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IMF Says Japan And Spain Are Done, "Debt Ratio Will Never Stabilize"

Tyler Durden's picture




 

The IMF believes that advanced economy deficits will decline by about 0.75 percentage points of GDP this year which 'strikes a compromise between restoring fiscal sustainability and supporting growth". However, continued focus on nominal deficit targets runs the risk of compelling excessive fiscal tightening if growth weakens. In addition, there is a risk in the United States of political gridlock that puts fiscal policy on autopilot and results in a sharp and sudden decline in deficits—the “fiscal cliff.” What is more troubling is the significant upward revision to all of the peripheral European nations (with Greece now at 171% Debt/GDP in 2013 versus 160.9% forecast only 3 months ago). While the average debt-to-GDP ratio among advanced economies is projected to continue to rise over the next two years, surpassing 110 percent of GDP on average in 2013, debt ratios will by then have peaked in several advanced economies - though rather explosively they do not see debt ratios for Spain and Japan stabilizing.

Debt/GDP ratios seen rising across Europe and most specifically Greece is losing it again and Spain bleeding fast...

Spain and Japan are seen to have debt ratios that are not stabilizing...

IMF2

 

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Mon, 07/16/2012 - 10:23 | 2620092 zero19451945
zero19451945's picture

You can't deficit spend forever. It simply doesn't work.

Mon, 07/16/2012 - 10:32 | 2620116 bilbao
bilbao's picture

Sure you can. That's how fiat money is created in a debt-based monetary system, such as ours.

 

Wake up! We live in a DEBT-BASED MONETARY SYSTEM. Debt-GDP ratios are meaningless for countries that issue their own currency as debt...

See: Robert J. Shiller: Debt and Delusion

Mon, 07/16/2012 - 10:42 | 2620153 tmosley
tmosley's picture

That has a 60-year hard time limit, unfortunately.  We are on year 41.  The mean is more like 20 years.

Mon, 07/16/2012 - 16:12 | 2621495 LowProfile
LowProfile's picture

 

Sure you can. That's how fiat money is created in a debt-based monetary system, such as ours.

Wake up! We live in a DEBT-BASED MONETARY SYSTEM. Debt-GDP ratios are meaningless for countries that issue their own currency as debt...

Unless the issuing central bank monetizes the debt.

consequences of debt monetization - Startpage Web Search

...Exactly who needs to wake up, again?

Mon, 07/16/2012 - 10:32 | 2620126 vast-dom
vast-dom's picture

don't tell Obamneyzi, Bernankzi and Krugzi.

Mon, 07/16/2012 - 11:17 | 2620278 geewhiz190
geewhiz190's picture

off topic but,  PBOC is in the us dollar market again today bidding for dollars, they're willing to pay up for the USD by 5 bps. on six months

Mon, 07/16/2012 - 14:04 | 2620923 old naughty
old naughty's picture

Good Boy !

They are jockeying for membership.

G7 minus two (oops, too soon for Italy) ; to be replaced by BRIC minus two (China and Russia).

Its inevitable...If we last that long.

Mon, 07/16/2012 - 10:25 | 2620100 Anne Ominous
Anne Ominous's picture

Don't stop there. Japan, Spain , Britain, Ireland, Greece, Italy, France and soon Germany are all fucking broke.

 

Oh Yeah - and the US. Left that off the speech.

 

Gold not set to go yet - still have SDRs before the big paradigm swap.

 

DIMF.

Mon, 07/16/2012 - 10:26 | 2620106 Canadian Dirtlump
Canadian Dirtlump's picture

Looks like Green economies, and economies based on vending machines with soiled underwear in them share something afterall.

 

They are both the shits for long term success.

Mon, 07/16/2012 - 10:28 | 2620110 ptoemmes
ptoemmes's picture

What, no second derivative Hopium?

Mon, 07/16/2012 - 10:29 | 2620113 TrainWreck1
TrainWreck1's picture

"In addition, there is a risk in the United States of political gridlock that puts fiscal policy on autopilot and results in a sharp and sudden decline in deficits—the “fiscal cliff.” "

I'll take political gridlock in the US any day of the week. Sure it will impair fiscal policy, but anything that results in congress doing less can't be all bad. In fact, given their track record over the past few decades, anything that slows them down is probably best.

Too bad the ratings agencies don't grade congress. We might see the first F-F-F-

btw, is the IMF rated?

 

Mon, 07/16/2012 - 10:33 | 2620129 caimen garou
caimen garou's picture

Japan has been "over done" like a slice of burt toast

Mon, 07/16/2012 - 13:40 | 2620876 Hi Ho Silver
Hi Ho Silver's picture

Radioactive toast.

Mon, 07/16/2012 - 10:33 | 2620130 Vincent Vega
Vincent Vega's picture

In short...we are so fucked.

Mon, 07/16/2012 - 10:35 | 2620137 John Law Lives
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"While the average debt-to-GDP ratio among advanced economies is projected to continue to rise over the next two years, surpassing 110 percent of GDP on average in 2013, debt ratios will by then have peaked in several advanced economies - though rather explosively they do not see debt ratios for Spain and Japan stabilizing."

It would be laughable if anyone thinks the US debt ratio is going to peak in the next few years...

Mon, 07/16/2012 - 11:21 | 2620286 Mitzibitzi
Mitzibitzi's picture

It could. But you'd need those FEMA camps if the government pulled the plug on the entire welfare system, which is about what it would take to manage it.

Mon, 07/16/2012 - 10:37 | 2620139 Burr's 2nd Shot
Burr's 2nd Shot's picture

Dead is a form of stability.

Mon, 07/16/2012 - 10:52 | 2620188 legal eagle
legal eagle's picture

That was very funny, thank you for the chuckle

Mon, 07/16/2012 - 11:00 | 2620212 Zero Debt
Zero Debt's picture

You've obviously never met a zombie. If you do, .308 Winchester to the head does the trick

Mon, 07/16/2012 - 12:12 | 2620475 Ghordius
Ghordius's picture

hogwash. this is just propaganda from the weapons industry - ever bent to make you fearful, it sells.

 

if you meet a zombie, a baseball bat or a big blade is the only solution. you either smash it's head until the brain is pulp or you cut off the head.

if you meet a vampire or a werewolf, the same. don't try with silver, this is just propaganda from the bugs

 

if you meet a zombie bank, though, you need to cut the government support. it's a bit trickier

if you meet a vampire bank... shit! they are coming for me! quick, you have to.... aarrrrggghhhh!!!!

Mon, 07/16/2012 - 10:43 | 2620157 gjp
gjp's picture

The main reason the forecast changes are so dramatic for the PIIGS is because higher interest rates are blowing a hole in their budget.  Primary defiicits are even worse in the US, but interest rates are near all-time lows.  Sure is nice to have a sugar daddy with a printing press.

And on this basis the anglos lecture the rest of the world.  What a sick farce.

Mon, 07/16/2012 - 11:29 | 2620319 Mitzibitzi
Mitzibitzi's picture

"Sure is nice to have a sugar daddy with a printing press."

Not when you have bills to pay and kids to feed! Every time the BOE presses Ctrl-P the cost of food goes up in direct proportion. With the exception of bread, milk and eggs (maybe a few other things) which seem to being artificially held down compared to everything else.

I imagine the same is true in the US, as well?

Mon, 07/16/2012 - 10:49 | 2620180 Jlmadyson
Jlmadyson's picture

From Richard Duncan today from CNBCs piece How close are we to a new great depression;

When we broke the link between money and gold this removed all constraints on credit creation. This explosion of credit created the world we live in, but it now seems that credit cannot expand any further because the private sector is incapable of repaying the debt it already has, and if credit begins to contract, there's a very real danger that we will collapse into a Great depression.

If this credit bubble pops, the depression could be so severe that I don't think our civilization could survive it.

End.

Exactly the govts can print all they want but in the end it matters little.

Mon, 07/16/2012 - 11:01 | 2620217 Bicycle Repairman
Bicycle Repairman's picture

Did the Soviet Union worry about credit creation?

Mon, 07/16/2012 - 11:24 | 2620298 Everybodys All ...
Everybodys All American's picture

... no they just buried everyone alive. I'm sorry but your probably too young to have known Stalin.

Tue, 07/17/2012 - 10:14 | 2624039 Bicycle Repairman
Bicycle Repairman's picture

I read his book.  Does that count?

Mon, 07/16/2012 - 10:51 | 2620185 Snakeeyes
Snakeeyes's picture

No kidding. It was NEVER in doubt.

Mon, 07/16/2012 - 11:03 | 2620224 onebir
onebir's picture

There's usually a way to tweak it so debt/GDP stabilises a few years out...

Mon, 07/16/2012 - 11:02 | 2620205 onebir
onebir's picture

IMF forecasts no stabilisation in two major economies' debt/GDP ratios*. ECB recommended senior bondholders take losses, and it got leaked.

This is a very strange day...

(*over the forecast horizon)

Mon, 07/16/2012 - 11:04 | 2620225 firstdivision
firstdivision's picture

So much for inflating your way out of debt.

If Japan is done, then the US will be done, albeit in less than 20 years since this depression was started by more than just a housing bubble bursting. 

Mon, 07/16/2012 - 11:06 | 2620231 Crispy
Crispy's picture

Jubilee me!

Mon, 07/16/2012 - 11:11 | 2620251 bnbdnb
bnbdnb's picture

Just issue 1000 yr treasury notes.

Mon, 07/16/2012 - 11:16 | 2620275 vxpatel
vxpatel's picture

LIEMORE

 

'Stressed' Bank of England official stabbed self to death A Bank of England manager stabbed himself to death due to the over-whelming pressure he was under at work, an inquest has heard.

 

http://bbc-worldnews.net/2012/07/bank-of-england-boss-suicide-induced-by-cost-cutting/

Mon, 07/16/2012 - 11:21 | 2620291 EmileLargo
EmileLargo's picture

So the IMF now says what Kyle Bass was saying in 2009?

 

 

Mon, 07/16/2012 - 11:23 | 2620305 BillyBoy22
BillyBoy22's picture

Looks like Kyle Bass is gonna turn his little hedgefun into a mega player.

Mon, 07/16/2012 - 11:27 | 2620314 Snakeeyes
Snakeeyes's picture

Absolutely! But when the IMF holds up Argentina as the shining example of a growing economy, you have to shake your head.

http://confoundedinterest.wordpress.com/2012/07/16/imf-declares-spain-and-japan-as-zombielands-u-s-suffering-from-rigor-mortis-3rd-place/

Mon, 07/16/2012 - 11:40 | 2620357 Snakeeyes
Snakeeyes's picture

US GETS BRONZE MEDAL!!!!!!!!!!!!!!!!!!!!

Mon, 07/16/2012 - 11:44 | 2620363 web bot
web bot's picture

You know, whenever anyone talks about the decoupling of Gold to the US dollar, they throw up the idea as progressive. Without it, we'd still be living in caves, or log cabins.

I'm not as convinced as I use to be as to the evils of the gold standard. By today's world, yes it is not practical, but if the gold standard was not done away with, we'd likely be in a very, very, very different world today.

But let's just say that if Gold was never decoupled... the likely results would have been "limited" globalization, perhaps a lower standard of living and a slower crawl  of the 3rd world out of poverty. And oh... likely the abatement of China's rise to global ascension. No, nobody talks about this though.

 

Mon, 07/16/2012 - 12:19 | 2620508 robertocarlos
robertocarlos's picture

We ran out of unlimited resources. That's the only thing stopping us. And it still isn't over. We couldn't build what we have under a gold standard. Now if we just tweak things a bit we could have our heaven on earth.

Mon, 07/16/2012 - 12:20 | 2620514 Hobbleknee
Hobbleknee's picture

What resources did we run out of?

Mon, 07/16/2012 - 12:33 | 2620568 robertocarlos
robertocarlos's picture

Brains.

Mon, 07/16/2012 - 12:19 | 2620509 Hobbleknee
Hobbleknee's picture

Why is a gold standard not practical?  It doesn't mean everyone is walking around with sacks of gold coins; it means paper money would actually be backed by something besides government fiat.  It means the government can't print us into poverty because at anytime, people can redeem their warehouse receipts for real gold.

Mon, 07/16/2012 - 12:44 | 2620617 robertocarlos
robertocarlos's picture

I'm not good at panning.

Mon, 07/16/2012 - 12:16 | 2620492 Hobbleknee
Hobbleknee's picture

Ctrl + Alt + Delete, bitchez!

Mon, 07/16/2012 - 12:56 | 2620688 PulpCutter
PulpCutter's picture

I'm confused.  In this article, you say US total debt/GDP will stabilize at 1.13%.  But in the post just a few below it, you claim we're growing "total marketable US debt" at 21% per year, while GDP is growing at 1.1% per year.

Which is it?

http://www.zerohedge.com/news/problem-nutshell-annualized-gdp-growth-1-a...

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