The sky has finally fallen...

[silentheart]

I think there is some confusion about high debt to gdp ratio implications.
By itself the ratio means nothing. A country's debt to gdp ratio is similar to a person's debt to gdp ratio, which can be very good to very bad, depending on other things.
Say if you have an annual income of US$200,000, net ot tax, and an annual total expenditure of US$210,000. You have a deficit of US$10,000. On top of this you have a mortgage of US$500,000.
Based on the above your annual deficit is 5% (US$10,000) and your debt to gdp is US$500,000 + US$10,000 (debt) to US$200,000 (gdp), or 255%.
Using the same data for say 2 individuals with idnetical numbers except that one has a positive networth and the other a negative networth, we come up with two very different ratings, just like one is Greece the other Sigapore or Japan.
If one is Greece (A), his networth is negative US$200,000 due to a declining market value of his mortgaged property (US$500,000 mortgage-US$300,000 current arket value of his property). A will then have a negative networth of US$200,000 + $10,000 deficit and this plus a 255% debt to gdp ratio will mean a complte disaster.
The other party, say Singapore (B), its mortgage of US$500,000 on a property has a positive networth if its property has a current market value of US$1,000,000. It then has a positive net worth of US$1,000,000 - US$500,000 - US$10,000 = US$400,000. Therefore its high debt to gdp ratio is nothing to worry about.
In other words you cannot jump to conclusions merely from looking at incomplete data.

Yes, this is the big problem that caused sub prim mortgage meltdown. you are making assumption that the property value will increase year over year and does not go down. Let me know when you wake up and realize that your equity is all used up and you are under water...

[silentheart]

Let it fall. Let it fall. Let it fall...

[taneepak]

Yes, this is the big problem that caused sub prim mortgage meltdown. you are making assumption that the property value will increase year over year and does not go down. Let me know when you wake up and realize that your equity is all used up and you are under water...

The example I gave was to simplify a case of a positive net worth by citing just one asset, i.e. property, so that it could be easily understood. The key thing is a positive net worth, which is your total assets are bigger than your total liabilities. Total assets include property, cash in banks, treasury bonds, stocks, etc. In Japan assets are mainly solid cash in banks.

[silentheart]

Yeah, Sub prime started by over simplify ideas and using the wrong ASSumption of property value will always goes up. Just like your example. Since you are so knowledgeable and good at searching internet. Why not just throw in the random walk and Markov Chain. They are very easy for you right?

[Pete LSD]

Are you sure it's not Cherkov as in the dude from Star Trek 1?

Yeah, Sub prime started by over simplify ideas and using the wrong ASSumption of property value will always goes up. Just like your example. Since you are so knowledgeable and good at searching internet. Why not just throw in the random walk and Markov Chain. They are very easy for you right?

[cooler]

The example I gave was to simplify a case of a positive net worth by citing just one asset, i.e. property, so that it could be easily understood. The key thing is a positive net worth, which is your total assets are bigger than your total liabilities. Total assets include property, cash in banks, treasury bonds, stocks, etc. In Japan assets are mainly solid cash in banks.

before the subprime crash, american homeowners have positive net worth too

[taneepak]

before the subprime crash, american homeowners have positive net worth too

This is not true, never was. Americans have one of the worst savings rates in the world. That is why they live in a world where the economic model is based on financing, financing, financing through debts, more debts, mountain of debts.
It is because of the above that the world is now in dire need of a global re-balancing of how to live responsibly. This means the US and that means the Americans in the United States of America must now spend less and save more. Simultaneously, the Chinese will have to spend more and save less.
When this re-balancing reaches an equilibrium then we will say goodbye to reckless risks and greed from the banking system that gave us such grief.

[cooler]

This is not true, never was. Americans have one of the worst savings rates in the world. That is why they live in a world where the economic model is based on financing, financing, financing through debts, more debts, mountain of debts.
It is because of the above that the world is now in dire need of a global re-balancing of how to live responsibly. This means the US and that means the Americans in the United States of America must now spend less and save more. Simultaneously, the Chinese will have to spend more and save less.
When this re-balancing reaches an equilibrium then we will say goodbye to reckless risks and greed from the banking system that gave us such grief.

using your own words, those americans were net positive in net worth, assets bigger than liabilities, what me worry???

[taneepak]

The latest development on Goldman Sachs being charged with fraud by the SEC is potentially dangerous for the global economy that is recovering.
Now we have both Britain and Germany calling for investigations into Goldman Sach's role in the financial meltdown in both countries. Already Goldman Sachs is being blamed for "cooking" Greece's books that eventually brought down Greece.
How could the US government be not aware of such machinations from their banking giants? This is a heinous crime of the worse kind. At least in widescale corruption, you know what is going on, although it is for the wrong reasons. Here they come into your house, be nice to you as well as promising you that they will make you rich soon, but in the end steals everything you have.
No wonder Americans don't trust their congress and to a lesser extent their government.

[ctjcad]

...
No wonder Americans don't trust their congress and to a lesser extent their government.

..and you just realized that???....who set up the rules/regulations and the ones who didn't enforce the rule when they should have been doing so??..

[extremenanopowe]

goldman is my man.... well done..

[taneepak]

Here was how Britain, Germany, and Greece got conned http://www.cbsnews.com/stories/2010/...n6409386.shtml

[ctjcad]

..it was Enron during W's 1st term of presidency...
now, looks like it will be Goldman Sachs becoming the new Enron for BO..uuhhh huh..

http://images.opensecrets.org/obama_...&cid=N00009638
It all started in 1999 with Larry Summers, Levitt, Greenspan & Rubin. Then expanded during W's presidency with the SEC. And it's continuing now..
Goldman Sachs was one of BO's top presidential campaign donors – giving nearly 1 million dollars to “The Annointed One’s” war chest.
This is the same company that BO singled out and demonized last week for the financial collapse on Wall Street. What are the chances BO gives that money back? What’s worse, BO's attack on Goldman Sachs was really politically motivated. The Dems and the SEC timed the announcement of their fraud case against Sachs to coincide with Democrats’ bid to overhaul the nation’s financial regulatory infrastructure. “You take the worst companies in this country, and the worst accounting practices and all the Ponzi schemes – nothing begins to compare to the way that government has mismanaged our money”...

[extremenanopowe]

I am very impressed with their lawyers if they can get away with it. Kudos to them.

[silentheart]

I am very impressed with their lawyers if they can get away with it. Kudos to them.

Well, OJ did... "If the glove won't fit, you must acquit."

[OneToughBirdie]

..it was Enron during W's 1st term of presidency...
now, looks like it will be Goldman Sachs becoming the new Enron for BO..uuhhh huh..

http://images.opensecrets.org/obama_...&cid=N00009638
It all started in 1999 with Larry Summers, Levitt, Greenspan & Rubin. Then expanded during W's presidency with the SEC. And it's continuing now..
Goldman Sachs was one of BO's top presidential campaign donors – giving nearly 1 million dollars to “The Annointed One’s” war chest.
This is the same company that BO singled out and demonized last week for the financial collapse on Wall Street. What are the chances BO gives that money back? What’s worse, BO's attack on Goldman Sachs was really politically motivated. The Dems and the SEC timed the announcement of their fraud case against Sachs to coincide with Democrats’ bid to overhaul the nation’s financial regulatory infrastructure. “You take the worst companies in this country, and the worst accounting practices and all the Ponzi schemes – nothing begins to compare to the way that government has mismanaged our money”...

The underlined red statement nails it and I would add 'past and present government' to it. It is still deficits translating to huge debts, with no plan of how to balance the budget in the foreseenable future, forget about ever paying off, now add more spending and more spen....that eventually will torpedo the great US of A. Eepak can google, then spin and more spins to make debts looks good or manageable to support his arguments for more spending but as I look at CHN and then the 3 island nations of HK, Taiwan and Sing, what is common among them...no debt, huge $$$ reserves, strong economy. I still shake my head looking at USA's US$800B for annual debt servicing (>2X Canada annual federal budget) and the number will escalate when interest rate spikes, that is a huge transfer of wealth out of USA. How long can any nation operate of life support or borrowed $$$? unbelieveable.

[ctjcad]

..how many trillion of dollars have GS been pillaging, stealing, raping, gambling & putting in their pockets the reg. people's taxpayers' money over so many yrs....probably abt $32 trillion of them..people say the Dems stand for poor people, middle class folks, the minorities etc...yeaaaah, riiiight..

More on Goldman Sachs:
Goldman Sachs
Goldman Sachs, one of Wall Street’s most prestigious investment banks, was also among the many banks in 2008 and 2009 to receive billions of dollars in taxpayer money to help it stay afloat. Like others in the securities industry, Goldman Sachs advises and invests in nearly every industry affected by federal legislation. The firm closely monitors issues including economic policy, trade and nearly all legislation that governs the financial sector. It has been a major proponent of privatizing Social Security as well as legislation that would essentially deregulate the investment banking/securities industry. The firm tends to give most of its money to Democrats. A number of high-ranking government officials in recent years have spent part of their careers at Goldman Sachs.
http://www.opensecrets.org/orgs/summ...085&cycle=2010
More of their happenings here:
http://www.opensecrets.org/orgs/othe...085&cycle=2010