U.S. Debt At 104% Of GDP Hits Another Record.

Summary

    The US budget deficit grew another $52.9 billion in March 2015.
    Total US debt now stands at a record $18.15 trillion or 104% of GDP!
    So far, the US borrowed 23.6¢ of every dollar it spent in Fiscal 2015.

Yesterday, Monday, April 13, 2015, the US Treasury Department reported that the U.S. government had a budget deficit of $52.9 billion for March 2015. They also reported the total deficit now stands at $439 billion for the full fiscal 2015 year.



According to the "Monthly Statement of the Public Debt" for March 2015", the total US public debt outstanding is $ 18,152,056 million or roughly $18.2 trillion.

According to the most recent estimate of GDP dated March 27, 2015, total "Current Dollar GDP" stands at $ 17,418.9 billion and increased 2.4% over the prior year.

    Current-dollar GDP increased 3.9 percent, or $650.8 billion, in 2014 to a level of $17,418.9 billion, compared with an increase of 3.7 percent, or $604.9 billion, in 2013.
    During 2014 (that is, measured from the fourth quarter of 2013 to the fourth quarter of 2014), real GDP increased 2.4 percent, compared with an increase of 3.1 percent during 2013. The price index for gross domestic purchases increased 1.1 percent during 2014, compared with an increase of 1.3 percent during 2013.

Taken together, this means the US Debt is 104.2% of GDP.

Deficit as a Percentage of GDP is Growing!
Sadly, not only is the total debt higher, but the total debt as a percentage of GDP is also higher than the last time I wrote about the deficit on Seeking Alpha.

Like it or not, savers in "safe" investments like CDs and US treasuries are financing the economic recovery with a hidden tax levied with artificially low interest rates. This "wealth transfer" from a "hidden tax on savers" via lower rates has allowed the government to reflate the economy without causing high inflation, so far.

Despite claims that the US economy is recovering, and it is certainly much better than at the depth of the financial crisis, the US deficit continues to grow even as the Federal Reserve continues to keep interest rates artificially low. If the Fed raises rates, borrowing costs for the government, at least for short-term borrowing, will certainly go higher. If the Fed doesn't walk the perfect tightrope to raise rates but not too quickly to head off high inflation, gold and other physical assets could soar. Some think it could already be too late and another bubble is inevitable.

http://seekingalpha.com/article/3070446-u-s-debt-at-104-percent-of-gdp-hits-anot...
=====================================================
So, we have the US at an "official" Debt to GDP ratio of 104%, BUT when the REAL figure, plus the FedRes "unofficial" QE's & Debt buying are thrown in, the US Debt to GDP ratio is certain to be a lot higher than 104%!

Iron ore ‘may never clear $US50 again’

The price of iron ore has returned to the psychologically important level of $US50 a tonne in offshore trade despite Goldman Sachs delivering one of the more dire forecasts seen during the current bear market.

At the end of the latest session, benchmark iron ore for immediate delivery to the port of Tianjin in China was trading at $US50.00 a tonne, up 0.6 per cent from its prior close of $US49.70 a tonne. The commodity recently collapsed to a 10-year low of $US46.70, but has rebounded as bargain hunters step in amid signs of supply cutbacks from tier-2 miners.

Forced supply reductions are expected to continue as Goldman Sachs warns 50 per cent of production from junior and mid-tier miners is likely to be withdrawn by 2019 as peak demand is seen next year. Tier-1 miners — BHP Billiton, Vale and Rio Tinto — will face further pressure as well, but lower production costs should ensure there’s no need for them to trim supply targets.

“Faced with a mature market, we believe tier 1 producers have no alternative but to reduce unit costs and to exploit their asset base more efficiently; (but) their production volumes are not at risk from a lower iron ore price,” Goldman’s analysts said.

As demand growth evaporates, Goldman foresees further price pain, slashing its forecasts by around a third to $US44 a tonne in 2016 and $US40 a tonne in 2017 and 2018.

However, the most worrying prediction for the industry came as Goldman downgraded its rating for Rio and Fortescue Metals stock to “sell” on expectations iron ore will never again see the $US50 mark once 2015 is over.

“Our Global Macro team believes that iron ore prices will continue to trend towards $US40/tonne over the next 18 months as continued new supply and lacklustre demand cause a glut of supply,” the Goldman note read.

Most experts now expect prices will fall into the $US30s at some stage this year, which would have almost the entire industry operating in the red aside from BHP, Rio and Vale.

“We are very comfortable with our balance sheet,” Fortescue boss Nev Power said yesterday as the firm delivered its latest production report.

“The current state of the iron ore industry has been a disaster for everyone,” he said. “It has ripped the heart out of the industry.

“There are no winners in any of this.”

Rio again took the opportunity to defend its tactics of lifting production in an oversupplied market, with

the firm’s executives labelling the strategy as “rational, normal economics”

.

The comments failed to improve market sentiment as Rio stock slumped 2.4 per cent in London trade, while rival BHP gave up 0.2 per cent as the broader market lost 0.5 per cent.

http://www.theaustralian.com.au/business/mining-energy/iron-ore-may-never-clear-...
======================================================

It is becoming apparent, that there are very few who have any idea what
RATIONAL, NORMAL, ECONOMICS ACTUALLY NOW MEANS!!!

   

perceptions_now wrote on Apr 17^th, 2015 at 11:49pm:


Well, IT WASN'T THE BIG ONE (yet), possibly with a little assistance a couple of hours before the US markets closed.

Anyway, markets finished -
The German Dax - down 310 points (2.58%)
The British FTSE - down 66 points (0.93%)
The French CAC - down 81 points (1.55%)
The US DOW - down 279 points (1.54%)
http://www.investing.com/indices/major-indices

That said, the following article, MAY have "some" indications for us -

Opinion:

‘American Exceptionalism’ gut-punched in zero-growth world

And that’s becoming more and more obvious.

The IMF just doubled down, warns the Wall Street Journal:

“Global growth fails to find new momentum: cheaper oil prices fail to deliver the expected jolt”

while the “anemic outlook in rich countries” like in the U.S. is “souring emerging-market expectations, .”

But a market crash is now inevitable. As Jeremy Grantham, head of GMO investment firm sees it, “around the presidential election or soon after, the market bubble will burst, as bubbles always do, and will revert to its trend value, around half of its peak or worse,”

collapsing from the current range of 18,000 down 50% to about 9,000.

But the economy’s a different story from stocks. For some time the IMF and World Bank have been warning us of trouble ahead,

anemic recovery, dead in the water, slow growth, stagnant.

The economy’s guaranteed to get worse, lots slower, thanks to the Fed’s market bubble.

IMF Managing Director Christine Lagarde says: “Six months ago, I warned about the risk of a New Mediocre, low growth for a long time.” She delivered that warning at the Atlantic Council, an international affairs organization. Now she’s more worried: We must “prevent that ‘New Mediocre’ from becoming the ‘New Reality’,” because we’re sinking even deeper.

Lagarde warns: “The challenge for policy makers around the world is to combine the policies needed to boost today’s growth with those fortifying tomorrow’s prospects,” because unfortunately “while global growth is not bad, it’s just not good enough.” Her solution?

Policy makers must “press ahead with needed reforms.”

But that’s not happening. Seems nobody’s “exceptional” enough to lead the reforms. There’s no “new momentum,” just wishful thinking, infighting and empty promises.

Worse, central bankers, policy makers and politicians all focus on short-term solutions, piling on more stimulus debt, sidestepping systemic long-term problems

. We’re our own worst enemies,

driving down the road to zero growth

and painful austerity, like the 1930s.

In one of his quarterly letters,

“On The Road to Zero Growth,”

Grantham put the coming economic collapse in perspective. InvestmentNews, the newspaper read by 90,000 professional advisers, called it “the most depressing forecast ever.”

What’s ahead? InvestmentNews’ Dan Jamieson summed up Grantham’s “Road to Zero Growth” predictions:

“The U.S. GDP growth rate that we have become accustomed to for over a hundred years is not just hiding behind temporary setbacks. It is gone forever.”

Get it?

No “New Economy.”

Not even the “New Normal” 6-7% returns,

We’re stuck in low gear,

the harsh reality of a “New Mediocre” economy.

And soon we’ll downshift into neutral. Then finally, into reverse

as we experience “Zero Growth.”

Economist Robert Gordon of Northwestern University put this megatrend in perspective in his National Bureau of Economic Research paper, “Is U.S. economic growth over?”

Then he in succession subtracts the economic impact of six headwinds dragging on America’s economic future, include

shifting demographics

... stagnant educational achievement ... rising income inequality ... globalization and technology ...

energy versus environment

... plus household and

government debt

No wonder the World Bank and the International Monetary Fund are running scared.Can you see the bottom?

Or are you, like so many, in denial, believers in the grand myth of perpetual growth

http://www.marketwatch.com/story/american-exceptionalism-gut-punched-in-zero-gro...
========================================================
Any of that ,

RINGING ANY BELLS???

It's all about Growth, Growth, Growth OR the lack of it and the lack of a plan, to combat new realities!
Also Demographics, Energy & Politicians/Economists, who focus on short-termism & sidestep Reality!

Greece is due to make a payment of $827 Million, to the IMF, by May 12.

They don't have it!
They either give way, to more requests from the ECB, IMF & others OR they find another source OR they exit the Euro, ALL OF WHICH WILL PROVE UNPALATABLE IN ONE WAY, SHAPE OR FORM, SO THE NEXT FEW WEEKS MAY WELL PROVE PIVOTAL!

Peter Costello says stop messing with superannuation

The chairman of the Future Fund, Peter Costello, has urged politicians to stop messing around with the country's $1.9 trillion superannuation system, warning increasing super taxes will worsen the burden of the age pension with younger Australians forced to bear the cost of the tinkering.

"Increasing taxes on superannuation, which is a long term savings vehicle, usually involves taking now at a cost to be borne sometime in the future," he said at The Australian Financial Review Banking and Wealth Summit in Sydney on Wednesday.

"Governments are interested in the here and now – they don't worry too much about what's outside the forward estimates," he said.

"If taxes are on the rise, it means people will have lower retirement incomes, some especially those who live long longer will be back on the pension."

Mr Costello's comments come after federal Treasurer Joe Hockey previously floated the idea of allowing younger Australians to dip into their super for a home deposit.

Last week, Labor outlined a plan that would see Australia's well off lose $14 billion in superannuation tax concessions over the next decade under new policies that it said were needed to keep the system sustainable and restore equity.

"The thing superannuation needs more than anything else is certainty," Mr Costello, who chairs the $117 billion Future Fund, said.

http://www.afr.com/business/banking-and-finance/financial-services/peter-costell...
========================================================
At the risk of upsetting Cods, I will both agree & disagree, with Peter Costello.

I agree, in so far as -
1) Politicians should not continually "change the rules".
2) Governments should look to the longer term, not so much the here and now. 
3) Super is meant for Retirement, not for housing in your 20's to 40's.


I disagree, in that both Liberal & Labor should have ensured -
1) The correctness of the system, so that Rorting could not & did not occur and therefore changes would not be required!
2) That sufficient funds were accrued in the Future Fund, so that there was now $1 Trillion in the Future Fund, instead of the current $117 billion, which is nowhere near enough and it will lead to a great many eldery Australians living in poverty, when the GFC (GFC2), makes a revisit shortly!   

China's Debt Pile Is Frightening And Getting Worse

Now, note that the comparatives are all advanced economies that can carry, normally, higher debt levels, which makes China's 282% estimated total debt pile rather large.

My view: When this pile of Chinese debt blows, things will get spectacularly ugly, globally.

http://seekingalpha.com/article/3119236-chinas-debt-pile-is-frightening-and-gett...
======================================================
I would suggest, there are some "interesting" points that could be made, across the board, not just in respect of China!

The Stock Market: 2 Scenarios, 1 Outcome

Summary
    The two likely stock market scenarios we can expect.
    Why we should be worried about stocks in the near term.
    What this means for your investment strategy.

I predict two likely scenarios for the rest of this year and next:

In scenario one, the market takes a near 20% correction. I sent an exclusive update out to my Boom & Bust subscribers earlier today, explaining that while we're in uncharted territory with this endless quantitative easing nonsense, I still consider this a likely outcome.

If it happens, the Fed would not only put off raising interest rates indefinitely… but it may even announce another round of quantitative easing: QE4. Or at least threaten to.

The markets would like that at first. But after that, a big crash would follow, likely starting in early 2016. You just can't inflate this bubble much more!

In scenario two, the market makes its final long-term top in the broader "megaphone" pattern (where new lows precipitate new highs, and vice versa), now or in the very near term.

If this plays out, we could expect to see a 20% crash this summer. That would merely represent the first wave of the larger crash we see as inevitable ahead. Ultimately that would lead the Dow down to 6,000 or even 5,500.

Whichever scenario plays out, this looks like a dangerous period for stocks ahead.

Mind you, historical analysis has shown over many decades that most of the corrections, on average, come between very early May and mid-October in any given year.

2015 is shaping up to be one of those years.

Then there's another reason to be worried about stocks in the near-term. Just see the chart below:


That's a very important correlation that's starting to unravel.

A recent Bank of America Merrill Lynch survey shows that investors have pulled $79 billion out of the stock market just this year. That goes hand-in-hand with the chart, as cumulative equity flows pull out of the market.

If I were a passive investor, I'd be running for cover…

http://seekingalpha.com/article/3127586-the-stock-market-2-scenarios-1-outcome?i...
======================================================
Happy investing?