Thursday, 6 December 2012

Visualizing the actual size of the US debt

With all this talk of debt and the words billions and trillions being thrown around left, right and center it is very easy for the average individual to lose sight of how much money a trillion actually represents. Below find a great graphic representation posted yesterday on

While the video does a great job at illustrating the sheer size of the US debt, here's another example you can use. Since large monetary units are hard to conceptualize, let's translate them into units of distance. Let's assume that: $1 = 1 micron. Therefore:
$1,000 = 1mm
$1,000,000 = 1M
$1,000,000,000 = 1KM
$1,000,000,000,000 = 1,000KM.
So, 1 trillion dollars is equal to 1,000KM. The latest balance of the US debt subject

Friday, 12 October 2012

Guest Post: The Nobel WTF Prize

Here's an interesting commentary from John over at Azizonomics regarding this year's Nobel Peace Prize:

So the European Union won the Nobel Peace prize for “having over six decades contributed to the advancement of peace and reconciliation, democracy and human rights in Europe.”
Is this a joke? Nigel Farage thinks so, exclaiming that ”this goes to show that the Norwegians really do have a sense of humour.”
The Telegraph reports:
The award of the prestigious prize sparked a mixed response in Greece, where living standards have crashed as the economy has contracted 20 per cent in the last three years, despite bailouts totalling 240 billion euros (£200 billion).
With social tensions still high, more than 7,000 police had to be deployed to protect Mrs Merkel on a visit to Athens this week, when she was derided by some as a reincarnation of the Third Reich.
Rena Dourou, an MP for the Left-wing Syriza opposition, said of the award: “At first, many people thought this was some kind of joke. It is a very big surprise.”
The European economic system really isn’t working. Many predicted at the inception of

Thursday, 4 October 2012

Marc Faber and Jim Rogers on the Economy and Politics

After last night's presidential debate, many are still analyzing the main highlights and argue for one or the other of the two candidates having "clearly demonstrated" their knowledge of any one of the subjects covered. Here are Marc Faber and Jim Rogers with their own opinions and a few investment comments. Enjoy...

Wednesday, 3 October 2012

Stimulus Spending and Taxing the Rich

With the US elections around the corner and the first of the presidential debates on tonight, chances are we will be hearing ever more rhetoric from both camps as well as proposed solutions to some of the challenges ahead. Of course, Romney likes to be rather secretive about what he plans or does not plan on doing if and when he will be elected.

With the Great Financial Crisis and the bailouts of the too-big-to-fail banks (and car manufacturers) by the various governments and central banks came the anger of the populace at the perceived injustices. "Why should we socialize the costs while most of the profits have been privatized?" is a question that has come up time and again in recent years. While it may be frustrating to realize that the same laws don't quite seem to apply to everyone, should we really be that surprised? Have we not learned anything from history?

People tend to give preferential treatment to those they have closer relationships with than to those they don't know. I'm not saying that this is fair nor that it is necessarily desirable, but it is reality none-the-less. What's more is that we all do it. Virtually anyone (no matter how virtuous they attempt to be) will give preferential treatment to certain individuals. The difference lies in the fact that when one has less influence, the perceived amount of the benefit is significantly smaller than if one has a direct impact on the creation of say 50,000 jobs. Again, this may not be fair, but that's human nature; we all do it. And pretending that this is not the case is both naive and hypocritical.

So what's the point of my post today? It's not to depress you but to tell you to stop falling for the same old lines and empty promises; instead, look for substance and a quantifiable action plan.

If you live in the US, don't just vote for Obama because he promises you more social

Tuesday, 2 October 2012

US opens FY 2013 with Record Debt

Yesterday was the first day of the 2013 fiscal year for the US government and they opened with a bang: they've tagged on an additional $93 billion in one day to their federal debt for a grand total of $16,159,487,013,300.35, an all-time record high. The current estimated deficit for FY 2012 is around $1.1 trillion, but I wouldn't be surprised if this number gets revised upwards, as is often the case with budgetary deficits once one includes all expenditures.

Out of this staggering sum, only $16.12 trillion is subject to the debt limit of $16.39 trillion. So they are around $270 billion shy of the current debt limit which should last them until just after the election, January 2013 perhaps if they really try to stretch it and borrow from the various social programs for the short-term as they have done in the past repeatedly.

This brings me to ask: "What were you doing on November 16th 2005?" Why do I want to know? Well, it's because on that day, the US's debt was only $8.06 trillion, or less than half of what it is today. When it takes less than 7 years to double your debt while you continuously have over $1 trillion in deficits (while interest rates are at record lows), you know that something must be done soon before debt entirely gets out of control. Alas, a quick look at the graph below reveals a constant acceleration in debt accumulation in recent years instead of a decline:

Another worrying metric is the number of days that it has recently taken for the US

Monday, 1 October 2012

Canadian Housing Bubble or Sheer Fear-Mongering?

Recently, we've been hearing more and more about a Canadian Housing Bubble from various media outlets; all the while experts from the Canadian Real Estate Association re-assure us that all is well. So which is it? Those familiar with my views will know that I've been warning of a housing correction since the site was launched, but for the sake of being constructive, I'll do my best to set my views aside and look at the data at hand.

Simply look at the most recent RBC Housing Affordability Report for some rather shocking numbers; then again, this report has been flashing warning signs for many quarters now. For those not familiar, RBC is Canada's largest mortgage lender, so they should know what they are talking about.

There are always a myriad of graphs and tables in this 11-page document, but the most recent key findings are always found on page 7. The very first graph that is presented to us is the summary graph of housing affordability (divided into two-storey homes, bungalows and condos) in the entire country:
At first glance, the current levels of ownership costs don't appear to be all that outrageous when compared to the historical averages. However, one key factor that is

Tuesday, 25 September 2012

The Futility of Long-term Government Job Creation

I know many people who agree with the statement in the title and I probably know just as many who would disagree with it. Opinions are great, and by all means, anyone is entitled to their own opinion; however, facts are better. No matter whether you agree or disagree with the title of this post, let's take a look at some facts and numbers; we'll discuss any moral dilemmas in a different post.

Let's consider the following simple example: Jake and Julie both just got jobs as Auditors; Jake got hired by the Federal government as an AU-2 (step 1) Auditor and makes $62,442.00 per year while Julie recently got hired by one of the big four audit firms. For simplicity's sake, let's also assume that she makes the exact same amount as Jake and let's assume that they work the same hours, live in the same building in Toronto, and have the same tax deductibles at the end of the year. The point of this example is to show you the impact on government spending in the long-run; we're less interested in the differences they may have in their health coverage or pension plans at this point.

Living in Ontario, their respective income results in an average tax rate of 20.74% which corresponds to roughly $12,953.00 in income taxes annually. Of course, both government and private sector employees have to pay the same amount of taxes on identical incomes. And yes, with an annual income of $62,442.00, Jake and Julie could contribute up to $11,240.00 to their RRSPs in order to lower their tax burdens but that's a different topic for a different post; right now let's just focus on where the tax money ends up.

Wednesday, 22 August 2012

A history of exchange-rate regimes

GoldMoney released today an excellent, concise review of the major exchange-rate regimes that have been in place over the past 191 years. Their entire review is summarized in the infographic below which they've created.

Note: Depending on your browser and operating system, you may not be able to zoom in sufficiently using the pictures provided here, if that does occur, simply go to the original GoldMoney post.

Monday, 20 August 2012

Guest Post: Apple's Valuation: Is it reasonable?

It's been a few months since I last featured any of John Aziz's posts but I found today's particularly interesting as it asks a pertinent question: Is Apple really worth more than the sum of Microsoft, Dell, Google, Facebook and HP?

Because that’s what the market cap suggests:

Saturday, 18 August 2012

Involuntary Termination and Severance Pay Practices

Monday, Mercer released the results of their 2012 Worldwide Benefit & Employment Guidelines report. Ever wondered how the various safety nets pertaining to involuntary termination that are in place in your country measure up to common practices worldwide? While you have to be a paid subscriber to get access to the full report, the following graphs summarize many of their key findings nicely:

…And best of luck in your future endeavors
Infographic by Mercer Insights