The Silicon Graybeard

In the World of the High Tech Redneck, the Graybeard is the old guy who earned his gray by making all the mistakes, and tries to keep the young 'uns from repeating them. Silicon Graybeard is my term for an old hardware engineer; a circuit designer. The focus of this blog is on doing things, from radio to home machine shops and making all kinds of things, along with comments from a retired radio engineer, that run from tech, science or space news to economics; from firearms to world events.

Monday, January 24, 2011

In A Race to the Bottom, Do You Win by Being First or Last?

I stumbled across this link (End of the Euro?) on Survivalblog, explaining that the Irish are printing their own Euros in whatever quantity they want. Oh, great! Does this hasten the collapse of the Euro?

In this great race to the bottom, the race for all fiat currencies to collapse, do you win by collapsing first or last? If you collapse first, the remaining countries give you supplies and their (failing) paper money. If you collapse last, there might not be anyone to help you. But if you collapse last, you can buy all of those collapsed countries at real "fire sale" prices. Because they'll be burned to the ground.

Over at the Economic Collapse Blog, there's an interesting post on this, asking which of the currencies of the world will collapse first? No conclusions, which only means it's a tight race.

Japan has the highest debt to GDP rates in the world at 200%. Why haven't they defaulted already? The Japanese are big savers and have bought plenty of sovereign debt from the government. As it is, the debt per citizen in Japan is an astounding 7.5 million Yen (about $90,000).
The EU is a mashup of different health states. Lumping Greece and Germany into one economic zone is like putting healthy people in an open hospital ward with the confluent smallpox cases. "Already some prominent politicians in Europe are calling for the European "bailout fund" to be doubled in size to about 2 trillion dollars. Other analysts believe that it is going to take at least 4 or 5 trillion dollars to properly bail out all of the European nations that need it." They're saying countries could start collapsing in about a month.
The US has a debt to GDP ratio just under 100%, but has been relying on shorter term debt than some EU countries. That means the obligations have to be paid more often and regularly. When you just use the "on budget" spending and deficit, the US taxpayers "only" have a debt per taxpayer of around $127,000 (compare that to Japan). However, when you include the so-called "off-budget" liabilities of social security, Medicare, and other entitlements, that liability swells to over $1 million per taxpayer. (Numbers from the DebtClock, so they're at the time of this writing).

Last week, the brilliant heads working in Davos, said if the world could just borrow another $100 Trillion dollars, everything would be peachy! I'm sure we can ask the Borg, or those funky blue people from Star Trek. I'm sure we're good for it.

Analysts are predicting oil at $200/barrel by the end of the year, and wicked inflation in food prices. I should point out that in case you haven't noticed it, silver and gold are currently "on sale"; that is, about 10 to 20% off their end-of-2010 prices. Time is running out.