I don’t follow. Are you suggesting that Congress can invest (China’s) money profitably or that weatherstripping will help my son with long division?

Robert Barro has said that the Keynesian multiplier isn’t just less than one, it’s probably less than zero. LOL! (BTW, I’m not sure any economist would accept the claims about education and mass-transit without some serious qualifications as to the circumstances)

It is too late to worry about the cost of servicing the debt. That should have been debated years ago.
If we do not invest in the future, at some point the future will arrive on our doorstep and demand payment on it’s own terms. This isn’t long term talk, this is now.

The day of reckoning may be postponed longer than the pessimists believe.

It says any Tag, excluding Formula 1.

I’ve spent all my time looking at that debt lately and I can’t draw any other conclusion than the one you have. There was a nice link posted today by Mannwich on another thread that showed further consumer credit contraction today. People are paying down debt but there is a major psychological shift happening right now due the loss of wealth over the last year. It’s all deflationary to me. I got a chart of consumer credit the other day going back to 1950, it just dipped down basically for the first time during that entire period, though there was some flatness in the 70′s.

I look at the 21T number you post there and think about how deflationary it will be to suck that out of the system, profits will have to also then contract and it doesn’t look good from there. We haven’t even really contracted there yet, it’s on very slightly pulled back. I made a comment as well the other day that the vast majority of people/economists/money managers are banking on inflation/reflation so there could be a powerful effect there when deflation really takes hold and slowly people change attitude. Grantham did say that about 7 years of very little growth to sideways. He’s not the kind of guy to just throw out stuff like that like the average CNBC pundit.

I don’t think this rally is over yet though.

ON the other note, is that any Tag? I have a cheap tag Formula 1, maybe I could upgrade.

The debt/GDP ratio is horrible on the face of it, just in absolute terms. Even worse is the rate at which debt has increased over the last 10 years or so vs. the rate at which GDP has increased. If I understand this right, they more or less have to keep together or there are hiccups along the way. This would be pretty big hiccup we’re having right now.

I imagine a super-productive, fast-growing economy could sustain, temporarily, the ratio we have now (country by country figures anyone?), but we’re not that economy right now. I wonder if our ratio ought not be even lower than your 21/14.2 — absent real changes in our capacity for growth.

Rally or no rally, I’m vey pessimistic about growth going forward. I think Grantham came out with something recently saying the economy and stocks could go sideways for 7 years or more. I wonder if he isn’t about right.

you are correct- debt is the whole issue