into the Eurozone as a voting member.

The second item on the docket is Spain. They need a total of around $350-400 billion dollars to straighten out their banking system and their regional debt. Money lent to the banks in some fashion, not currently allowable under the various policies but you never know, or money lent to the sovereign to be lent to the banks will be just the first tranche of funding. It will be followed by more money lent to the regions of Spain which may take another novel approach but no matter. Spain is about to be run out of Germany no matter how all of the trivialities play out and so the impositions of the Men in Black are about to be put in place. So long to the importance of Madrid and thanks for all of the entertainment. You have been caught and are about to be hung out to dry and enjoy the ice wine that Germany will provide for your congratulatory dinner. Rajoy was right, a “Great Victory for Europe;” serving ice wine in Madrid.

Frau Merkel: Prime Minister, how do you like ice wine?

Mr. Rajoy: I have never tasted it.

Frau Merkel: Oh but you will!

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Jack Sheet's picture

do you get paid by the word?

disabledvet's picture

it would appear "more by the turd than the word" for that is all i learned here Jack Sheet.

gojam's picture

I thought it was a very good summary. Euro for dummies.

And it's spot on. Most Europeans don't really understand Euroland ,so God knows what others must think.

CIABS's picture

"promises unkempt"

Nice.  First time I've seen that one.

mcguire's picture

i liked it too.. now if they can only train the algos to read it this way.. 

mvsjcl's picture

Couldn't he just have said: Germany rules, all else is distraction?

MuppetMaster's picture

http://www.youtube.com/user/SOSTacoJohnson?feature=mhee

 

I have found the alpha.

Come see what I'm doing.

See what I'm seeing...

francis_sawyer's picture

 "All of my life I have listened to economists.." 

~~~

It ended for me right there...

LoneStarHog's picture

For Gawd's Sake...JUST F**KING DEFAULT, ALREADY!

HelluvaEngineer's picture

A series of events...each more bullish than the last one!

francis_sawyer's picture

 "There are two significant events that will be decided in the forthcoming days. Each will change the face of the European Union. The first is Greece"

~~~

So, was this piece written in, like, January 2010 or something?

LoneStarHog's picture

He just got "Outta Da Box" so that he could publish his outdated work. Please! Someone put him back.

Zaydac's picture

The thing is, he is often right about what he says, as in this piece where he correctly calls the need to ignore 20/21ths of what comes out of Europe. But I kind of worked that out for myself about 3-4 years ago and so did most right-minded people. The way to put him back in his box is to junk him:

Average:

Your rating: None Average:

But Zero Hedge needs page reads and clicks to survive and I value Zero Hedge so what I do is click on every post, click on a few ads from time to time, and read what Tyler says. And a few other people. But not this guy.

 

slackrabbit's picture

Calculations are easy:

Bottomless socialist pit vs loss of exports but self determination

 

 

(the bank & sovereign defaults / failures are gonna happens anyway)

 

LawsofPhysics's picture

ALL eCONomic "calculations" are bullshit.

Yet another sheep that does not know the difference between socialism and fascism.  In the absence of any rule of law and contracts, all paper will die, period, so yes, banks (without gold) and sovereigns (without gold or resource assets) are dead men walking.

FeralSerf's picture

Self-determination for the Germans is just an illusion.  It has been this way for hundreds of years.  It's not so different in the rest of the EU or America either, for that matter.

That "bottomless-socialist pit" is just another term for "feeding trough for the livestock".  It's not so expensive or inconvenient for TPTB to maintain what with late 20th century industrial automation and hybrid grain agriculture.  They can easily control the amount of livestock in their herds if it gets too crowded and they are about to at this point in time.

LawsofPhysics's picture

What a load of horseshit.

One simple question for Germany; What if that 1% "handout" is not used to purchase any german goods?  What if folks in the rest of the E.U. say "fine, fuck you, we will do things for ourselves?" How much OIL does Germany have again?  FAIL.

Making any predictions in a lawsless land is beyond idiotic.  Prosecute the god damn fraud AT ALL LEVELS, restore the rule of law.  Nothing will improve until there are real consequences for bad behavior for everyone, including large banks.

agent default's picture

"Prosecute the god damn fraud AT ALL LEVELS, restore the rule of law. "

I see an obvious flaw with this proposal. You cannot lock up the entire EU commission and every politician and banker in every member state.  It is embarrassing. I mean, rule of law... Are you sure you want to go down this path of dangerous experimentation?

FeralSerf's picture

In America it would be necessary to jail the jailers too.  The financial "services" industry's privatization of the penal institutions has made it so.

disabledvet's picture

This article sucks and his clearly written by a clown who has no idea what the phuck he is talking about. Hence "your frustration." (Indeed much of Zero Hedge is going Full Retard of late i might add. "The bad guys have won" issue...which try as i might i simply cannot see how they have lost in The Great Battle of Bailout Nation. What? You thought you or I would get the moula?) "Germany" (yes, that needs to be put in quotes now too) is "of Two Masters" (ah, the Two Headed Eagle...how ironic!) One is the liquidity it has provided to the entirety of Europe (the EZ) and the second is the money it is getting in return (repayment risk.) AND THAT'S IT! So "for all the diktats" the simple fact of the matter is "there is no credit growth in Germany because they killed their lenders." And they continue to kill them i might add. Hence "the death of the EZ."

JustObserving's picture

Greece; a little country with a total debt of $1.3 trillion and likely to default

That seems quite a bit higher than most published figures.  External debt is $540 billion and government debt to GDP is about 120% so government debt is about $360 billion.  

In any case, your number works out to be $115,000 per citizen - no chance it can be repaid.

And US debt and unfunded liabilities today are $15.81 trillion and $119.42 trillion or about $436,000 per citizen - no chance it can be repaid.



t_kAyk's picture

None of it, anywhere, will ever be repaid, ever. 

Mitzibitzi's picture

I suspect the bastards running the debts up know that, or they wouldn't be doing it. It's fun running up a credit card debt that you intend to walk away from. In fact, the only reason they haven't cut the card up yet is that, unacountably, the card company (the taxpayers, in other words) haven't twigged that they're going to be stuck with the bill yet and keep increasing the credit limit!

FeralSerf's picture

There was no plan to repay it.  It's the currency that we will be using for the rest of the 21st century.  That's what we use now for money, i.e. debt.  And we've got this money-debt up to our eyeballs.  You don't think the Power Elites would consider letting the proles have anything else to use for their savings, do you?

disabledvet's picture

"extinquish the debts through a depreciating currency." we all understand that here hence "GOOLLLLLDDDDDDD!" Having said that there are other ways to "extinquish the debts." I have a counter to the Gold Thesis (a very good one i might add...and an all time favorite as well) namely "the Means of Production" thesis. (Yet another all time favorite...still working even today...unlike our Gold Standard which STILL is just part of the historical record...but grows stronger in the eyes of history by the day!) The current form is called "financial repression"...although "seeing the liberation variant in Europe" has given me more than pause if this is the "correct expression." I must say i've had a lot of..."back but not forth" about "what is the simple dollar in our pocket" for some time--and still i find myself amazing that it is indeed "good for all debts public and private"!!!! Clearly "we're gonna need a LOT of it" for the current iteration of "debt"...but the servicing costs haven't exploded which is what i assumed would happen all along. This is in spite of servicing costs STILL rising (in absolute...though amazingly not in the interest rate/exponential form!). At some point the economic growth we've been experience over the past two years will start to be reflected "in the government numbers" and "we'll deal with the Federal DEFICIT (since that's all we can deal with anyways)" when we get to it. Don't ask me how it works. I am fascinated as to the why however. Here's one thought:
http://www.youtube.com/watch?v=O_nZ6HnMPLQ&feature=fvwrel

FeralSerf's picture

That dollar, that appears to be just a worthless piece of paper (and fundamentally it is), is only worth something as long as the people believe they can exchange them for stuff they want.  They will even stuff their mattresses with them, planning on keeping them indefinitely as their life's savings!  Amazingly even Russians have been known to do this!  TPTB have everything at stake vis-a-vis maintaining this charade.  They will do everything necessary to make sure it continues, including eliminating contrarians from society.  They will never allow their fiat IOUs to be replaced by gold or silver, even if they must use the courts, the police and the army to provide support for their legal tender laws.  The paper "money" is their source of power.  They use it to pay the army and the police.  They use it to remove competing mediums of exchange from the marketplace as well.  As long as they have the exclusive power to create more of it they don't even need to collect taxes to make claims on the nation's goods and services.

There is much more to California than most people want to admit.  Yes, the taxes are way too high and the politicians are too crooked which is the reason taxes are so high.  But the weather's good, there's water, agricultural production is good, Mexican labor is cheap, doesn't collect pensions and goes back to Mexico for health care when they need something serious.  There's lots of high tech.  There are good ports and a lot of natural resources.  California's economy is plenty big to be an independent country, even two countries.  There's plenty of reasons Polk and Carson wanted it so bad in 1846.  Al Jolson, a Russian born Jew, found plenty of other talented (and wealthy) tribal members in California in the entertainment business.

The Age of Useful Idiots's picture

He is mixing several numbers here, which is not useful at all (and so is most of his commentary, lots of clichés). If we were to look at total debt, the UK is the worst offender in the world (1000% Of GDP) and Greece is actually not that bad because household debt is pretty small compared to others:

http://articles.businessinsider.com/2011-12-04/markets/30473957_1_househ...

 

disabledvet's picture

"dollar is a reserve currency. The euro is killing the euro zone in order to become one." The fact of the matter is unlike other money the dollar is barely traded in the world. And in the world of currencies "that's the currency you want to be." The one "held in reserve." The euro is the one "being held in contempt right now." Once all the other nations realize they're better off without it (and they are better off without it) then those left "holding the bag" (Germany) will have to figure out what to do with it (after extensive discussions with the Bag-Man, the Goldman Sachs.) A "new EZ" will have to born from the ashes of course.

Savyindallas's picture

sure it can be paid  -just write a check. They did it in Weimar. When gold gets to be a billion an ounce, we should be able to pay off the debt. Every problem has a solution-Yes We Can!

FeralSerf's picture

The Golden Rule: the Tribe with the gold makes The Rules.  The Rothschilds and their subordinates have most of the gold now.   This will become more apparent as the next couple years unfold.

"The gold standard has been the ruin of States which adopted it, for it has not been able to satisfy the demands for money, the more so as we have removed gold from circulation as far as possible." -- Protocols of Zion, No. 20

disabledvet's picture

not nearly as much as oil has since "oil needs no standard." still...above EVEN THAT apparently is a "debt standard." "Monetizations so big you will be forced to submit to our superior economical ways! (i.e. "we're in fact dirt phuckin' poor but are going to kick your ass anyways.")" Appears to be working...surprisingly.

FeralSerf's picture

The Tribe controls the oil supply as well.  That may have been a hidden reason for WW1, i.e. to wrest the oil fields from the Ottoman Empire.   It's been said that gold is portable, easily stored oil.

The monetizations work because of legal tender laws.  Otherwise only an idiot would believe that paper unsecured debt instruments are money instead of gold coins.  

timbo_em's picture

I largely disagree when it comes to the ECB. The ECB is run by Latin Europe and the Bundesbank and their friends from Finland, Austria and the Netherlands are constantly voted down; see SMP, LTROs and numerous collateral easings. None of those unorthodox measures was oked by the FANG countries.

GMadScientist's picture

What happens to the Vampire when the FANG can't drain the PIIGS anymore?

In essence, a choice between screwing all taxpayers or exporters (which will indirectly screw some taxpayers).

Sorry, taxpayers!

Treason Season's picture

You can fool some of the taxpayers all of the time, and all of the taxpayers some of the time, but you can not fool all of the taxpayers all of the time. Or exporters for that matter!

FeralSerf's picture

.

"you can not fool all of the taxpayers all of the time"

Au contraire mon ami.  They wouldn't be taxyapers if they weren't fooled.  One of the essential qualities of a taxpayer is that he be a fool.  Why else would he keep contributing money to a cause or causes that have been proven time and again to be false?  The promises he gets are based on lies.  It's always been this way, everywhere.  But like death, taxes are one of life's guaranties.

Exporters, in order to be "exporters" must export.  This always entails a risk of not being paid, no matter how careful they are.

disabledvet's picture

You mean BENEFITS RECIPIENTS. "Nobody pays their taxes in Europe." Well, at least "nobody that's an anybody." It's nice to think "the welfare state is just a problem in Southern Europe" of course.

falak pema's picture

So the club med countries in fiscal terms are like USA!

Free market without fiscal obligations. I wonder why they have a problem.

Could it be that inspite of being true John Galters paying no taxes, they are like good ole USA, drowning in debt?

Oh, then maybe its not fiscal death that kills the cat, its debt?? That changes that ending of that movie.

Get a new script writer, pronto! 

 

disabledvet's picture

have you ever actually tried to COLLECT a benefits check in the USA? Trust me "welfare state in name only." The money goes to the Banks and the States...and that's where it stops. Everything else you see in "the good ol' USA" was built from the ground up. And since "the Welfare State wasn't created until the 60's" that's a LOT of ground to cover! (Perhaps if you asked HOW it exists to begin with. Hint, hint: oil in the USA is a MONETIZED asset...thus leading to BANKS EVERYWHERE--at least "until the oil ran out"...which is still hasn't btw. But by then there had been so much wealth created we created "securities firms" which "securitized your debt" by issuing EQUITY thus allowing for the borrowing spigot to continue by GROWING THE ECONOMY. That's how powerful this "simple process" is. Think of it as "fractional reserve banking in reverse" where "i put 10 bucks down and get a $10,000 asset." if the only problem is "repayment" what's the problem then? the asset still exists does it not? Backed by a DEPRECIATING CURRENCY is it not? and ...in theory AND IN PRACTICE...this method could include "things that haven't been invented yet." Hence disabledvet here goes "right for cloud computing, natural gas and solar"--all of which require capital expenditures beyond belief to deploy (and could never be deployed under a Gold Standard where you have CAPITAL scarcity. gold is money but it is NOT capital.) Who knows? Maybe with the 100's of billions being spent some of this shit will actually work! (trust me...it's VERY valuable!) Back in the 20's it was "automobiles" (perhaps you've heard of them?) or "electricity" (perhaps you have that now) or VERY importantly THE MEDIA (i know you have that because you are here...in a World Wide WEB.) Interestingly "in the 90's it grew to include housing"...something i would not regard to be...in ANY sense...an asset at all. (something that appreciates in value over time.) Hence "this part is government business now." But WHAT is government business again? To "refresh"...the current head of the NSA (National Security Agency) came from the Housing Department of the Federal Government. Ergo "housing is the business of the Federal Government." Or should i say "lending to the depreciating asset known as housing" is now considered the critical aspect to our National Security. Talk about "getting Government off the backs of the Capitalists"! Outside of the Armed Forces they run the whole place PROVIDED they can make the dough of course. And of course "they're making more now than ever" yes? And what is the only motivation for a capitalist who already has more than enough money? To make MORE money. So I say "he will" and proceed from there. Again sheeple INTEREST RATE RISK is the problem because this system is not a scam but a very effective SCHEME and "but for the internet and Social Media" most of these folks who run this thing would have walked away with the keys to the Kingdom long ago as they did in Ireland. (Brazil i believe.) The key is "quiet money"...aka "the greenback." The dollar says nothing doesn't it? Interestingly "the same with the Yen." Not true with the euro though...is it.) To summarize in the DIGITAL DOMAIN you and I are just bit and bytes...worth FAR more however as bits and bytes than in our actual "material" form. Hence PROTECTING those bits and bytes is consuming more Capital right now than any project since the Manhattan project itself. I say equities keep pushing higher, along with the dollar, along with consumer discretionary and the war effort. Trust me...i only saw "the bad guys winning"...i never..."saw" this coming (in the sense of my actual eye. but in the "mind's eye" anything is possible.) As equities push higher that should be a floor in for commodities...but you'd be surprised how much the "food industry" can economize if they need to as well.

RobotTrader's picture

While everybody is screaming "Its The End of the World!!!"

 

Europe is having no adverse impact on the U.S. consumer.

Credit card companies are now the No. 1 sector ranked by IBD:

http://www.wallstreetbear.com/board/view.php?topic=102291&post=371877

Other top sectors continue to be in the Consumer Discretionary space, with many names like Disney completely ignoring all the bad news:

http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=dis&inst...

Absolute worst sectors in the IBD ranking are "Metals and Mining" and "Oil Service".

The outright collapse in gasoline and food prices the last 9 months is like "QE on Sterioids".  Ergo, I expect the XRT and XLY to make new highs prior to the election:

http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=xrt&inst...

Market continues to show its strength, as the NYSE Summation Index is still going up despite Thursday's drubbing.

http://stockcharts.com/freecharts/McSumNYSE.html

And more and more Dow stocks are headed to world record highs, the next one likely to be JNJ:

http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=jnj&inst...

GMadScientist's picture

So you're recovery is completely based on Brave merchandising sales? And I thought your Chipotle theses were fucking retarded.

Gas was $3.22/gal on average at Christmas last year, $3.92 3 months ago, and $3.43 now. Collapse?! Man you dumb (unless you think Main St gets to cash in on commodity speculation).

Please please please buy with both fists. Leverage the SUV you live in if you have to. BUY!

 

 

disabledvet's picture

so he forgot to add "buy oil stocks." what's your point? gold mining equities haven't done a thing in years...who knows, maybe even they'll find a way to make money mining that worthless phucking gold shit. not that you can't spend all your time shining it of course. Just remember "that's why there's a shoeshine boy outside the bank." Now how about this equity:http://seekingalpha.com/symbol/wmt?source=search_general&s=wmt
i mean "who needs anything period" right? have you even been to a Jewelry store lately? Is the guy behind the counter the owner? i rest my case.

Savyindallas's picture

Yeah, our economy is really strong. amazing what an additional $1.4 trillion in borrowed money, deficit spending (each year) will do to prop up the economy for a while. Private Bankster debt transferred to public debt. How long can that continue before we have a currency crisis and the house of cards collapses?

 

falak pema's picture

here is a history of debt spending build up; it all starts under RR around 1983...

Okay, Folks, Let's Put Aside Politics And Look At The Facts... [CHARTS] - Business Insider

Charts # 14 to 16 are very instructive!

Libertarian USA, from 1983 has piled on debt, except under that socialist CLinton when it went down!

With GWB in went viral as he cut taxes as he upped debt/deficit spendng! double whammy! 

World upside down! Libertarians killed the free enterprise cat! 

RoadKill's picture

Let's look at the numbers shall we?

RR - 1980 - GDP $2,788b Debt $909b - 1988 - GDP $5,100b Debt $2,601b - CHANGE GDP +$2,312b Debt +$1,692b - Ratio 0.73x

B1 - 1988 - GDP $5,100b Debt $2,601b - 1992 - GDP $6,342b Debt $4,001b - CHANGE GDP +$1,242b Debt +$1,401b - Ratio 1.13x

C -  1992 - GDP $6,342b Debt $4,001b - 2000 - GDP $9,952b Debt $5,629b - CHANGE GDP +$3,609b Debt +$1,627b - Ratio 0.45x

B2 - 2000 - GDP $9,952b Debt $5,629b - 2008 - GDP $14,369b Debt $9,986b - CHANGE GDP +$4,417b Debt +$4,357b - Ratio 0.99x

O - 2008 - GDP $14,369b Debt $9,986b - 2012 - GDP $15,602b Debt $16,351b - CHANGE GDP +$1,232b Debt +$6,365b - Ratio 5.16x

RR + B1 + B2 = GDP + $7,972 Debt + $7,450b

So in 4 years Obama has added $1.1 trillion LESS debt then 20 years of Republican presidents.  He has added $6.7 LESS GDP as well.

falak pema's picture

well you can't give O'Bammy credit for it all. In fact it was Hank Paulson blackmail debt that started it all. Of course Obammy got on the bandwagon pretty fast and never got off. 

To look at debt to gdp growth ratio look at chart 14 in blodget presentation.

Ned Zeppelin's picture

Agreed, RT that the ponzi is still sailing along over here, and one should trade on reality - what is - not ideals - what should be.  But I insist the cracks are not yet visible, and while the US consumer is supposedly not yet affected by Europe, there is no evidence that the consumer across all classes is doing swell, and there is no doubt a slowdown in an economy which has never really regained its footing after 2008-09.  So while the band plays on on the top deck, I wouldn't necessarily agree it means the Titanic Economy is sound. No one can trade fundamentals when a CB like the Fed is backstopping everything - no wonder everyone is anxious. 

Anyone who thinks everything is OK need only look at the US Fed and the ECB balance sheets from 2008 to now.  Tells you everything you need to know.

But day to day, right now? trade away on the volatility - but higher highs seem to always retreat as reality intrudes. If anything the equities market is range bound and that's about it.