The take home is very, very simple: we can delude ourselves that the game can be won (it can't),...

[Subdivisions]

...snip...

...or we can prepare for the imminent collapse when delusion finally fails.

And here is the topic that will dominate over all pundit round table discussions in the next weeks: the entire world is insolvent, although some are more insolvent than others. Greek total net liabilities (on and off balance sheet) to GDP are 800%! EU: at 470%, the US, at over 500%. There is no way out but default.

Edwards' poignant summation.

I am persuaded by my colleague Dylan Grice's analysis that, including unfunded liabilities, most governments are already insolvent with debt to GDP ratios closer to 500% of GDP instead of around 100% for most G7 countries . It is too late.

Nor were Dylan and I persuaded by recent comments from Nobel Prize Winner Joseph Stiglitz that it is absurd to suggest that the US and UK governments might default on their debts as they could just print money. Indeed. But a client pointed out to us that Weimar Germany did not default on its debts during its hyper-inflation. How reassuring!

I am persuaded though by Richard Koo's book about the lessons from Japan's balance sheet recession. The crux of his analysis is that governments have no option but to stimulate aggressively all the while the private sector is de-leveraging. ANY attempt at fiscal cuts simply results in renewed recession and a further loss of confidence, thus making it even harder and more costly to sustain any subsequent recovery - and hence the budget deficit ends up bigger than before (e.g. see chart below). This is exactly the outcome I expect.

...snip...

http://www.zerohedge.com/article/albert-edwards-500-net-liabilities-gdp-it-too-late-prevent-collapse-g-7-greece-irrelevant-we

[readmoreoften]

1. why would anyone unrec this?

[BeFree]

2. So

Where is all the money? Is it just a bunch of rich people who are hoarding it?

That and one reason there is so much debt is that retirement funds that are owed have no real cash behind them as those funds have been spent.

So who's gonna pay the way out of this hole?
The rich people or the pensioners?

The decision is gonna be interesting to watch.

[Greyhound]

7. Interesting question.

It's quite a conundrum that they're trying to con their way out of.

"All the money" is an enormous ocean of (mostly stolen) liquidity sitting in the black holes most commonly referred to as hedge funds but they have several other names as well. But that's not really correct either as these funds really have paper leveraging and betting on the actual money which is really nowhere.

So they/we now have a situation where the "winners" of this game have amassed fortunes so vast that there is not enough product on earth to ever cash in. IOW, these people/entities "own" more of the world than actually exists because currencies are not tied to any real value. So, the richest have paper assets that depend on a system for value that the excessive imbalance of their assets cannot support.

If the world, like Iceland and Greece, refuses to bear the cost (which they neither incurred nor enjoyed the profits from) the system will inevitably collapse, so it is the uber-wealthy that have the greatest interest in perpetuating the system. But so far they adamantly refuse to pay for it without a hefty return, so who knows?:shrug:

[BeFree]

9. One historic answer

Which I hope doesn't come to pass, is world war.

Blame some poor country getting the people to focus their anger away from the real bandits and shock and awe that country into oblivion. And then spend great sums of money to rebuild making even more profits for the bandits.

The answer I'd like to see is we take back our money via taxes and fees, and end up making all humans more equal. Hey, I can dream, right?

[Greyhound]

12. I'd go much further. This system was sufficient for 500 years ago when

transactions were relatively rare (just volume, even the smallest card network does more business in a day than was done over a century when this defective system was cobbled together by thieves that have run it since.

Today we need clear value and delineation between banking (currency control) and financial transactions (everything else). We also need to rework much of the GAPP to reduce, or at least make clear, 'creative' accounting.

[pocoloco]

3. To whom is all this debt owed??

[amborin]

6. i believe pension funds

the ny times reported on this several wks ago

[The Wielding Truth]

4. Oh GOP throw up your hands. There is nothing can be done. BY YOU.

[HCE SuiGeneris]

5. I am in agreement. Just posted this...

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=114&topic_id=76943&mesg_id=76981

[Ozymanithrax]

8. Perahaps all debts should be forgiven...

and we start over.

Everywhere...

[metapunditedgy]

10. Problem is they just keep shifting the day of reckoning and inflating new bubbles.

If you don't play along, you lose out. Who knows when the big bubble will finally pop? This game is as old as currency.

I'm not disagreeing, I'm just bitter. :-)

[Holly_Hobby]

11. Ellen Hodgson Brown says:

Congress has the power to mint coin. Let them mint enough to pay off the debt. Viola!

From a Thom Hartman interview:

...

: Okay, here we have the, as Ellen Brown writes in this new article at webofdebt.com, or also in Yes! Magazine,

“As noted by Barry Ritholtz in a December 2 article, the bailout has already cost“, already! “cost more than the New Deal, the Marshall Plan, the Louisiana Purchase, the moonshot, the savings and loan bailout, the Korean War, the Iraq war, the Vietnam war, and NASA’s lifetime budget combined“.

“Thomas Jefferson“, she notes, “realized two centuries ago that there is a way to finance government without taxes or debt. Unfortunately, he came to that realization only after he had left the White House, and he was unable to put it into action.”

Ellen Brown, webofdebt.com, what is Jefferson’s solution to today’s disaster?

: The solution is that the government itself should be creating our money supply. And that’s where most people think money comes from. If you ask anybody on the street, who makes our money, they think it’s the government. In fact it all comes from private banks.

: Except for coins.

: Except for coins, which is just a token. It’s just a remnant of what they put in the constitution, which is that Congress shall have the power to coin money.

: Right.

: In fact I read somebody’s opinion, I think it was somebody from the Mint said that you could solve the whole problem by printing, or stamping, ten one-trillion-dollar coins, I mean today, that’s what it would be, and then just pay off the debt with these ten trillion dollars worth of coins. Because there’s no, it doesn’t say in the Constitution what the face value of these coins would be.

: Oh, that’s amazing! Now, let me just wrap my brain around that for a minute. Here’s the, the reason, just to back up a little bit. The reason that the US mint is making coins, and not the Federal Reserve Bank, and the reason why our coins don’t say Federal Reserve pennies, they say actually US money, is because our coinage, the Constitution says that the federal government has the exclusive right to manufacture coins.

: It says, yeah, Congress shall have the power to coin money, and that’s all it says about creating money.

: Right.

: It doesn’t say who has the power to print money or to create, obviously, electronic money, or all those forms that we use today.

: Right, so what the Fed has done, is it’s said, ‘okay, government, you guys are in charge of pennies, nickels, dimes and quarters’.

: Correct.

: ‘And we’re in charge of dollar bills on up’.

: Correct.

: And so the Treasury Department could simply say, ‘okay, we’re gonna start making hundred dollar coins, thousand dollar coins, million dollar coins and by the way we’ll make a trillion dollar coin, and with ten of these coins which we will print, we will buy the Fed’, do I have that right?

: Right. Well, you don’t even need to buy the Fed; it’s in the Federal Reserve Act that Congress could just vote to nationalize it, I mean.

: It’s in the Act?

: Well, the last provision of the Act is that it can be modified by Congress at any time.

: Right.

: So they, yeah, I mean, they gave it the power, they could take back the power.

: Sure. So, what would be the practical effect of the Treasury Department saying, ‘okay, the Federal Reserve, the Federal Reserve, which is a private corporation which is creating and controlling our money supply is no longer a private corporation, it’s now part of the Department of the Treasury. We’re going to buy it from its investors, we’ll pay whatever the price is, and now we own it’? What, how does that accrue value to you and me?

: Well, right now, the Federal Reserve has always bought Federal debt but they haven’t been so obvious about it. But right now, right on their books they’re stating that they’re buying a certain amount of US debt. So, what you have is the government printing these IOUs and then the Federal Reserve printing money and trading it for the IOUs and then we owe the Federal Reserve the money plus interest. Well, if it was our Federal Reserve we wouldn’t need to print debt, we could just print money, which is what our debt really is.

: But that would immediately inflate our currency, wouldn’t it, and decrease the value of it?

: No, because what you would do is you would print the dollars instead of the debt. In other words, you would rip up the bonds.

...

Here's the rest:

http://www.thomhartmann.com/2008/12/14/transcript-ellen-hodgson-brown-09-december-2008/