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(Reuters)   Because of cool accounting tricks, global debt might be understated by a measly $13 trillion. Well, that's nice   ( reuters.com) divider line
    More: Interesting, Finance, foreign currency bonds, FX swaps, Money supply, Currency, financial crisis, FX swap, Federal Reserve System  
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756 clicks; posted to Business » on 20 Sep 2017 at 12:50 PM (17 weeks ago)   |   Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2017-09-20 12:27:31 PM  
Oblig:

img.fark.netView Full Size
 
2017-09-20 12:55:06 PM  
And to whom does Earth owe this debt?
The Ferengi?
 
2017-09-20 01:05:13 PM  
Look up the derivative market and try to explain what an asset is.  Or even who owns what property.
/remember the fiascos trying to show who forclosed on somebody?
//its like that for most "assets", only worse
///one of the many ways capitalism is farked
 
2017-09-20 01:05:59 PM  
$20 of that is what I owe my buddy for my beer last night.
 
2017-09-20 01:14:14 PM  

Krieghund: $20 of that is what I owe my buddy for my beer last night.


Some dude owes me $123.99 for a computer he purchased.  So we're up to $143.99.  Not sure what the rest is for.
 
2017-09-20 01:27:12 PM  

give me doughnuts: And to whom does Earth owe this debt?
The Ferengi?


To the globalists.
 
2017-09-20 01:28:40 PM  
This confuses me.  If traditional accounting excludes these assets from "debt" then ... for all intents and purposes isn't it "not debt".  Like by definition?
 
2017-09-20 01:33:42 PM  
And it's bad HOW? Let's say my wife promised my kid a toy for $100 when it's his birthday, if he behaves. He promised to behave for a value of $100 (the cost of his promise). She asked me for money, and I've promised to give her $100 for a toy when my client will pay me after the end of month.

So now global debt of my family is $400 - $100 my client ows me, $100 I owe my wife, $100 my wife owes to our child as a promise of toy, $100 in his promised workhours to "behave".

Does that mean that my family have lost $400 somehow? Is our family having a debt problem?
 
2017-09-20 01:34:59 PM  
In other words: people, you commenting on those articles, is the prime example of Dunning-Kruger effect. Stop it.
 
2017-09-20 02:08:53 PM  
im drowning in debt. im broke as fark
 
2017-09-20 02:15:14 PM  

give me doughnuts: And to whom does Earth owe this debt?
The Ferengi?


This.
Made up numbers can't be wrong, cause you know, they're made up.
 
KIA
2017-09-20 02:24:04 PM  

Grahor: And it's bad HOW? Let's say my wife promised my kid a toy for $100 when it's his birthday, if he behaves. He promised to behave for a value of $100 (the cost of his promise). She asked me for money, and I've promised to give her $100 for a toy when my client will pay me after the end of month.

So now global debt of my family is $400 - $100 my client ows me, $100 I owe my wife, $100 my wife owes to our child as a promise of toy, $100 in his promised workhours to "behave".

Does that mean that my family have lost $400 somehow? Is our family having a debt problem?


Nice try. It's more like you sold a promise that you wouldn't default onm a loan to someone for $100 then went out and blew the cash on a steak dinner and a dime bag for Friday night. The person that bought the promise talked it up a bit and sold it for $200, spent part of that buying more promises from other people, then blew the other part clubbing. The next buyer of the promise was convinced to pay $400 so the seller got to blow part of those proceeds on a hooker and some blow, shared both with a friend, got a line on some more promises and bought those cheap.

Wash thoroughly, rinse and repeat until the total derivative debt is over a quadrillion dollars then tell me:

What happens when these idiots start breaking promises?
 
2017-09-20 02:27:48 PM  

ds615: give me doughnuts: And to whom does Earth owe this debt?
The Ferengi?

This.
Made up numbers can't be wrong, cause you know, they're made up.


It's not a debt if you believe it, Jerry.
 
2017-09-20 03:51:20 PM  
At that level, isn't it all accounting tricks?
 
2017-09-20 05:02:55 PM  

KIA: Nice try. It's more like


No it's farking not "more like". The was majority of that "debt" is delayed payments. Derivative markets consists of futures, forwards and options, which are exactly like I've described, and also of instruments called to mitigate the risk of the debts, like swaps of hedges. It's only when you start falsify the actual statistics used to calculate those risks and then put huge margins on your instruments because you falsify the actual risk of those margins - only then it becomes a danger.

And your question, "What happens when these idiots start breaking promises?", unless you falsify the statistics, they WON'T. That's the whole point.
 
2017-09-20 05:07:30 PM  

foo monkey: At that level, isn't it all accounting tricks?


Let me put it this way. Imagine you are standing in front of Hadron Collider and say "At that level, isn't it all physics tricks?" No. In both cases, it's a precise science existing to create a very real, although not material result (knowledge in case of collider, investment financial infrastructure in case of derivatives).

In both cases, if you falsify the numbers, you get a big badda boom. Precisely because it's not "tricks", it's reality, and reality doesn't look kindly at those playing with it.
 
2017-09-20 06:20:08 PM  

downstairs: Krieghund: $20 of that is what I owe my buddy for my beer last night.

Some dude owes me $123.99 for a computer he purchased.  So we're up to $143.99.  Not sure what the rest is for.


I'm owed around 20k for unpaid rent. But I'm the asshole for cutting ties with fanily.
 
2017-09-20 08:25:04 PM  

downstairs: Krieghund: $20 of that is what I owe my buddy for my beer last night.

Some dude owes me $123.99 for a computer he purchased.  So we're up to $143.99.  Not sure what the rest is for.


Blackjack and hookers.

Probably some blow as well.
 
2017-09-20 09:35:27 PM  

KIA: Grahor: And it's bad HOW? Let's say my wife promised my kid a toy for $100 when it's his birthday, if he behaves. He promised to behave for a value of $100 (the cost of his promise). She asked me for money, and I've promised to give her $100 for a toy when my client will pay me after the end of month.

So now global debt of my family is $400 - $100 my client ows me, $100 I owe my wife, $100 my wife owes to our child as a promise of toy, $100 in his promised workhours to "behave".

Does that mean that my family have lost $400 somehow? Is our family having a debt problem?

Nice try. It's more like you sold a promise that you wouldn't default onm a loan to someone for $100 then went out and blew the cash on a steak dinner and a dime bag for Friday night. The person that bought the promise talked it up a bit and sold it for $200, spent part of that buying more promises from other people, then blew the other part clubbing. The next buyer of the promise was convinced to pay $400 so the seller got to blow part of those proceeds on a hooker and some blow, shared both with a friend, got a line on some more promises and bought those cheap.

Wash thoroughly, rinse and repeat until the total derivative debt is over a quadrillion dollars then tell me:

What happens when these idiots start breaking promises?


Global debt is >4 quadrillion dollars.  $14 trillion or so is around 0.3% of the total.  The debt is composed of short term and long term, government and private obligations.  US debt is constitutionally mandated, meaning treasuries are the most secure global debt.  A lot is backed by assets like real estate, patents, or David Bowies music (he issued his music rights future royalties as CDOs).  So there are "real" things too.  Venezuelan debt is garbage, but they could issue bonds backed in volumes of future oil deliveries if they wanted (did they already do this)?  So one does not necessarily need to emotionally trust that a debt will be paid as long as the courts back the contracts.
 
2017-09-20 10:16:59 PM  
It's pretend debt. The US government figured this out years ago, and has since allowed it to balloon while throwing some money at interest payments every year to keep the electorate off the scent. Nothing to see here, folks.

/It would be fun to zero out every bit of debt in the world tomorrow morning.
//I bet in five years the people who have been making a killing on loans (of whatever sort) would be in the very same place they are now, and those who owe the moon would again.
 
2017-09-21 07:41:03 AM  

feanorn: It's pretend debt. The US government figured this out years ago, and has since allowed it to balloon while throwing some money at interest payments every year to keep the electorate off the scent. Nothing to see here, folks.

/It would be fun to zero out every bit of debt in the world tomorrow morning.
//I bet in five years the people who have been making a killing on loans (of whatever sort) would be in the very same place they are now, and those who owe the moon would again.


So what?  Debt allows us to expand the economy.  Home (plus other eligible property) mortgage interest is also tax deductible, and with absurdly low interest rates debt is cheaper than renting right now in major metro areas.  Same thing for government.   The fed issues 10 year treasuries at 2%, barely above inflation meaning at the zero lower boundary.  We should be rapidly expanding infrastructure and subsidizing higher education to grow the economy faster than the debt service payments.
This is the real crisis, that a repeal of the ACA, tax cuts, and a significantly smaller federal budget will shrink the economy and make debt service a much larger portion of declining revenue.  Remember, US federal debt repayment is constitutionally mandated which means congress can void other types of obligations like employment contracts (retirement plans), social security, and Medicare.
The GOP believe the opposite of what I wrote is true, that drastic cuts to federal spending and lower taxes will grow GDP by 4% annually and dramatically increase tax revenue.   Kansas is a great example of these ideas in action, where governor Sam Brownbeck drank the kool aid and went all in on this idea.  I leave it up to farkers to see for themselves what happened.
/But Hillary sent email.
//federal debt is not household debt
 
2017-09-21 01:07:43 PM  

Grahor: In other words: people, you commenting on those articles, is the prime example of Dunning-Kruger effect. Stop it.


If you only knew how incorrect you are.
 
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