The Debt Whirlpool

SUBHEAD: Visualizing the status of the whirlpooling increase of world government debt to GDP.

By Jeff Desjardins on 21 January 2019 for Visual Capitalist -
(https://www.visualcapitalist.com/visualizing-the-snowball-of-government-debt/)


Image above: Click to enlarge. Swirling around the drain-hole of history are the national economies in red with between 50% and over100% of government debt to Gross Domestic Product (GDP). From (https://www.visualcapitalist.com/visualizing-the-snowball-of-government-debt/).

Over the last five years, markets have pushed concerns about debt under the rug.

While economic growth and record-low interest rates have made it easy to service existing government debt, it’s also created a situation where government debt has grown in to over $63 trillion in absolute terms.

The global economic tide can change fast, and in the event of a recession or rapidly rising interest rates, debt levels could come back into the spotlight very quickly.

The Debt Snowball
Today’s visualization comes to us from HowMuch.net and it rolls the world’s countries into a “snowball” of government debt, colored and arranged by debt-to-GDP ratios. The data itself comes from the IMF’s most recent October 2018 update.

The structure of the visualization is apt, because debt can accumulate in an unsustainable way if governments are not proactive. This situation can create a vicious cycle, where mounting debt can start hampering growth, making the debt ultimately harder to pay off.

Here are the countries with the most debt on the books:

Rank	Country	Debt-to-GDP Ratio (2017)
#1	Japan	237.6%
#2	Greece	181.8%
#3	Lebanon	146.8%
#4	Italy	131.8%
#5	Portugal	125.7%
#6	Sudan	121.6%
#7	Singapore	111.1%
#8	United States	105.2%
#9	Belgium	103.4%
#10	Egypt	103.0%

Note: Small economies (GDP under $10 billion) are excluded in this table, such as Cabo Verde and Barbados
 
Japan and Greece are the most indebted countries in the world, with debt-to-GDP ratios of 237.6% and 181.8% respectively. Meanwhile, the United States sits in the #8 spot with a 105.2% ratio, and recent Treasury estimates putting the national debt at $22 trillion.

 Light Snow
On the opposite spectrum, here are the 10 jurisdictions that have incurred less debt relative to the size of their economies:

Rank	Country	Debt-to-GDP Ratio (2017)
#1	Macao (SAR)	0.0%
#2	Hong Kong (SAR)	0.1%
#3	Brunei	2.8%
#4	Afghanistan	7.0%
#5	Estonia	9.0%
#6	Botswana	14.0%
#7	Russia	15.5%
#8	Saudi Arabia	17.2%
#9	DRC	18.1%
#10	Paraguay	19.5%

Note: Small economies (GDP under $10 billion) are excluded in this table, such as Timor-Leste and Solomon Islands

Macao and Hong Kong – both special administrative regions (SARs) in China – have virtually zero debt on the books, while the official country with the lowest debt is Brunei (2.8%).

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West Coast State of Mind

SUBHEAD: It's just a part of the even greater tectonic phenomenon called the Ring of Fire.

By James Kunstler on 4 June 2018 for Kunstler.com -
(http://kunstler.com/clusterfuck-nation/west-coast-state-mind/)


Image above: On May 18th 1980, Mount Saint Helens exploded and devastated hundreds of square miles around it. From (https://rarehistoricalphotos.com/eruption-mount-st-helens-1980/).

Driving south on I-5 into Seattle, the Cascadia Subduction Zone came to mind, especially when the highway dipped into a gloomy tunnel beneath Seattle’s relatively new skyscraper district. This fault line runs along the Pacific coast from north of Vancouver down into California.

The western “plates” move implacably east and downward under the North American plate, building up massive tectonic forces that can produce some of the most violent megathrust earthquakes on the planet.

The zone also accounts for a chain of volcanoes that tend to produce titanic explosions rather than eruptions of lava and ash as seen in the hula movies.

The most recent expression of this tendency was Mt. St. Helens in 1980, an impressive cataclysm by the standards of our fine-tuned complex civilization, but a junior event of its type compared to, say, the blow-off of Mt. Mazama 7,500 years ago, which left Crater Lake for the tourists. A publicity-shy correspondent writes:

By all acounts Mazama was floating upon a vast lake of steamy rhyolite. It was a structurally unstable stratovolcano the size of Mount Shasta with a net volume of 80 cubic miles. A five minute Triple Junction 9.3 Richter Scale shaker uncorked the Mount Mazama champagne bottle via massive lahars which removed the overpressure. Geologists estimate that the eruption lasted for about one day.

It’s only been in the last thirty years that Seattle hoisted up its tombstone cluster of several dozen office and condo towers. That’s what cities do these days to demonstrate their self-regard, and Seattle is perhaps America’s boomingest city, what with Microsoft’s and Amazon’s headquarters there — avatars of the digital economy.

A megathrust earthquake there today would produce a scene that even the computer graphics artistes of Hollywood could not match for picturesque chaos. What were the city planners thinking when they signed off on those building plans?

I survived the journey through the Seattle tunnel, dogged by neurotic fantasies, and headed south to California’s Bay Area, another seismic doomer zone. For sure I am not the only casual observer who gets the doomish vibe out there on the Left Coast.

Even if you are oblivious to the geology of the place, there’s plenty to suggest a sense of impossibility for business-as-usual continuing much longer.

I got that end-of-an-era feeling in California traffic, specifically driving toward San Francisco on the I-80 freeway out in the suburban asteroid belt of Contra Costa County, past the sinister oil refineries of Mococo and the dormitory sprawl of Walnut Creek, Orinda, and Lafayette.

Things go on until they can’t, economist Herb Stein observed, back in the quaint old 20th century, as the USA revved up toward the final blowoff we’ve now entered.

The shale oil “miracle” (so-called) has given even thoughtful adults the false impression that the California template for modern living will continue indefinitely. I’d give it less than five years now.

The movers and shakers of that state dwell in an extra-special political bubble of their own that doesn’t accommodate much thought about the actual future in which all their recent investments in public infrastructure fail spectacularly.

There will be no Tesla utopia of self-driving electric cars to “solve” the dilemmas of internal combustion, despite the prototype demonstrations among status-seeking tech executive millionaires.

From the Berkeley highlands at night, you could see across the fabled bay to the twinkling new skyscrapers of San Francisco — like Seattle’s, another expression of the inordinate riches spawned by computers. How was that a good idea, considering what happened there as recently as 1906?

What you see out there along the Pacific rim of the USA is a giant booby-trap of certain cataclysm. It’s part of the even greater tectonic phenomenon called the Ring of Fire, which circles the whole western ocean from the Aleutian Islands to Japan through Indonesia and up again along the western edge of South America.

Things are livening up all over the darn thing right now, including the rumblings of a bunch of big volcanoes in the South Pacific and the Fuego volcano in Guatemala, uncorking lethally as I write.

And, of course, none of the foregoing includes the giant magma dome of worthless stock and bond values swelling under the towers of Wall Street back east.

[IB Publisher's note: Over time We've come to sense that James H. Kunstler has a bit of misogynous and racial bias in his understanding of people. We try to make posts to this website that do not display that side of his world. None the less, we still find his observations of American suburban auto-centric life, with its self denial and absurdities, a penetrating vision.]

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That collapse you ordered...?

SUBHEAD: And when it happens here, it will spread through the financial systems of the world.

By James Kunstler on 30 April 2018 for Kunstler.com -
(http://kunstler.com/clusterfuck-nation/9192/)


Image above: Scene from the movie "The Road" based on the novel by Cormac McCarthy. From (http://www.enclavedecine.com/2010/02/la-carretera-road-2009-de-john-hillcoat.html).

I had a fellow on my latest podcast, released Sunday, who insists that the world population will crash 90-plus percent from the current 7.6 billion to 600 million by the end of this century.

Jack Alpert heads an outfit called the Stanford Knowledge Integration Lab (SKIL) which he started at Stanford University in 1978 and now runs as a private research foundation. Alpert is primarily an engineer.

At 600 million, the living standard in the USA would be on a level with the post-Roman peasantry of Fifth century Europe, but without the charm, since many of the planet’s linked systems — soils, oceans, climate, mineral resources — will be in much greater disarray than was the case 1,500 years ago.

Anyway, that state-of-life may be a way-station to something more dire. Alpert’s optimal case would be a world human population of 50 million, deployed in three “city-states,” in the Pacific Northwest, the Uruguay / Paraguay border region, and China, that could support something close to today’s living standards for a tiny population, along with science and advanced technology, run on hydropower.

The rest of world, he says, would just go back to nature, or what’s left of it. Alpert’s project aims to engineer a path to that optimal outcome.

I hadn’t encountered quite such an extreme view of the future before, except for some fictional exercises like Cormac McCarthy’s The Road. (Alpert, too, sees cannibalism as one likely byproduct of the journey ahead.)

Obviously, my own venture into the fictionalized future of the World Made by Hand books depicted a much kinder and gentler re-set to life at the circa-1800 level of living, at least in the USA.

Apparently, I’m a sentimental softie.

Both of us are at odds with the more generic techno-optimists who are waiting patiently for miracle rescue remedies like cold fusion while enjoying re-runs of The Big Bang Theory. (Alpert doesn’t completely rule out as-yet-undeveloped energy sources, though he acknowledges that they’re a low-percentage prospect.)

We do agree with basic premise that the energy supply is mainly what supports the way we live now, and that it shows every evidence of entering a deep and destabilizing decline that will halt the activities necessary to keep our networks of dynamic systems running.

A question of interest to many readers is how soon or how rapid the unraveling of these systems might be. When civilizations crumble, it tends to fast-track.

The Roman empire seems to be an exception, but in many ways it was far more resilient than ours, being a sort of advanced Flintstones economy, with even its giant-scale activities (e.g. building the Coliseum) being accomplished by human-powered work.

In any case, the outfit really fell apart steadily after the reign of emperor Marcus Aurelius (180 AD).

The Romans had their own version of a financialized economy: they simply devalued their coins by mixing in less and less silver at the mint, so they could pretend to pay for the same luxuries they had grown accustomed to as resources stretched thin.

Our financialized economy — like everything else we do — operates at levels of complexity so baffling that even its supposed managers at the central banks are flying blind through fogs of debt, deception, and moral hazard.

When that vessel of pretense slams into a mountain top, the effects are likely to be quick and lethal to the economies on the ground below.

In our time, the most recent crash of a major socioeconomic system was the fall of the Soviet Union in 1990-91. Of course, it happened against the backdrop of a global system that was still revving pretty well outside the USSR, and that softened the blow.

Ultimately, the Russians still had plenty of oil to sell, which allowed them to re-set well above the Fifth Century peasant level of existence. At least for now.
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The Soviet Union collapsed because it was a thoroughly dishonest system that ran on pretense and coercion. Apparently, the US Intel Community completely missed the signs that political collapse was underway. They seem to be pretty clueless about the fate of the USA these days, too.

If you consider the preoccupations of two very recent Intel chiefs — John Brennan of CIA and James Clapper, DNI — who now inveigh full-time on CNN as avatars of the Deep State against the wicked Golden Golem of Greatness.

Personally, I expect our collapse to be as sudden and unexpected as the USSR’s, but probably bloodier because there’s simply more stuff just lying around to fight over.

Of course, I expect the collapse to express itself first in banking, finance, and markets — being so deeply faith-based and so subject to simple failures of faith.

But it will become political and social soon enough, maybe all-at once.

And when it happens in the USA, it will spread through the financial systems the whole world round.

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The Darkest Hours

SUBHEAD: But like all addicts, we have to hit bottom before anything like clarity returns to our daily doings.

By James Kunstler on 18 December 2017 for Kunstler.com -
(http://kunstler.com/clusterfuck-nation/the-darkest-hours/)


Image above: The Republican senate leadership gloat after passing self-serving tax reductions for the wealthy. From (https://www.economist.com/news/united-states/21732096-todays-bill-does-not-much-resemble-1986-tax-overhaul-how-republican-tax-bill).

The Tax “Reform” bill working its way painfully out the digestive system of congress like a sigmoid fistula, ought be re-named the US Asset-stripping Assistance Act of 2017, because that’s what is about to splatter the faces of the waiting public, most of whom won’t have a personal lobbyist / tax lawyer by their sides holding a protective tarpulin during the climactic colonic burst of legislation.

Sssshhhh….

The media has not grokked this, but the economy is actually collapsing, and the nova-like expansion of the stock markets is exactly the sort of action you might expect in a system getting ready to blow.

Meanwhile, the more visible rise of the laughable scam known as crypto-currency, is like the plume of smoke coming out of Vesuvius around 79 AD — an amusing curiosity to the citizens of Pompeii below, going about their normal activities, eating pizza, buying slaves, making love — before hellfire rained down on them.

Whatever the corporate tax rate might be, it won’t be enough to rescue the Ponzi scheme that governing has become, with its implacable costs of empire.

So the real aim here is to keep up appearances at all costs just a little while longer while the table scraps of a four-hundred-year-long New World banquet get tossed to the hogs of Wall Street and their accomplices. The catch is that even hogs busy fattening up don’t have a clue about their imminent slaughter.

The centerpiece of the swindle, as usual, is control fraud on the grand scale. Control fraud is the mis-use of authority in applying Three-Card-Monte principles to financial accounting practice, so that a credulous, trustful public will be too bamboozled to see the money drain from their bank accounts and the ground shift under their feet until the moment of freefall.

Control fraud is at work in the corporate C-suites, of course, because that is its natural habitat — remember that silver-haired CEO swine from Wells Fargo who got off scot-free with a life-time supply of acorns after scamming his account-holders — but their errand boys and girls in congress have been superbly groomed, pampered, fed, and trained to break trail and cover for them.

The country has gotten used to thinking that the game of pretend is exactly the same as what is actually going on in the world. The now-seminal phrase coined by Karl Rove, “we make our own reality,” is as comforting these days to Republicans from Idaho as it is to hairy, “intersectional” professors of post-structural gender studies in the bluest ivory towers of the Ivy League.

Nobody in this Republic really wants to get his-hers-zhe’s-they’s reality on.

Ah, but reality wants to do its thing regardless of our wishes, hopes, and pretenses, and you can kind of see how these moves taken in the dark waning hours of 2017 will play out in the quickening weeks of 2018. Long about March or April, something’s got to give.

Other players around the world are surely eager to assist shoving this mad bull of a polity towards the critical state it deserves to enter, though we are doing quite enough on our own to put ourselves at ground zero of financial and political implosion.

The addiction metaphor does apply to America. We are simply addicted to our own bullshit. But like all floundering addicts, we have to hit bottom before anything like clarity returns to our daily doings.

When that does happen, it will be as far from intoxicating as you can imagine. The smoldering wreckage of The World’s Highest Standing of Living will be visible in a 360-degree panorama. A lot of familiar faces will be among the suddenly missing. But we’re already prepped for this by the sexual purges of the season.

One day, the reassuring figure of ole Garrison Keillor is there to remind you of the exquisite taste of Midwestern sweet corn on an August night; and the next morning, you’re up to your eyeballs in the colonic explosion of unintended consequences engineered by the least reassuring cast of characters ever assembled under one capitol dome.

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Exit Sign? Bitcoins!

SUBHEAD: Techno-Narcissism — the idea is tech is now so magical that it over-rides the laws of physics.

By James Kunstler on 27 November 2017 for Kunstler.com -
(http://kunstler.com/clusterfuck-nation/exit-sign/)


Image above: The largest Bitcoin mining operations are in China running on coal. From (https://spectrum.ieee.org/computing/networks/why-the-biggest-bitcoin-mines-are-in-china).

Shoeshine boys in airports ‘round the world must be whispering about Bitcoin as the crypto-currency coils upward to tickle the $10,000 line. Ethereum’s roaring up, too, along with most other cryptos, from Byteball Bytes to Tattoocoin (Limited Edition).

Whatever else you think about it, this action is sending a message, perhaps several.

One would be Get Rich Quick, of course. Eight months ago, you could have copped Bitcoin for a mere $1000, and around Labor Day it touched $5000, which seemed, well, figment-ish. In the last two weeks it went all out hockey-stick, doubling.

To a certain sort of mind this must seem irresistible. The result: a good old-fashioned mania. Digital tulip bulbs.

Another message probably goes something like duck-and cover. Some nervous nellies are seeking shelter in Bitcoin as they detect tremors in the more traditional markets creeping ever-higher to new records.

To some degree, Bitcoin may be doing the job that gold used to do, providing the aura of a “safe haven” from a possible global financial mega-storm.

The last time such an event came out nowhere (ha!) after the “permanent plateau” of 1929 collapsed, the government confiscated as much physical gold as it could get its paws on. So who wants to be there? (Echo answers….)

These days, the zeitgeist also points to new-and-improved government monkey business for shoving global populations into cashless monetary regimes where the authorities could monitor and control (and collect a vig on) all transactions — and there is the theory, at least, that Bitcoin’s block-chain computer math would be secure from any government’s clutches.

I’m not so sanguine about Bitcoin’s supposed impregnability, nor about many of its other appealing claims.

The Mt. Gox affair of 2014 must be forgotten now, but back then some sharpie hacked 850,000 Bitcoins (valued over $450,000,000) out of the exchange, which was processing almost two-thirds of all the Bitcoin trades in the world. Mt. Gox went out of business.

Bitcoin tanked and then traded sideways for three years until (coincidentally?) the Golden Golem of Greatness was elected Leader of the Free World. Hmmmm…..

Not many readers understand the first thing about block-chain math, your correspondent among them.

But I am aware that the supposed safety of Bitcoin lies in its feature of being an algorithm distributed among a network of computers world-wide, so that it kind of exists everywhere-and-nowhere at the same time, a highly-valued ghost in the techno-industrial meta-machine.

However, the electric energy required for “mining” each Bitcoin — that is, the computations required for updating the block-chain network — is enough to boil almost 2000 liters of water.

This is happening world-wide, and a lot of the Bitcoin “mining” is powered by coal-burning electric plants, making it the first Steampunk currency.

If Bitcoin were to keep rising to $1,000,000 per unit, as many investors hope and pray, there wouldn’t be enough electric power in the world to keep it going.

Pardon me if I seem skeptical about the whole scheme. Even without Bitcoin bringing extra demand onto the scene, America’s electrical grid is already an aging rig of rags and tatters.

There are a lot of ways that the service could be interrupted, perhaps for a long time in the case of an electric magnetic pulse (EMP). I’m not convinced that crypto-currencies are beyond the clutches of government, either.

Around the world, in their campaign to digitize all money, there must be a deep interest in either hijiking existing block-chains, or creating official government Bit-monies to seal the deal of total control over financial transactions they seek.

Anyway, there are already over 1300 private cryptos and, apparently, a theoretically endless ability to create ever new ones — though the electricity required does seem to be a limiting factor. Maybe governments will shut them down for being energy-hogs.

My personal take on the phenomenon is that it represents the high point of techno-narcissism — the idea that technology is now so magical that it over-rides the laws of physics.

That, for me, would be the loudest “sell” signal. I’d just hate to be in that rush to the exits. And who knows what kind of rush to other exits it could inspire.

See also:
Ea O Ka Aina: Bitcoins are a waste of energy 11/6/17
Ea O Ka Aina: In praise of cash 3/6/17
Ea O Ka Aina: The War on Cash has begun 2/17/16

Ea O Ka Aina: The War on Cash 9/19/16
Ea O Ka Aina: NIRP and the War on Cash 9/8/16
Ea O Ka Aina: Land as Insurance - The Black Swan 3/10/17
Ea O Ka Aina: Cashless NIRP economy signal 2/20/16
Ea O Ka Aina: Hang Onto Your Wallets 11/20/15
Ea O Ka Aina: The Uranium Card 3/7/14
Ea O Ka Aina: Smack Down Time 4/15/13

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