[I’ve listed here some countries that are in the MSM as being bankrupt. I will continue to update this list when I find more articles (or you guys send them in). Tony]
The Bankruptcy of the United States
Saturday, December 26, 2009
By Porter Stansberry via Kitco, h/t: Jim Sinclair
It’s one of those numbers that’s so unbelievable you have to actually think about it for a while…
Within the next 12 months, the U.S. Treasury will have to refinance $2 trillion in short-term debt. And that’s not counting any additional deficit spending, which is estimated to be around $1.5 trillion.
Put the two numbers together. Then ask yourself, how in the world can the Treasury borrow $3.5 trillion in only one year? That’s an amount equal to nearly 30% of our entire GDP. And we’re the world’s biggest economy. Where will the money come from?
How did we end up with so much short-term debt? Like most entities that have far too much debt – whether subprime borrowers, GM, Fannie, or GE – the U.S. Treasury has tried to minimize its interest burden by borrowing for short durations and then “rolling over” the loans when they come due. As they say on Wall Street, “a rolling debt collects no moss.”
What they mean is, as long as you can extend the debt, you have no problem. Unfortunately, that leads folks to take on ever greater amounts of debt… at ever shorter durations… at ever lower interest rates. Sooner or later, the creditors wake up and ask themselves: What are the chances I will ever actually be repaid? And that’s when the trouble starts. Interest rates go up dramatically. Funding costs soar. The party is over. Bankruptcy is next.
Aussies $1.2 trillion in debt
[Judging by the information in the previous post about the bankruptcy of the US, then I’d say Australia is right there too. Tony]
In a new record, Australians now owe more in household debt than the country’s entire economy earns in a year.
Reserve Bank figures show mortgage, credit card and personal loan debts now stand at $1.2 trillion, up 71 per cent from just five years ago and equating to $56,000 for every man, woman and child in the country, News Ltd says.
Our spending binge, fuelled most recently by the federal government’s First Home Owner Grant, means personal debt now totals 100.4 per cent of Australia’s annual GDP – one of the highest ratios in the developed world.
“It’s the first time household debt has cracked 100 per cent of annual GDP and it’s a terrible, terrible sign,” University of NSW economics professor Steve Keen told News Ltd.
“It shows we are living beyond our means and many highly geared borrowers are now extremely vulnerable to further rate rises – they are already saturated with debt and will not be able to tolerate much of an increase to their repayments.”
Australia’s financial headache is likely to get worse before it gets better. The country is in the midst of the peak spending season, when billions goes on the plastic, yet the Reserve Bank data dates back to October’s debt levels only, so that means there are another two months of First Home Owner Grant-fuelled mortgage activity still to be taken into account.
The extra cost is expected to add billions to the burgeoning debt tally.
Stages of Denial at CBRC
December 24, 2009
It took a few days, but the China Banking Regulatory Commission has formally distanced itself from a forecast, attributed by local media Monday to one of its officials, that China’s banks would need to raise 500 billion yuan ($73.25 billion) in new capital next year.
“Reports by some media misunderstood comments by Li Fuan, director general of the CBRC’s supervisory cooperation department for banking innovation, regarding data on banks’ capital raising needs next year,” the CBRC said in a text message Wednesday. “The CBRC has never published such a number.”
To be honest, it felt a little odd from the beginning. What exactly was Li, who typically talks about derivatives and securities investment, doing giving official projections for capital raising? When called by The Wall Street Journal Monday, he denied having cited the figure.
Japan’s Economy in 2009: Review of the Year and Challenges Ahead
December 24, 2009
Speech to the Board of Councillors of Nippon Keidanren (Japan Business Federation) in Tokyo
Governor of the Bank of Japan
In N. Korea, a Strong Movement Recoils at Kim Jong Il’s Attempt to Limit Weatlh
By Blaine Harden
Washington Post Foreign Service
Sunday, December 27, 2009
SEOUL — North Korean leader Kim Jong Il moved early this month to wipe out much of the wealth earned in the past decade in his country’s private markets. As part of a surprise currency revaluation, the government sharply restricted the amount of old bills that could be traded for new and made it illegal for citizens to have more than $40 worth of local currency.
It was an unexplained decision — the kind of command that for more than six decades has been obeyed without question in North Korea. But this time, in a highly unusual challenge to Kim’s near-absolute authority, the markets and the people who depend on them pushed back.
Grass-roots anger and a reported riot in an eastern coastal city pressured the government to amend its confiscatory policy. Exchange limits have been eased, allowing individuals to possess more cash.
A Greek Tragedy: Should the EU Save Athens from Bankruptcy?
By Wolfgang Reuter
In Berlin and Brussels there is growing doubt over whether Greece can solve its debt problems without external help. If nothing is done, the country risks falling into bankruptcy — with unforeseeable consequences for the European currency.
German Chancellor Angela Merkel refrained from commenting for three long days as the value of Greek bonds continued to fall. The chancellor knew she had to say something to put a halt to the nose dive. Something needed to be done to defuse the ticking time bomb threatening Europe and the euro: the possible bankruptcy of European Union member state Greece.
Speculators in the trading rooms of banks had been waiting for a signal. They wanted to know whether EU member states were going to rush to the aid of the financially hemorrhaging country on the Aegean. The longer they waited, the further Greek bonds slipped — and the closer the country slid toward national bankruptcy.
India Central Bank Said To Be “Fund Starved”
Friday, Dec 25, 2009
New Delhi: The Reserve Bank on Thursday said it will come out with its third quarter review of the monetary policy for the current fiscal on January 29.
“Reserve Bank of India governor D Subbarao will release the third quarter review of monetary policy 2009-10 on January 29, 2010,” the RBI said in a release.
The apex bank’s quarterly review is being eagerly awaited as there have been intense speculations that it may signal an interest hike to tighten money supply to contain rising inflation.
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