THE COMING FINANCIAL WARS

Back in 2009 the International Monetary Fund (IMF) took a look at how much debt each of the countries listed below carried in relation to how much they produced in goods and services (Gross Domestic Product, or GDP). This relationship is also known as a nations debt to GDP ratio. The IMF then made projections based on the policies of the day and financial trends, and came up with this ...

One thing is clear, debt to GDP ratios didn't look so good in 2009, and were predicted to be far worse in 2014 for the vast majority of the countries listed.

Good so far? OK.

Recently actual debt to GDP ratios were released for 2012. What do we see? Germany, not surprisingly, saw their debt to GDP ratio decline from a projected 91% in 2014 to 70% in 2012. But it's pretty much all bad news after that. In 2012 the U.S. reached and surpassed IMF debt to GDP ratios that were projected for 2014 … so did Japan … as did the United Kingdom … as did Canada (by 19%) … as did France … as did Spain (by 10%) ... and on it goes. 

Here, via Barclays and Zero Hedge, you can check it out for yourself ...

Long story short? The biggest nation-states (apart from Germany) seem to be in a borrowing death spiral that, at least in the 20th century, preceded some pretty ugly political developments. Tariff wars and competitive devaluations became part of an ugly political mix in the 1930s that turned trading partners into aggressive trade competitors.

Today's emerging currency wars, America's ridiculous money dumps to save Wall Street (only), and all around slavish devotion to the preachings of ethically bankrupt brokerage and financial houses - that should have gone under after 2008 - tell us that we are already on an ugly financial path. This is not good news.

I'll be going through the dynamics behind all of this in my International Political Economy course this spring 2013 quarter (and in my next book). For those of you who want to know a little more about how history may be whispering in our ear can click here, here, here, and here (or buy my first book).

In all cases, stay tuned. I'll be writing more about this later. You can be sure of that.

- Mark