Americas Debt

The FT had an interesting article on this subject a week ago, in amongst almost daily articles about the impact of rising American debt.  What caught my attention was a paragraph stating that by 2020 the Congressional Budget Office predicts that the debt to GDP ratio will be at 90%.  Interesting the IMF thinks it will be at 115%.

Total debt at this moment is in excess of $9,000bn, which means that for every single one of the 308,745,538 residents, they each owe $29,150.  So for a family of four their ‘liability’ toward the national debt is $116,600.  This doesn’t count what they owe on their credit cards 🙂

In the same week there were also articles about how American business resist any attempt to do anything about the national debt because of the potential impact to government contractors in defense etc.  I think it is going to be very interesting to see what will happen if the Asian dominated markets begin to force the same medicine upon America as the US did to Asia in order to correct the Asian crisis in 1997.

I am amazed that some folks who I work with think that moving to the US is still a good idea.  I for one, will not be joining them. 


“Fabulous Fab”

Earlier in this blog I have vented my spleen about investment bankers and in general hoping against hope that they all rot in hell.  Here is a small collection of  text from the emails of Fabrice Tourre, the Goldman Sachs trader to his girlfriend, Marine Serres.

“Anyway, not feeling too guilty about this, the real purpose of my job is to make capital markets more efficient and ultimately provide the U.S. consumer with more efficient ways to leverage and finance himself, so there is a humble, noble and ethical reason for my job 😉 amazing how good I am in convincing myself !!!” Tourre said in an e-mail to Serres in January 2007.

“standing in the middle of all these complex, highly leveraged, exotic trades he created without necessarily understanding all of the implications of those monstrosities!!!”

“It’s bizarre I have the sensation of coming each day to work and re-living the same agony – a little like a bad dream that repeats itself,” Tourre writes. “In sum, I’m trading a product which a month ago was worth $100 and which today is only worth $93 and which on average is losing 25 cents a day …That doesn’t seem like a lot but when you take into account that we buy and sell these things that have nominal amounts that are worth billions, well it adds up to a lot of money.”

 “When I think that I had some input into the creation of this product (which by the way is a product of pure intellectual masturbation, the type of thing which you invent telling yourself: “Well, what if we created a “thing”, which has no purpose, which is absolutely conceptual and highly theoretical and which nobody knows how to price?”) it sickens the heart to see it shot down in mid-flight… It’s a little like Frankenstein turning against his own investor ;)”

“Just made it to the country of your favorite clients!!! I’m managed (sic) to sell a few abacus bonds to widow and orphans that I ran into at the airport, apparently these Belgians adore synthetic abs cdo2,”