Spot The Looming Crisis

Tyler Durden's picture

Yes, we all know that Europe is in deep, deep, trouble, and we all know that Europe has a major fiscal deficit issue which is why well over half of the Eurozone is effectively locked out of the capital markets, and only has funding courtesy of various back door Ponzi schemes funded by the ECB, and we also all know that on a consolidated basis Europe's debt/GDP is very high. But the truth is that at least Europe is taking small steps to rectify its historic profligacy and is at least pretending to be implementing austerity (in some cases actually truly doing so). How about the US. Well, the chart below should answer that particular question. Because while the consolidated GDP of the US and Europe are nearly identical, they differ very materially in terms of both fiscal deficit, and total Debt/GDP. The chart below shows precisely where the differences lie between the United States of Europe and the United States of America.

Hint: higher and right-er are bad-er.



Ironically while the financial sectors of both the US and the Euro Area are nearly identical in their liability composition, where they differ is in the amount of deposit buffers backing the financial system: in Europe deposits are nearly three times greater than the US! Of course, this is a double edged sword: on one hand it means banks have a greater cash-based capital buffer - US banks would die to have the nominal amount of European deposits - but it also means that European banks have a far greater propensity to bank runs (as we have witnessed) since in Europe the shadow banking system is far less developed, and by implication it also means that Inflation in Europe is a far, far greater risk. Perhaps the Bundesbank, for all the criticism it gets day in and day out, is spot on in its unwilliningess to cede to the ECB's endless money printing demands. Actually scratch the "perhaps."

Source: Citi

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fonzannoon's picture

The looming crisis is the population bubble. Starvation and poverty is a hard way to deflate that bubble but that seems to be the plan.

fireangelmaverick's picture

Is the Japan bubble among the advertisments on the side of the page?

camaro68ss's picture

guess the looming crisis....hummm, let me guess there in red....

Manthong's picture

Japan should be right around 1 o'clock on the US bubble.

Popo's picture

While the above is true from an economic perspective,  I'm struggling to think of a historic example where the side with 100x the military might of everyone else ended up losing.    

(ps: I'm no warmonger.  No moral justifications intended by the above.  Just pointing out that it's historically unwise to bet against the side that's armed to the teeth.  And I think we all know what historically follows financial collapses...)



Sudden Debt's picture

BE = Belgium! WE WIN AGAIN!

Mountainview's picture

There is someone else in a worse position than ours !!! Hurrah!!!

Ironmaan's picture

There is no population bubble. Everyone on the planet can fit in Texas at the same pop density as NYC. Check the math here.

fonzannoon's picture

I was referring to population in regards to the resources available. But I guess if you are in the monsanto camp where we all eat mass produced garbage and take a bunch of pills to try to control obesity etc. we can all prob fit. Actually I still don't think so.

Ironmaan's picture

You're one of those folks that has the midset that we are always "lacking". Have faith in mans ingenuity and ability to solve problems. The problem is not the population, the problem is government and the restaints it places on man.

fonzannoon's picture

see my post below regarding East NY. I agree with you somewhat. You make a valid point.

Ironmaan's picture

Broads b poppin out 12 kids coz gubbament encourages it. Gov fucks everything up. They encourage shit they shouldn't and restrict where they shouldn't.

MayIMommaDogFace2theBananaPatch's picture


aka: A Modest Proposal for Preventing the Children of Poor People From Being a Burden on Their Parents or Country, and for Making Them Beneficial to the Publick 


Theosebes Goodfellow's picture

Two cannibals are having dinner, and one gazes around and casually mentions,

"I don't like your mother-in-law."

Without looking up the other cannibal replies,

"That's okay, just eat the noodles."


centerline's picture

+1 for this statement ironmaan - now ask why.  Or how we wound up in this place and who benefits.  And don't give any of us the usual Dem, Rep, Left, Right, this, that bullshit.


NotApplicable's picture

A.k.a. "Government creates its own demand."

WillyGroper's picture

They don't be doin it alone.

Citxmech's picture

Then there's those pesky problems with the laws of thermodynamics and inefficiencies related to ballooning complexity and decreasing returns, etc.  Sorry, no Jetson's/Star Trek future for you.

NotApplicable's picture

And if you study history long enough, you might observe how populations both rise AND fall in response to the sustainability of any particular environment.

Skateboarder's picture

I'd be happy with a Flintstones future, so as long as we're all free...

centerline's picture

You got it backwards.  It is about more than just pop density.  Ever consider social complexity?  or resource allocation?  supply lines?

Population is a real problem - but compounded by human nature (selfishness, greed, etc.).  It is this human nature that was so easy to leverage in creating the world you see now which is predicated on perpetual... say it with me... "growth."  Once "growth" becomes unsustainable (as is happening now), the system becomes unstable.  Japan was just early to the party.  This time around it is more global in nature.



NotApplicable's picture

I find it odd that "human nature" is always cited as a pejorative, never as a positive.

Also, the idea of "perpetual growth" seems to always ignore the passage of time, and the consumption that takes place during it, instead implying an attempt to reach infinity. Honestly, "growth" at any particular point in time is merely producing more than is consumed. We aren't ever going to stop consuming, so the real question is our consumption sustainable, or are we "eating the seed corn." (or worse yet, pissing on it in apathy)

Now, I'm not stating that today's malinvestment isn't unsustainable (WooHoo, triple-negative!), but that you are expressing the argument in a simplistic, and flawed fashion.

centerline's picture

Just trying to stick the red hot poker into the heart of the matter... which is human nature itself.  Predators, which are also part of our make-up, exploit human nature for gain.  This is really the underlying principle of how we got to where we are today.  Intellect would suggest we would recognize this and deal with it intelligently - but that really does not happen more often than not.  I/E (intellect over emotion) doesn't really work as well as we have been lead to believe.  Predators know this.

Regarding growth, it simply cannot continue forever given finite resources (boundary constraints).  Any other math is just flawed.  The "flow" is merely a measure of the velocity towards the constraints.  Sustainability is about getting that flow to be nuetral over a period of time.  If we don't pay attention to this, mother nature will do it anyhow.  George Carlin pointed out that we are here to make plastic and when there is enough, Mother Nature will get rid of us.  Carlin understood human nature... this was his forte... we should pay attention.

My argument is simpistic though.  I agree.  Mainly because we are opening pandora's box.


centerline's picture

Just adding that IF there are predators powerful enough to really affect global change, they will not tolerate passing the point of no return where sustainability is not recoverable.  They will intervene and affect change.  Herein, the nuclear option is off the table.  Period.  But, a controlled change is necessary.  Well... at least controlled from the perspective they see it... not you and I.  The best option herein I think would be to disguise the change... or hasten the change via mother nature without losing control.

If there are no predators powerful enough to affect global change, mother nature will be the deciding factor.

I think we live in a world somewhere between.  The financial world we watch is just the facade for all for of this.  Art imitating life if you will... a battlefield without bullets... a reflection of ourselves.

tulip_permabull's picture

Right Not Applicable. But self-interest isn't a negative anyway. The negative in human nature is Envy (as Mises so well points out in "Anti-capitalism and the Intellectuals").

merizobeach's picture

"I find it odd that "human nature" is always cited as a pejorative, never as a positive."

I don't.  People are a fucking cancer.  Even if humanity is the seat of consciousness of "Gaia Earth", it still only means that the planet has brain cancer.

Who actually knows what makes a cell cancerous?  A friend who was doing cancer research explained to me how simple it is: cancer cells have damage to the part of their DNA that regulates their reproduction, and thus they reproduce without ceasing.  Sounds an awful goddam lot like humanity, in my opinion.  Take a low-flying domestic flight over some shithole like the Philippines; look out the window and marvel at the crusty skin cancer on the surface of the Earth.

Spastica Rex's picture

To infinity, and BEYOND!

I'm looking forawrd to purchasing an 800 HP 2 ton pickup truck, as soon as the government gets off my back.

Landrew's picture

You are a moron, you are wrong there is gravity and the earth is not flat.

Antifaschistische's picture

I'm late to my ZH reading tonight so pardon my delinquency, but Ironmaan...I do completely agree with government CONstraints.   But, perhaps you haven't been to Liberia, or Nigeria, etc.   It's very difficult to walk away from these places in the world without saying...there's just too many people in a given space.   Yes, India has greater population density hot spots without identical problems but Indians are fighting to get OUT of their country...not back to it.  At least, not at this point.   Population density is a factor around the globe as resources become more and more constrained.

Joe A's picture

Are you of the mindset that the world has unlimited resources? Because it has not. It is not about being an optimist or a pessimist but about being realistic. People don't like to think of problems, it is a self preserving prevention of depression. And people like freedom but they don't like the responsibility that comes with it. I agree that man's ingenuity can solve a lot of problems but man's ingenuity also created a lot of problems regarding exploitation of resources and the degradation of the environment. Solutions though, are around the corner but it is government AND big business that keep us from having access to them. Hundreds miles (kilometers) to the gallon (litre) are possbile. Cars on hydrogen are possible. Restoration of ecosystems can solve a lot of pollution problems.

Heyoka Bianco's picture

Just as every government has a spending problem rather than a revenue problem, in food and clean water, it's not a production issue, it's a distribution issue. There are many places in great want, but tons of food gets thrown out every day in the developed countries (have you ever seen a supermarket with rows of empty shelves? Or even an understocked produce section? (Panic buying excluded of course)). Even with relatively cheap energy, the problem is getting worse.

Please to be naming a "problem" solved by humans that didn't create unforseen future problems. There isn't one. Humans are good at designing for their own increased convienence, but solutions? Not so much.

Freedom In Your Lifetime's picture

Depends on what type of resources you are talking about. There are ways to produce food that is healthy in enough quantity to feed many more people than we have today. There wouldn't be enough resources for everyone to have 3 60" televisions and 2 cars though. And Monsanto and the garbage produced by the big monoculture farms wouldn't be a part of the solution either, smaller with more diversity is the only way we can maintain a world population like we currently have in any healhy way. Bigger, more complex, and less diverse doesn't work.

granolageek's picture

Population density of the Netherlands, maybe. Population density of NYC, uh, nope.

Freedom In Your Lifetime's picture

That is a good point. There is probably no way to feed places with a very high population density healhy food which is produced a sustainable way.

MayIMommaDogFace2theBananaPatch's picture

Now you know why they invented Soylent Green.

Seer's picture

"There are ways to produce food that is healthy in enough quantity to feed many more people than we have today."

I'd be interested in hearing what your views are for accomplishing this: keep in mind that we've got continual growth in population sizes. (note: I'm a start-up, SMALL farmer, so I'm not challenging the point about there being a need; it's just that I see and feel the difficulties and I tend to think that things aren't quite as easy as some might believe)

"Bigger, more complex, and less diverse doesn't work."

Like I've been saying for a LONG time now- BIG = FAIL!

Freedom In Your Lifetime's picture

I didn't mean to imply that anything would be easy. As far as what I was referencing, check out the way Masanobu Fukuoka farms as well as Joel Salatin and Sepp Holtzer to name a few. The key factor with the gentlemen I named is that they all practice polycuture to reduce any unnatural inputs. Don't take me as an expert, I don't farm (although it is one of my goals in the near future), I just happen to have a reading and thinking addiction. Drives my girlfriend crazy.

I would also say that eventually the population would have to stop increasing. Otherwise, no matter how efficient people got, we would eventually reach the point where there were too many people to keep happy (or alive). Good luck with your farm.

Red Heeler's picture

"I don't farm (although it is one of my goals in the near future), "

I hope you get the chance. It will be quite an eye-opener.

Freedom In Your Lifetime's picture

Thanks. I was raised on one and have worked on farms off and on for years growing up so I know what I'm getting into.

Red Heeler's picture

I was raised on one too. But it was oriented heavily towards row crop farming. I have since learned that's not farming, that's industry.

I recommend anything and everything written by Gene Logsdon. The world needs more farmers - I hope you become one.

Freedom In Your Lifetime's picture

Thank you for the recommendation, I've got All flesh is Grass on the way.

andyupnorth's picture

"I just happen to have a reading and thinking addiction. Drives my girlfriend crazy."


centerline's picture

The whole Monsanto thing IMO is about keeping the party going.  If it were not for some serious control and engineering put into modern farming, the ponzi we have become as a society would have collapsed long ago.  So much irony in all of this it hurts.

WillyGroper's picture

with pig genes spliced into corn? you have to be kidding.

snblitz's picture

Seen Soylent Green?  I bought a can of Soylent Red the other day.

One tires of the "we are running out of this or that" crowd.

When considering "peak anything" please refer yourself to this video:

extendedorder's picture

a free market can produce enough food to support 10 tims the current population

msmith9962's picture

(Cheap energy) x (cheap $/credit/borrowing from the future) x (technological advances) x (Political power which learn to use the first two to keep their jobs/consolodate power (see The Law- Bastiat)) = Exponential population growth that doesnt know how to exist without any of the above.


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