The Pain in Spain

I was reading an interesting article about the Spanish crisis and how bad it is. Here is the introductory paragraph. 

Beleaguered Prime Minister Mariano Rajoy just broke another record. As if a plague of corruption scandals was not enough, Spain's debt-to-GDP has now reached levels not seen in over 100 years. As El Pais reports, Spanish debt levels rose at an alarming EUR 400 million per day in 2012 making for the largest annual increase in debt in the nation's history - all the while proclaiming austerity.

Several thoughts came to mind as I read this article. The first was that those that are against austerity do not have a viable alternative. The second is that there has been no real austerity anywhere except Estonia. It is not that I am I favor of austerity, it is just that there is no viable alternative. 

The final thought was the most disturbing. Look at the chart on the right from the article. It shows how rapidly the debt is growing in Spain. It is now 84% of the Gross Domestic Production (GDP). This is shockingly large. The last time it was this large there was a huge crisis. I assume that debt was repudiated in the 1880's in Spain. What can't continue, won't continue. (Note that it is only public debt. Private debt and unfunded liabilities from the banking crisis needs to be added to this to get the total debt picture.)

More Riots in Spain? 84% is way too large to be sustainable. 

What is the public debt to GDP for Japan? 230%. What is the debt to GDP for the US? 105%. What is the debt to GDP for Russia? 9%. Who won the Cold War? (Note that the Wikipedia article is out of date as the Spanish situation is deteriorating rapidly).

Remember, what can't continue, won't continue. The example of Japan shows that the US has some time remaining. Will that time be squandered? 

A Retired Soldier

He was a soldier who, after 20 years or so in the service, decided to retire. He was an officer, a major in fact. He found a nice house in an area known for retirees, lots of fishing. But the area just did not suit him.

It may have had something to do with the fact that people would drive by his house in the middle of the night and shoot his house full of lead. Even though he had not had a chance to make any friends or enemies. There was great rejoicing in the community when he left.

He was black.

No, this did not happen in where you might expect drive-by shootings. No gangs were involved. It happened in rural Missouri, in a community I lived in briefly in 1985. Nor was it ancient history, it had happened a little before I lived there. 

I write this as an introduction to Pam Dewey's newest series at her blog, The Prophecy Panic Button, about a very sordid part of America's past--lynching. In part two of this series she talks about an infamous lynching in Springfield, Mo., another community in which I lived for many years. I can say from personal experience that Pam did not exaggerate one bit in her depiction of the incident and the ongoing problem. Springfield, Missouri, still has a much smaller population blacks than one would expect in a city that size as the effects of the lynching lingered for decades, and still lingers.

You can begin the series by clicking here.

The Pessimistic Jim Rogers

While I am not a fan of Glenn Beck, I am a fan of Jim Rogers. Nice interview. I am not as pessimistic as Mr Rogers as I am guardedly pessimistic. 

The Yen is Worth Less or Worthless

There is no doubt that Lauren's interview skills is why I watch her. I saw three short videos that I thought might be of interest.

The first is a Lauren Lyster interview of Rick Rickerts, author of the book Currency Wars. This is particularly troubling as such "wars" were common during the Great Depression, and eventually led to a shooting war.

The second interview is a prediction that the Yen will become worthless—not worth less, but worthless.

The third interview is with John Maudlin, whom I will hear in person next week at a Palm Springs hard money "retreat." In the interview he was surprisingly optimistic with a prediction of American resurgence—if the deficit problem is solved. A mighty big if. But if this happens and everyone else does not solve their problems, then maybe he will be right.

In any event recently I have thought a lot about that old Chinese curse, "May you live in interesting times."

Pink Floyd vs. the Bee Gees

A fun combination of Pink Floyd and the Bee Gees.