Prices not going down??

[Singularity]

Originally Posted by dwedeking2

I think 1984 was written as a warning. Something you would read before it happens to avoid it. Unfortunately we took it as a guide and it's depressing to read now that we're so close.

The point is there are enough "1984" books written in the history of known civilization so as one could fill an entire library or three. Just most of them don't become famous.

It bears mentioning that a high percentage of people don't mind that things are progressing, for example, to a 1984 world. This is the perennial horror story, but it's never been easier in the history of civilization to go gallivanting about on a boat...far away from it all (and I'm not referring to the typical cruising grounds).

[GordMay]

Originally Posted by Island Time O25

Shouldn't this debt be ofset by their cash reserves? I recall reading that Apple is sitting on hundreds of billions of cash. So their $93bil debt doesn't look so scary.

I don't really know.

Google parent, Alphabet, became the most cash-rich company in the world during 2019's second quarter, taking Apple's long-held crown, according to the Financial Times. Alphabet apparently has $117 billion in cash, while Apple has $102 billion.
However, Apple had $163 billion in 2017, so this is just as much a story of Apple reducing its reserves, as it is one of Google growing its own. Apple spent $122 billion on stock buybacks, since the beginning of 2018. It also took advantage of a one-time tax incentive, to bring overseas cash back into the United States, at a reduced tax rate, a little over a year ago.
Apple took the crown of "world's most valuable company", in August 2018, as it became a trillion-dollar company, but it's been overtaken by Amazon, and Microsoft in the months since.

[Wotname]

Originally Posted by GordMay

Nope.

According to the OECD ➥ https://data.oecd.org/gga/general-government-debt.htm

Government Debt as a Ratio to Each Country’s Gross Domestic Product:
Japan: Debt-to-GDP ratio: 235 percent
Greece: Debt-to-GDP ratio: 188 percent
Italy: Debt-to-GDP ratio: 156 percent
Portugal: Debt-to-GDP ratio: 146 percent
Belgium: Debt-to-GDP ratio: 128 percent
United States: Debt-to-GDP ratio: 127 percent
France: Debt-to-GDP ratio: 123 percent
United Kingdom: Debt-to-GDP ratio: 119 percent
Spain: Debt-to-GDP ratio: 117 percent
Canada: Debt-to-GDP ratio: 114 percent

The Countries With the Most $ Debt:
Japan
Greece
Italy
Portugal
Belgium
United States
France
United Kingdom
Spain
Canada

Total U.S. consumer debt is at $13.86 trillion. That includes mortgages, auto loans, credit cards and student loans.
Comparing total household debt, to the overall size of the economy, as measured by GDP, is one of the measures of household (consumer) indebtedness . And per this household-debt-to-GDP measure, the Americans are 10th place with 78.8%. Switzerland is number 1, at 127.7%.
➥ https://www.businessinsider.com/thes...-slaves-2017-1

That is a shipload of money!

I will be frank - I don't know a lot about the world's financial system. I know that when I borrow money, I have to pay it back sooner or later and I know that the guy I borrowed from has lent more money then he actually has. He might have had $10 and was allowed to lend that to 10 people so he has $100 on his books that he lend to another 10 people. He now has $1,000 on his books etc etc.

Two naive questions.

1. Who holds all that worldwide debt i.e. who is at the top of the tree that is owed all of this money?

2. Why isn't the top dog very worried that all (most?) of these debtors will renege on the repayments?

OK, make that three questions - What happens if the top dog does't get back the money he is owed?

[geoleo]

Originally Posted by CarinaPDX

Yep, that's right. And it is happening because the wealthy and corporate interests have paid Congress to create this unfair tax system. CEOs are mostly paid with stock options, not stock grants, and these are treated as having no value (no income tax is paid by the recipient at the time the options are granted). Then when they vest the recipient does a one-day purchase and sale, and either pays no tax (incentive stock options) or capital gains tax (because the options are held long enough). Since this is so favorable to the CEOs, they are highly motivated to push the stock prices up by buybacks instead of distributing dividends. Stockholders put up with it because for them paying taxes on capital gains is preferable to taxes on straight income. They shouldn't (assuming they have any say in the matter, which they don't). It is a tax system that actively incentivizes CEOs to put their companies at risk by over-leveraging, and puts far too much money in CEO pockets. Also, because these are options and not stock, if things turn bad (because of the high risk) management just walks away without losses.

I am not optimistic that the public will rise up and demand a fair system. But until we have a fair tax system and corporate governance we are going to continue to suffer.

Stay safe.

Greg

"FAIR" ? fair has zero to do with it -power has everything to do with "it". Every square inch of the worlds surface is held by power--nothing else.

[geoleo]

Originally Posted by Wotname

That is a shipload of money!

I will be frank - I don't know a lot about the world's financial system. I know that when I borrow money, I have to pay it back sooner or later and I know that the guy I borrowed from has lent more money then he actually has. He might have had $10 and was allowed to lend that to 10 people so he has $100 on his books that he lend to another 10 people. He now has $1,000 on his books etc etc.

Two naive questions.

1. Who holds all that worldwide debt i.e. who is at the top of the tree that is owed all of this money?

2. Why isn't the top dog very worried that all (most?) of these debtors will renege on the repayments?

OK, make that three questions - What happens if the top dog does't get back the money he is owed?

Note that Russia is not listed--and China is listed way down-- Their "debt" is what they say it is and there is no way of knowing the true numbers . Business in China that are favored get unlimited credit from the government and never have to pay it back (and it is all a state secret)-this is how they came to dominate the USA and the world.

[valhalla360]

Originally Posted by Wotname

That is a shipload of money!

I will be frank - I don't know a lot about the world's financial system. I know that when I borrow money, I have to pay it back sooner or later and I know that the guy I borrowed from has lent more money then he actually has. He might have had $10 and was allowed to lend that to 10 people so he has $100 on his books that he lend to another 10 people. He now has $1,000 on his books etc etc.

Two naive questions.

1. Who holds all that worldwide debt i.e. who is at the top of the tree that is owed all of this money?

2. Why isn't the top dog very worried that all (most?) of these debtors will renege on the repayments?

OK, make that three questions - What happens if the top dog does't get back the money he is owed?

1. Bond holders hold most of the debt.

2 If you renege, it's much more expensive to take out debt the next time. That's why the EU was freaking out over the PIGS a few years back. The EU hitched their wagon to every country inside, so if they defaulted, the whole EU would be treated as defaulting.

It's not technically true but govts treat a lot of this like mortgages where you only pay the interest...keep paying the interest and you never need to pay off the principal.

[Wotname]

Originally Posted by valhalla360

1. Bond holders hold most of the debt.

2 If you renege, it's much more expensive to take out debt the next time. That's why the EU was freaking out over the PIGS a few years back. The EU hitched their wagon to every country inside, so if they defaulted, the whole EU would be treated as defaulting.

It's not technically true but govts treat a lot of this like mortgages where you only pay the interest...keep paying the interest and you never need to pay off the principal.

Thanks for the information.

Just to be sure I understand this correctly, bond holders are people (or entities) that had spare cash and invested it in (government?) bonds i.e. they are using real money, not borrowed from somewhere else ????

And they don't expect ever to see that money again providing they are getting the interest - unless they can find another sucker investor to buy the bonds off them.

If the enough borrowers can't repay the interest, someone somewhere prints some more money starts quantitive easing.

Is this sort of close to the mark or have I misunderstood?

[skipperpete]

Originally Posted by Byrdman

When a company is interested in paying back shareholders for unused or retained earning that are not needed, they should declare dividends, but that didn't happen. The money was used to buyback stock to overinflate the value of the company and enrich executives since most of their bonuses are paid with stock. To make matters worse, when they ran out of money, they issued debt to buy more stock. No way you are going to convince me that the stock market was valued properly with the DOW at 29,0000+ when a simple price-to-earnings ratio has shown different.

Preparing for a downturn by having cash on hand is a productive home for money. Also, re-tooling for greater efficiency for product delivery and investing in your workforce vs executive pay would seem to make your company stronger to weather the downturns like Ford vs the rest of the US automakers back in 2008.

How has that great return to shareholders been for the past 3 weeks. Almost all stock appreciation gains for the past 3+ years are gone, and no companies were announcing huge dividends to give back to the shareholder during that time.

As I mentioned before, the biggest elephant in the room may be the derivatives market. We really have no idea how much money was bet by Wall Street that the markets would stay healthy. We may be in for a much bigger surprise, but I hope not.

It’s more like “the whale in the dinghy” with derivatives, here’s a screen shot of an article from July 19 regarding Deutschebank.

[Grimgrak]

I sure would love to see the denison annual sales sheet for 2008-2010

[Mike OReilly]

Originally Posted by Wotname

Thanks for the information.

Just to be sure I understand this correctly, bond holders are people (or entities) that had spare cash and invested it in (government?) bonds i.e. they are using real money, not borrowed from somewhere else ????

And they don't expect ever to see that money again providing they are getting the interest - unless they can find another sucker investor to buy the bonds off them.

If the enough borrowers can't repay the interest, someone somewhere prints some more money starts quantitive easing.

Is this sort of close to the mark or have I misunderstood?

Yup. And I think they have a word for this. What was it...

Oh ya; a Ponzi scheme.

It's great that we're keeping everyone solvent through this crisis, but we're doing it on the backs of future generations. With each successive crisis we shore up the system, and keep all the current investors whole, by shoveling money out the door -- money that we don't actually have.

Luckily it won't be most of us who have to pay it back. It's our bequeathment to future generations. I'm sure they'll just love us for it .

[letsgetsailing3]

Originally Posted by Mike OReilly

Yup. And I think they have a word for this. What was it...

Oh ya; a Ponzi scheme.

It's great that we're keeping everyone solvent through this crisis, but we're doing it on the backs of future generations. With each successive crisis we shore up the system, and keep all the current investors whole, by shoveling money out the door -- money that we don't actually have.

Luckily it won't be most of us who have to pay it back. It's our bequeathment to future generations. I'm sure they'll just love us for it .

What's the alternative?

I mean, we could have just let our financial system implode in 2008, but would the world have been better off?

(The answer to that, of course, is no.). Future generations would not have been better off by letting the financial system fail.

And letting people go destitute right now because we need to social distance for a couple of months would also be a bad idea. We wouldn't be better off, and the future generations also would not be better off.

Yes, money is an illusion. But it's one that is working pretty well in terms of living standards.

[Paul L]

Originally Posted by letsgetsailing3

What's the alternative?

I mean, we could have just let our financial system implode in 2008, but would the world have been better off?

(The answer to that, of course, is no.). Future generations would not have been better off by letting the financial system fail.

And letting people go destitute right now because we need to social distance for a couple of months would also be a bad idea. We wouldn't be better off, and the future generations also would not be better off.

Yes, money is an illusion. But it's one that is working pretty well in terms of living standards.

The alternative is to be responsible when the economy is doing well. We dumped money into the 2008 debacle, wait till the economy is running on all cyclinders and then offer up a giant tax cut that pokes another trillion dollar hole in the deficit.
We have a government and populace that says when times afe bad we need the goverenmentbto step in and help. When times are good, send me more money.
There's nothing wrong with the goverenment going out on a limb in extraordinary conditions. It is in normal conditions we refuse to pay for that goverenment spending or bank anything for the next debacle, that is criminal.

[wolfgal]

thank you for the words of encouragement. i'm usually the optimist, really. i'm also usually the one who has her head about her when folks begin to panic. i shift gears when things get rough. time slows, and i have focus and clarity that is usually inaccessible in my everyday life.

am i being a pessimist or a realist?

i'm looking at how Ray Dalio just made huge numbers shorting the European stock market. i'm wondering about the way the banks over here are interdependent and have a floundering foundation in germany. and yes, i'm wondering is this ship sinking? what is possibility of the banks folding here? if this happens, things might get nasty...

yes, i do realise that everything depends on the duration of this (i read that article: capitalism can survive in lockdown for one month but not for 18), but... , as far as i can see,
for the moment, all their big spending can effectively do (in the near future) is keep civil unrest at bay.

does anyone else imagine how a failing floodgate scenario could pan out?

and given how china is experiencing a return of the virus in the workplace and how this thing is a bit tough to beat, i am also wondering for how long sailors will be able to freely circulate while making stops stops along the way

maybe researchers will come up with a vaccine and we will be able to get one (how long would it take for the masses to be vaccinated?) and then we can carry proof of vaccination with our boat papers..., but will there be laws passed in the meantime drastically restricting foreigners entry into ports anyhow?

how long does herding take?

sorry to take this to such a negative place... as a draconian saver (for my boat life and inspite of the fact that salaries here have been at a standstill for ages and in spite of the neg. interest rates that make it silly to save and even though i did make a few safety moves that will help me longterm and do have a walled-garden fall-back plan...), i am beginning to feel pretty BAD WORD ferocious about it all.


if i'm a pessimist, i can get the boat and get her ready and get gone.

if i'm a realist, then it could be best to redirect my resources and energy into planting a veggie garden, building a greenhouse, stocking up on firewood and candles and raising chickens? if this is the best thing to do, i'd need to swallow my dream, hard...

Returning to topic... Prices not going down?

You guys have surely heard of Harry Dent. this video was made in 2015 but aired just recently...

In it, he explains how, given the circumstances of the then-upcoming-crash, serious deflation is projected initially and will then be followed by inflation (and perhaps hyperinflation).

Dent spells out the long cycles for Demographics. If you overlay these cycles with the economic long cycles spelled out by Dalio and pepper it with Bill Gate's Ted talk...

https://www.youtube.com/watch?v=FlGELg8Ises

as per, the reading suggestions. thanks. A Brave New World, i do need to read this yet as well. at one moment, i had it in my hands and put it back on the shelf, couldn't go there... though i was obliged to read Animal Farm one summer along with Slaughterhouse Five and Lord of the Flies, Grapes of Wrath, The Red Pony. i remember dodging War and Peace by reading another two instead...

what a pleasant summer the was, -- seriously.

[GordMay]

Originally Posted by Wotname

That is a shipload of money!
I will be frank - I don't know a lot about the world's financial system...
Two naive questions.
1. Who holds all that worldwide debt i.e. who is at the top of the tree that is owed all of this money?
2. Why isn't the top dog very worried that all (most?) of these debtors will renege on the repayments?
OK, make that three questions - What happens if the top dog does't get back the money he is owed?

I don't know a lot about the world financial system, either.

Some interesting stuff, from a recent article in Harvard Business Review:
China's overseas lending (about $500 billion in 2000) stands today, ostensibly, at around $5 Trillion. Indeed, they (China) are now the world's largest creditor, being twice as large as both the World Bank, and the International Monetary Fund, combined.
As much of what China does is under a veiled curtain of secrecy, it's been difficult to track how all the money is flowing. A new comprehensive study though, by Sebastian Horn and Christoph Trebesch of the Kiel Institute for the World Economy, and Carmen Reinhart of Harvard University, has provided some new insights about China's official credit lending empire. What did the researchers discover? More than half of China's lending to developing countries is what they term "hidden" money — loans that haven't been reported to any of the international funds, such as the World Bank.

“How Much Money Does the World Owe China?” ~ by Sebastian Horn et al.
➥ https://hbr.org/2020/02/how-much-mon...orld-owe-china

As of 2018, Germany and Switzerland have been the main Eurozone creditor nations, and they've maintained positive NIIP for many years. In Asia, Japan, mainland China, Hong Kong and Singapore are the main nations investing increasing amounts, in other countries. China, Japan and Singapore have all been increasing their international investment positions. In North America, only Canada is a creditor nation (maybe not?). The U.S. became a debtor nation in 1985, for the first time since World War I.

The list of sovereign debt crises involves the inability of independent countries to meet its liabilities as they become due. These include:
A sovereign default, where a government suspends debt repayments
A debt restructuring plan, where the government agrees with other countries, or unilaterally reduces its debt repayments
Requiring assistance from the International Monetary Fund or another international source
Debts could be owed either to private parties within a country, to foreign investors, or to other countries.
➥ https://en.wikipedia.org/wiki/List_o...gn_debt_crises

[arsenelupiga]

no need to be that negative.

this is what i think will happen.

Yes, we (not me of course) will go back to work shortly. There will be infections, etc.

As there was already infections, possibly say 20% of population, this will decrease pool of carriers a bit. Further masks, behaviour will decrease transmission to close to 1 and eventually in couple months below 1 and off you go, virus will be gone.

there is no alternative really. with lack of equipment, that is the only option. Maybe in the future you guys make your own masks in US .
Now the problem is that outsourcing. Source countries will be eternal supply of corona.

So some hard measures will need to be taken.

see how it goes.