So, Where’s The Bloody Inflation..?!

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baby boomers, banks, Bernanke, budget deficit, capital ratios, de-leveraging, debt monetization, Debt/GDP Ratio, ECB, Europe, European sovereign debt crisis, Fed, financial crisis, fiscal deficits, Flub-Med, GDP growth, Hunt brothers, income/dividend bubble, inflation, Japan, multiplier effect, Occupy Wall Street, politicians, quantitative easing, real assets, risk aversion, savings rate, stagflation, US, Volcker

I was beginning a new post in my recent Hitting the Century series (and here), and realized my next 3 investment allocations were to real assets – Natural Resources, Agri & Property. This v quickly got me thinking about inflation, enough to devote myself to this post instead:

Along the way, dear reader, you may have noticed my pronounced distaste for fiscal & monetary policy in the developed world. Particularly in the US... That’s not intended to be a US slap-down…and certainly not praise for Europe either! It’s simply a pretty inescapable conclusion if you compare the US & (the hard-core of) Europe over the past 4 decades. Jesus, I struggle to think of somebody with any real power in the US who truly gives a flying f**k about their accelerating debt burden, debt monetization, or the long-term external value of the dollar. In contrast, the ECB & certain Eurozone countries still actually exhibit a painful reluctance to take that road to monetary & fiscal oblivion – even in the face of a European sovereign debt crisis!

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A Simple Eurobond Proposal

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Debt/GDP Ratio, default, ECB, ESFS, Eurobonds, European Fiscal Compact, European sovereign debt crisi, Eurozone, fiscal deficits, Ireland, LTRO

I’ve tried my best to ignore all European news and hysteria in the past couple of years. It’s been a wonderful time/sanity-saver for me! And really, what have I missed in the way of concrete political progress?! But enough is enough, how about a real bloody solution now..?

I was never impressed with the old chestnut that sovereign debt’s superior (to corporate) due to a government’s ability to impose & collect taxes. Sure, and it can spend just about any level of revenues too, among other failings..! Whatever the argument, you can’t escape the fact a nation is the embodiment of ‘Us vs. Them‘. When it comes to the crunch, government can always re-write, or tear up, any contract they wish – the ‘Us‘ inevitably comes first . [Hmm, I guess Ireland’s the exception that proves the rule? God, the half-wits in power couldn’t even fail properly..!]. So any type of in-country sovereign enhancement is pointless. And talk of, say, collateralization or sale of Greek islands is just plain ludicrous!

US Economy, Government Finances & Debt – The Final Gory Details (IV)

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% of GDP, average debt maturity, baby boomers, budget deficit, Debt/GDP Ratio, European sovereign debt crisi, fiscal cliff, fiscal deficits, Intragovernmental Holdings, Reinhart & Rogoff, Sell in May, Social Security, US Congress, US government finances, US government revenues, US government spending, US Treasury

Continued from here.

Apologies, readers. Deficits left me feeling a little nauseated, I had to take a little breather on this series! In my last post, I highlighted the 2010 total US budget deficit (ignore the primary deficit, it’s irrelevant) was a whopping 8.9% of GDP. In the past half-century, this is the 2nd largest deficit on record (2009 being the winner), but it’s in good company. Nine of every 10 years politicians have outspent revenues, and in 2009-12 the deficit’s expected to consistently exceed $1 trillion (and 7.5% of GDP). It’s no longer surprising how quickly politicians can turn the truly exceptional into the simply mundane…

I think I also sidestepped the quicksand of Republican vs. Democrat debate?! This debate, and their respective philosophies, seem utterly pointless when there’s no credible attempt to eliminate deficits – it’s just moving the deck chairs ’round the Titanic. And deficit rhetoric’s always presented as ‘spending cuts, no tax hikes‘, or vice versa. Such one-sided (and unworkable) solutions are ludicrous – the only sensible solution is a deficit elimination plan based equally on tax hikes & spending cuts.

When Irish Eyes Were Not Smiling

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bank debt, Debt/GDP Ratio, default, fiscal deficits, Ireland, Japan

I’ve avoided talking about Ireland’s debt situation ‘til now – it makes my blood boil to think about it! It’s v difficult to comment or analyze when you’re starting from a point that should never have been reached…

Where to begin..? Well, nearly every day I get a nagging feeling, try to ignore it and finally (with a start) wonder if I was off sick the day the Irish government explained EXACTLY why they took on tens of billions of bank debts/losses?! And I never got the note either! Plenty of friends, relatives and colleagues ask me to explain this mystery, and to my embarrassment I just can’t! Now I just tell them what I think they want to hear…

Please help me. Why?!?