The death of money is coming and SEAWAPA can void it

During the George W Bush administration, the US government has launched bail-out, stimulus packages and guarantees accumulating almost more debts than during the period of other US President before him combined, from George Washington to Bill Clinton.

That’s more than the total costs of the US Government for WW1, WW2, the Korean War, the Vietnam War, the Invasion of Iraq, the New Deal, and the moon landing combined.

And Obama is almost creating greater debts than all Presidents before him, including George W Bush. 

But it’s not just the US that is increasingly looking like a house of cards. During the crisis, many government around the world went deeply into debts, exponentially increased treasury bonds and other financial services globally.

The global debt reckoning – Total global debt at $230 trillion. Total world debt over 300 percent annual GDP. There is no escape from a reckoning with debt markets.

Total global debt crossed a troubling event horizon by going past the $200 trillion mark last year.  Given the latest figures we are likely well above a total global debt of $230 trillion based on a comprehensive study done by ING last year.  The banking sector rummages for every possible way of accessing debt.  Global central banks from the Fed to the ECB to the Bank of Japan are now fully engaged in a digital printing end game for low debt creation/GDP growth ratio business model.  It isn’t so much the startling debt figures that are presented but the GDP that is actually backing up this insurmountable level of debt.  The latest data shows that total world debt is running above 313 percent of annual GDP.  To put this into perspective the US meltdown occurred when household debt reached about 120 percent total debt to annual GDP.  The only way to keep payments current is with a low rate environment.  There is no choice.  So central banks will do everything they can to print this debt into oblivion.  In many ways this is a reason that we have seen a rush into assets from commodities, real estate, art, Bitcoins, and anything that isn’t just a bunch of 1s and 0s on a central bank computer easily changed by the whims of politicians and those connected to them.

Total debt recall

One of the more interesting figures that I came across was that in 2000, every $2.4 of debt creation produced $1 of GDP growth.  Today that figure is up to $4.6 for every $1 of GDP growth.  In other words, the impact of debt creation is having less and less of an impact on real economic growth.  Unless you live in the digital cloud, you care about the real economy.

Ultimately the health of an economy should be measured by good paying jobs and income growth.  Since the recession ended in 2009 we have seen more growth in low wage jobs and income growth is not to be found.  At the same time, the Fed has expanded its balance sheet to a whopping $4 trillion.

total-global-debtVery little is financed by the private-sector in developed countries as would be expected.  As financial markets develop these things can change but given the low rate environment, people have chased yields all across the globe.  Hence a total of $230 trillion and more in public, private, and corporate liabilities.  Yet what we are seeing is a large amount of rent seeking and more debt being needed to generate $1 of GDP.

There is such a thing as too much debt.  Short of incomes rising we are merely setting up a different sort of debt crisis.  We already got a bit of a taste of that early in the year in many emerging markets.

WESTERN BUSINESS MODEL
The western economic model is based on supplying large scale, high tech, or automate system. The latest region developed was China. Factories materials were mostly fabricated by the west, while China employs cheap local labors. For this business model to continue operating, further new zones will need to be developed, continuously.

CLIMATE CHANGE
The Earth weather is exiting the Inter-glacial warm holidays period into the intermediate phase of Grand Solar Minimum. Earth agricultural zones will be roughly limited to between 40 degree latitudes North and South of the Equator. Growing season is already shortened Year on Year with extreme weather in many places affecting food yields, good production chains and diverse services globally.

There are many other related consequences happening the same time as the Solar hibernation in addition to cold weather events, there will be more flood and drought, plasma discharges, increase of volcanic activities, quakes and wars that will reduce productivity.

Sometime in our future, the return to Long Ice Age Glaciation cannot be ruled out which will reduce sea level as evaporated seawater are frozen inland or stay on top of ice sheets without returning to the sea as liquid.

These threats will increase production cost globally if there is no alternative project.

FINANCIAL CRISIS
Banks do not act as intermediaries, banks do not lend out the deposits that savers place with them. Banks do not keep any reserve of any kind. Banks use contracts as collateral to create "money" for them to earn commissions on products and services the financial system provides.

During the George W Bush administration, the US government has launched bail-out, stimulus packages and guarantees and accumulated almost more debts than during the period of other US President before him combined, from George Washington to Bill Clinton.

That’s more than the total costs of the US Government for WW1, WW2, the Korean War, the Vietnam War, the Invasion of Iraq, the New Deal, and the moon landing combined.

And Obama is almost creating greater debts than all Presidents before him, including George W Bush. 

But it’s not just the US that’s increasingly looking like a house of cards. During the crisis, many government around the world went deeply into debts to bankers.

CHINA CASE STUDY
An example; Chinese firms are borrowing faster than the GDP is growing, according to the Bank of England.

According to Nomura research, since the global crisis of 2008 Chinese firms have more than doubled the percentage of income they spend on servicing debts to 20 percent, the highest in the world. By comparison, US, Japanese and Korean firms have been cutting the share of income that goes to debt service since the crisis.

Recent research by the Bank for International Settlements in Basel, shows the Chinese loan bubble is getting dangerous. China's credit-to-GDP deficit is now 30.1 percent, its biggest number since 1995.



China's total debt is the equivalent of 255% of GDP - and while this is big, it is comparable to the UK and Europe.

The bigger issue is the speed at which China has taken on debt - it was 147 per cent of GDP only eight years ago. And there now has to be question marks over how this money was spent and whether it was sufficiently productive that it helped grow the economy.

It is particularly worrying that The International Monetary Fund estimated in June that Chinese companies that had borrowed a collective $US1.3 trillion did not have enough earnings before interest, taxes, depreciation and amortisation to meet interest payments.

Outstanding loans have reportedly reached $US28 trillion, as much as the commercial banking systems of the US and Japan combined. The scale is enough to threaten a worldwide shock if China ever loses control.

after-ice-age During the period of Long Ice-Age Glaciation, Malacca Strait, Suez and Panama Canals will be completely dry affecting the world sea routes. A new inter Ocean mass transport system is needed.
MEDIUM TERM TIMELINE
Discounting any super volcanic activities, the coldest first portion of the global 21st Century Ice Age Glaciation climate (caused by a “solar hibernation”, a pronounced reduction in energy coming from the Sun causing earth weakening defense against cosmic rays) is expected to be reached by the year 2031 followed by the first temporary reversals, first ice melting.

LONG TERM ICE AGE GLACIATION
After that point, it is estimated that the Earth weather will return back to longer, colder temperature starting around 2050 for a very long Ice Age Glaciation and will last for almost 100,000 years.

In the absence of government preparation and new large scale development, over 2 billion people will perish together with mismanaged government and idle corporations.