The CIA has some new 2011/2012 numbers for the world’s economy. These numbers are as “good” as the countries who post the individual data, so it’s safe to be suspect. That said, I found them interesting.
There’s 7B of us. I love the CIA’s precise estimate.
Only 47% of the population is in the workforce. 28% of the population is under 14 years of age, 8% is older than 65.
Of the 3.3 potential workers, fully 9.2% are unemployed.
I was surprised to see that the global unemployment rate had risen in 2012 by .8%. That’s a big change, It comes to an additional 26m people. Overall, some 300m people are looking for work. The numbers are big, the direction is bad. There is a case to be made about political stability with this many people not working.
The estimate for the USA is that 13m people are now unemployed. The US share of world unemployment is 4.3%, while US population is 4.4%. In other words, the US is right in the middle of the pack on unemployment. Not bad for the leading industrial economy……..
2012 was a so-so year for global growth, down YoY and down significantly from 2010.
The CIA measures total GDP, it came to a whopping $83T in 2012. The US share is 19%.
Global GDP rose $2.2T in 2012. How did that happen? Easy, more debt, money and inflation. The stock of money rose $6.1T, about 3Xs the increase in GDP. Given this, why is gold falling?
Where did all the new money come from? Debt, of course. Domestic and cross border debt marched ever higher:
Domestic debt rose by $5.1T, while cross bordered indebtedness rose $5.4T. Total debt is up by $10.5T while GDP rose only $2.2T. From this I conclude that it takes $1 of debt to produce a measly 20 cents of growth. Who was it that said that debt was an efficient stimulus for growth? There is no evidence of that in the CIA numbers.
The world is running a budget deficit. The government deficits increased by 3.8% (Vs. GDP of 3.3%) and by $2.7T (Vs. $2.2T of real growth). On balance, for each $1 increase in government debt, GDP rose by 80 cents.
Total government debt as a share of GDP is now at 65%.
The large deficits are happening even though global tax rates are high. There is not much blood to be had from the taxpayer’s stone:
Inflation was tame in 2012. With all that money sloshing around, one would think that the inflation numbers have to be headed higher.
The CIA data for 2012 is a mixed bag. There is no crisis at the moment, but there are troubling signs:
- Unemployment is dangerously high, social problems will be the result.
-Global growth is occurring as a result of ever higher debt loads, and a rapidly expanding money supply. Total debt is rising much faster than economic output. Every year we get more leveraged. The “efficiency” of debt is waning.
-Inflation is not a big issue today, but there is every reason to believe that this can’t be sustained.
Spy versus Spy
BK,Exactly why is gold falling,i have not a clue,seems manipulated at the moment.Any thoughts,thanks
Bruce & Clark-
Gold isn’t falling. Paper gold is falling. Which is exactly what you’d expect to see happen when the world is heading for the mother of all currency crises is heading our way.
Did you know that if you own 100,000 shares of GLD, you can trade that in for real bullion from the bullion bank sponsors of GLD? Did you know that someone is once again taking physical bullion out of the GLD trust? Did you know that the last time Soros “sold” all his GLD was 1Q11, when someone drained 68 tons of physical bullion out of the GLD trust, and then gold rose 50% in the next 6 months?
Just because the 100x levered COMEX gold contract price is falling doesn’t mean the price of physical gold bullion is falling. Don’t believe me? Try buying 100-200 oz in Manhattan, one of the financial capitals of the world…I think you will find it to be extremely hard to to do.
And when you realize that, you’ll see that the falling price of paper gold is actually a very, very bad sign for the USD & global financial system.
A falling paper price of gold in the face of unprecedented debt increases mean that the run on the global financial system is starting. $1 quadrillion+ of paper claims, $83T in global GDP with probably 30% of that or more coming from financial transactions. The falling price of paper gold when the availability of physical bullion has dried up means the big money guys are selling paper for physical. They are making their run on the bank, which in this case is the global financial system.
“Gold” isn’t falling, but paper gold products are collapsing and, eventually, such instruments as GLD will have little to no currency value as successively large, and I do mean large, drops in price will see their physical drained to the point that such a fund will be forced to shut down. Physical gold, as the only means for the lenders of last resort to recap themselves, as the only way to, in essence, balance their balance sheets, has a price that is vastly higher than that quoted on your Bloomberg screen. Those with savings in the East have an instinctive, not to say intellectual understanding of this that we in The West are going to learn in due course. It will not be a pleasant episode.
ch, You’re starting to scare me. What happens next for the miners? It seems like they exist in that no man’s land somewhere between physical and paper.
Bruce,
Do you think real estate is a good investment if the stock market and USD goes to hell? Ex: In Las Vegas or Phoenix, there are many good deals such as this:
http://phoenix.craigslist.org/wvl/reb/3540019619.html
So $80k for this house … put $25k down, finance $55k … even assuming 5% interest over 30 years (probably will be less), payments are less than $300. Add in taxes, ins, repair fund … lets call expenses $300 more, so $600 total. A house like this would rent for $1000 (or more), so cash flow is $400 * 12 so about $5k/yr. In 5 years you recoup your down payment, and cash flow. If USD devalues and inflation takes hold, your payment is the same on a 30 year fixed …. and you can probably raise the rent (due to inflation).
What do you think … good investment?
BK: “Inflation is not a big issue today, but there is every reason to believe that this can’t be sustained”
When you look at the real wold consumption basket of most Americans, I don’t think it has much similarity with the Harry Potter fantasy basket that the BLS uses to compile CPI.
Energy costs are up double digits — national average gasoline prices are reaching record levels.
Taxes — local, state and federal — are all up at least 6%, and generally a lot more. F U to the BLS — if we have to pay taxes, than they count toward real world spending. The BLS is just plain out of touch on this. Payroll taxes are way up. ObamaCare all by itself is raising the cost of living 3-4% (on average).
Speaking of healthcare costs — they are up 10.2% year over year. Maybe the BLS bureaucrats should stop watching porn over at the SEC, and try looking at real world data.
College costs continue to climb 2-3 times faster than the CPI fantasy numbers
Food costs continue to climb. And if like BK you live in the NYC area, your costs are climbing even faster because Emperor Bloomberg (mayor of Gotham) keeps issuing silly decrees about what everyone can and can’t eat, and what size container you can put your food in.
Housing costs in CPI are a complete fabrication. Here, the BLS isn’t using the wrong formula — they are just plain lying. Rental costs are climbing 6-8%. Implied rental (if you own your house or are underwater of your mtge) was always a made up number — but when houses aren’t even selling? Come on BLS — you have no data (good or bad) to back your rubbish report.
This time Bruce, I am arguing with you
… What I think you meant to say was that CPI is not showing inflation — the Boskin commission designed it not to. But real world inflation is already a problem. Did you see Walmart’s sales numbers for February?
Real world citizens are getting squeezed by inflation even if our public servants are insulated from it
a) i love how the comments thus far have nothing to do with this article.
b) those inflation numbers must be ex-energy and food which as we all know is only transitory inflation, so why even factor it in. Everything is mean reverting so why care about inflated milk prices? If only I could eat an ipad…
“transitory inflation” ,”mean reverting” What rubbish,you must be an “economist”still trying to validate the dismal science.A,The price,no VALUE of gold has everything to do with this,as asked CLEARLY in BK post. B, With all due respect sir,its NOT clear if you agree or do not agree with Gov’t CPI numbers.In my opinion Gov”t numbers on anything are always they”re part of the story,and a half truth is the same as a LIE.
CH,wow,thanks for that on (GLD).It”s just common sense.What private party reports they”re gold holdings?Answer,NONE.i.e.George Soros.So,(GLD) ,goes down with his withdrawals.Physical gold,goes down the rabbit hole,to appear latter and destroy fiat currency.Have i got that right?
Clark – you got it. Read FOFOA’s “Who’s Draining GLD?” post from 2Q11 or “Victor the Cleaner” ‘s post “GLD: The Bullion Banks’ Bullion Bank” for more details.
On miners – I don’t have a strong feeling. I think there are cases to be made that miners could work, and real world examples that they will be confiscated by gov’ts when gold returns to the monetary system (miners would become utilities, making a healthy yield but not track bullion all the way up.)
I just don’t have enough time or legal expertise to know or investigate which is more likely, which makes holding bullion easier for me to understand.
http://goldnews.bullionvault.com/pound-SDR-010720122
Can I just say what a relief to get someone who essentially knows what theyre talking about on the net. You definitely know the way to bring an issue to light and make it necessary. Even more men and women need to read this and know this side of the story. I cant think youre not even more popular for the reason that you absolutely have the gift.
[url=http://cheapchinajordans.SAPUTOS2.COM/]cheap jordans free shipping[/url]
http://cheapchinajordans.ganadoyucatan.com