Sunday, November 23, 2008

Credit Bail Out - How bad is it

I'm no economist but I thought I should look into how big a problem is the credit crisis. I have done a few basic sums. 

(Total value of all US taxes)  
This represents 18.8% of GDP since 1930 the highest tax rate has been 20.9 in 2000

(Bail out) 850  
(Loans Liability) 2000
(Current US Debt) 10600
(War) 144
TOTAL 13,594 (Thats $48k per person)

US GDP 2007      13,810

So if the US government spends nothing on running the country and everything on paying off the debt they will take about 5 1/2 years to pay off this debt.

This puts the the US at about 1:1 debt to GDP which brings them from the 27th most in debt in 2007 to the 6th in the world now.

Below is a graph of debt to GDP before all this bail out stuff (taken from zfacts )

I've got a few movies here to looking at debt

Below is a movie by the that disputes the official government figures  
(anyone got opinion on this lot - a bit of research seemed to support thier claim that the figures are being modified optimistically.)

This sounds very scary to me.

Could anyone who knows a bit about this give me some explanation behind numbers that will give me some feeling that the US is OK?

Could we have currency devaluation and rampant  inflation? An article here (Argentina Vs US) explains the similarities.

US debt =  All the current debt owed by the US government not to be confused with US deficit which is the yearly shortfall between taxed raised and money spent by the US government each year.

Total Tax raised in the US 

US War expenditure

Total US Government Debt

Friday, November 7, 2008

Personal Share Portfolio

I am still waiting for the superanuation to fully be rolled over to the DIY superfund. In the mean time I have purchased shares in the following companies in my personal portfolio.

  • ASX:Toll Holdings
    Calculation Spreadsheet
  • ASX:Cabcharge
    Calculation Spreadsheet)
  • ASX: Commonwealth Bank of Australia
    I chose these because I thought I should have a bank. (I haven't a clue how to analyse a bank - I'll be honest I just put finger in the air and guessed on this one.)
  • NYSE:CBG CB Richard Ellis
    (I did some research into this one and it looked like a good bet (low debt good return on captial - good earnings and I though I should get into the property sector).

I bought these shares in late September. I bought Toll and cabcharge because they both seemed like good companies in strong market positions have shown consistently high return on capital and the prices were good.

Times are turbulent and the CBE Richard Ellis shares have taken a pounding but the rest are, for the time being, at about what I paid for them. That said my strategy is buy and hold so I am not too concerned what happens to the share price in the next (rocky 12 months).