[cube]

$this->bbcode_second_pass_quote('Daryl', 'U')S public (government debt) -the traditional big bad national debt figure - is estimated at about $5 trillion or around 65% of GDP. This figure has averaged about 40% of GDP since WW2. It is the 35th worst percentage worldwide among governments. Japan's public debt, for example, is 177% of GDP, France's is 66% of GDP and UK's is 43%. I got most of these figures from the CIA World Fact Book and the most recent Federal Reserve Flow of Funds Report.

[Daryl]

,

[mekrob]

$this->bbcode_second_pass_quote('', 'F')or example, it is rarely pointed out that the published personal savings rate in the US is very misleading. In fact US household net worth has been rising steadily for quite a long time and last year reached a (even in percentage terms) staggering $29.1 trillion, a figure that doesn't even include home equity, but does include all mortgage liabilities.

[LoneSnark]

$this->bbcode_second_pass_quote('', 'I')f you're pessimistic, and then things go poorly, then you've already prepared yourself mentally and hopefully in real life through reducing your lifestyle or whatever. But if things go well, then you've made out tremendously.

[mekrob]

$this->bbcode_second_pass_quote('', 'T')o be more specific, a pessimistic society will refrain from investing in the future by expanding capital, labor, and skill sets, since any investment that is not survivalist becomes worthless if things go awry. In a sufficiently complex economy, pessimistic expectations can often become self fulfilling.

[peakoilcar]

Interesting thought, I would tend to agree with you

[MrBill]

Daryl wrote:
$this->bbcode_second_pass_quote('', 'M')any of the statistics being bandied about wouldn't be quite so alarming if they were presented in terms of percentage of GDP, rather than billions of this and trillions of that. Also, even then some numbers are frequently taken out of context. For example, private household debt was recently reported around $13 trillion, which is 140% of GDP. As a percentage of GDP, this has doubled since WW2. But this figure includes mortgage debt, so what it is really telling you is that not much has changed since WW2 except that a much larger percentage of people own homes - not such a bad thing really. Is it better to be a nation of renters, like Germany and Japan? They have much lower pct of household debt to GDP ratios - and that's why. Over $10 trillion of US household debt is mortgage debt. The non-mortgage US household debt is less than 30 pct of GDP. US public (government debt) -the traditional big bad national debt figure - is estimated at about $5 trillion or around 65% of GDP. This figure has averaged about 40% of GDP since WW2. It is the 35th worst percentage worldwide among governments. Japan's public debt, for example, is 177% of GDP, France's is 66% of GDP and UK's is 43%. I got most of these figures from the CIA World Fact Book and the most recent Federal Reserve Flow of Funds Report.

[Daryl]

Here are some more examples of the problem presented in what I think is a more balanced perspective than we usually hear from the sensationally oriented financial media. I'll use numbers from the CIA World fact book for 2006, so we know we are comparing apples to apples. Sorry if I made a few errors, I calculated on this on the back of a napkin.


GDP (trillions of USD)

US 13.0
Japan 4.2
Germany 2.6
UK 1.9
France 1.9



Current Account (pct of GDP)

US -6.0
Japan +4.0
Germany +5.6
UK -4.5
France -1.2



Trade Deficit (pct of GDP)

US -6.0
Japan +2.5
Germany +7.5
UK -8.0
France -2.0




We can certainly see from these numbers that the US , England and France would prefer to be in the position of Germany and Japan, but then again, world trade is very complex and we really can't expect all these numbers to even out perfectly every year. It is a free market.

For all the bashing the US takes, their external trade/ca position doesn't look a whole lot different from that of France or the UK. I don't recall ever reading negative press about these two countries regarding their external trade positions. Maybe because the gross numbers aren't as sensational? For the US, I don't think it is reasonable to predict much more than a very bad recession in the case of an external shock. Perhaps unemployment might even double - bringing it almost up to average EU levels.

The US - the world's largest exporter, by the way - has been importing relatively more goods for quite a while. This is not entirely due to a "genetic defect" on the part of the American consumer. Consider the following factors:

1) As by far the wealthiest country in the world, in terms of the largest number of potential consumers with very high incomes, American businesses have had less incentive to pro-actively seek out foreign markets for their goods relative to most of the trading counterparties. For most foreign businesses, on the other hand, the US market has been an obsessive Holy Grail for more than half a century now. Indeed most of our major trading partners started out from such a low baseline in 1945, their economies to some extent have completely evolved and developed with the US consumer as a customer. Talk about a structural surplus/deficit! Especially between US and Japan/Germany....and now China, of course.

2) Nonetheless, energy accounts for a very large percentage of the US import problem. While Americans are relatively wasteful users of energy, that is not the only factor ie the economy is 4 to 5 times as large as it's closest peers and the economy is spread out over a larger geographic area, thus making transportation more expensive relative to other countries.

3) both US and foreign corporations have used free trade to aggressively arbitrage global wage price differentials, producing goods in low wage/regulatory/currency environments and undermining domestic producers in the US via low pricing. This trend has accelerated since the 1980's with the opening up of China.

All in all, I think the US is hanging in there pretty good. I'm giving them a B+ on my report card.

[LoneSnark]

$this->bbcode_second_pass_quote('', 'T')rue. I don't exactly mean pessimistic, but more like cautionary. Of course you don't want to set your views too low. I take a very cautionary approach and it's greatly enabled and enhanced me.

[Daryl]

$this->bbcode_second_pass_quote('MrBill', 'D')

I had a very illuminating dinner last night with the CEO of a major European bank that is responsible for the entire ME region. Actually, he is a good friend of mine. He feels very strongly that official estimates of the wealth under management of these governments is grossly understated. And their investment patterns are not benign.

The publicly announced deals only form a very small portion of the wall of money that is being invested here, there and everywhere. Cyprus, for example, is being systematically bought up in chunks of individual deals each worth hundreds of millions of dollars each. Egypt is another country that is of interest for these ME investors.

More I cannot say, but it puts to bed any notions that capital flows from developed nations to lesser developed nations as those capital flows are increasingly from wealthy nations, not necessarily developed ones, into other countries both developed and undeveloped. Kind of like it is outdated to say, 'they work and we think' when talking about Chindia and other Asian countries. Increasingly 'they out work and out think us' so it is not something to panic over, but it is also not an emerging trend to ignore.

[mekrob]

$this->bbcode_second_pass_quote('', 'A')s I said, if everyone is pessimistic then everyone made the same bad decision to invest in canned food and shotguns.

[Daryl]

Here's another statistic that one hears bandied about quite a bit - The US has only 5% of the world's population, but consumes 25% of the world's oil. This is true, but it's interesting to consider it from another view statistically ie that US GDP is 20% of of World GDP. Here are the statistics for some other major developed countries. Sorry for the difficult to read format, but these message boards don't seem to allow tables.


US 25% of world oil consumption 20% of world GDP
Canada 2.6 % of world oil consumption 1.8% of world GDP

Germany 3 pct of world oil consumption 4% of world GDP
Japan 5.8 pct of world oil consumption 6.5% of world GDP
UK 2.1 pct of world oil consumption 3 % of world GDP

The most obvious item to note here that suddenly the US doesn't look nearly so greedy and wasteful as they do when comparing their percentage of oil usage to their percentage of world population. In fact, on a percentage basis, US oil usage looks pretty much in line with that of other developed industrialized countries. Interesting though, that only the US and Canada have a greater percentage oil consumption relative to their percentage of world GDP. Could this have something to do with the fact than they are both very large countries with widely dispersed populations and therefore require relatively more oil for their transportation systems? Also, given the hue and cry about poor gas mileage and the lack of public transit in the US, one would expect more of a discrepancy with Europe and Japan. Anyone have any thoughts?

[cube]

$this->bbcode_second_pass_quote('Daryl', '.')..
US 25% of world oil consumption 20% of world GDP
Canada 2.6 % of world oil consumption 1.8% of world GDP

Germany 3 pct of world oil consumption 4% of world GDP
Japan 5.8 pct of world oil consumption 6.5% of world GDP
UK 2.1 pct of world oil consumption 3 % of world GDP

The most obvious item to note here that suddenly the US doesn't look nearly so greedy and wasteful as they do when comparing their percentage of oil usage to their percentage of world population.

[MrBill]

Daryl wrote:
$this->bbcode_second_pass_quote('', 'T')he US - the world's largest exporter, by the way - has been importing relatively more goods for quite a while. This is not entirely due to a "genetic defect" on the part of the American consumer. Consider the following factors:

[Daryl]

$this->bbcode_second_pass_quote('cube', ' ')
another statistic: South Korea
2.60% of world oil consumption 1.36% of world GDP
Why such a high rate of oil consumption? It's not car ownership that's for sure. In fact South Korea has a low car ownership rate relative to it's income compared to other nations. It has the 11th largest economy in the world but is ranked 40th in car ownership. I'm guessing the high oil demand must come from the fact that South Korea is world renown for being very heavy into manufacturing.

some more: China
7.87% of world oil consumption 3.83% of world GDP
China has a slightly more "energy inefficient" economy and the reason for this is because of its "low-end" manufacturing as opposed to South Korea's "high-end" manufacturing.

[Daryl]

$this->bbcode_second_pass_quote('MrBill', ' ')

It really does not matter how the US stacks up against other countries, and whether it has been fairly or unfairly singled out for blame by the Press or its trading partners. That is irrelevant as far as I am concerned. I am worried about a hole in the balance sheet from a sudden shift in sentiment from capital markets. 98-percent of American taxpayers do not have the option of liquidating their assets at current market value and relocating to another country. So they are stuck in a burning house, so to speak, if it comes to a financial crisis.

[sparky]

.

To Daryl

could the higher energy consumption ratio be related to a higher level of investment in equipment and facilities ???

some kind of basic cost of getting up the infrastructures ??

inversely a decrease in energy consumption could see under-investment in infrastructures and facilities

( just guessing )


.

[MrBill]

Daryl wrote:
$this->bbcode_second_pass_quote('', 'I') tried to look as some of the developing countries but got confused by the large discrepancy between GDP as measured by PPP and as measured by official exchange rate. Maybe someone can explain to me the difference. Not sure I really care that much though. Not an economist.....

[MrBill]

$this->bbcode_second_pass_quote('sparky', '.')

To Daryl

could the higher energy consumption ratio be related to a higher level of investment in equipment and facilities ???

some kind of basic cost of getting up the infrastructures ??

inversely a decrease in energy consumption could see under-investment in infrastructures and facilities

( just guessing )


.

[sparky]

.

Then , what could account for a worst energy ratio ?

Maybe " hard "manufacturing doesn't generate as much GDP as a fully developed financial sector ?

.