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Author Topic: American debt hits 13T!  (Read 11086 times)
TheWrathOfGrapes
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« Reply #15 on: 31 May 2010, 23:18:39 PM »

Wrath,

"...Now, did I say in my original post that debt does not matter? ..."

Wrath, not only are you stating that debt does not matter, but you are taking the very extreme position that it is actually beneficial:

"...There is always an optimum debt level to maximise the financial leverage and profits..."

"...So, my question to you naturally was - do all people pay cash for property purchases?.."

V, now I am really disappointed, nor, disgusted. You don't even have the honesty and decency to debate honorably.  Look at my ORIGINAL post - is there anything in it to suggest that debt does not matter?  Let me repeat in case you don't get it - my FIRST post.  So your response to my first post about DEBT MATTERS is totally off.

My subsequent posts was to rub you in - yes, debt is actually beneficial if you know how to use it to optimize your profit. And only in your own self-induced stupor can you think that property purchases should be made in cash, or not at all.

Let me agree with you (not in your intended way - in case you don't get it).  Debt matters - if you want to optimize your returns.

Anyway, no point debating with you if you cannot follow the sequence of argument and do not have the integrity to admit you made howlers:

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« Reply #15 on: 31 May 2010, 23:18:39 PM »



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Vulcanl
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« Reply #16 on: 01 June 2010, 8:31:41 AM »

Wrath,

"...Look at my ORIGINAL post - is there anything in it to suggest that debt does not matter?..."

You asked for it so here it is:

"...I think it is more relevant and pertinent to look at the External Debt, instead of Public Debt. The figures below are from the CIA World Factbook, against GDP(ppp)...The word for Japan is, "still okay", as most of the debt are public debt and funded internally. The external debt is only about half its GDP.

BTW, the Titanic actually sank rather slowly, with plenty of time to launch lifeboats to save the passengers..."

That is your original post...you betray a most lackadaisical attitude towards debt.  In your own words, it is 'OK,'  Japan's debt is 'only about half' its GDP (yikes!!!  Roll Eyes), and you end the post with some kind of allusion that there is somehow plenty of time for indebted nations to get out of their self-inflicted quagmires!  I could not disagree more with any of this.  You are fully versed in my opinions on this topic.  There's no way that careless statements like this can be to allowed to pass unchallenged

"... And only in your own self-induced stupor can you think that property purchases should be made in cash, or not at all..."

I have lived here in Singapore long enough to understand where you are coming from with this, and at this stage I will grant that if there were ONE reason only to get into debt it would be to purchase your residence.  This being said, taking on debt up to 10X one's income to service a mortgage is asking for trouble.  It is simply irresponsible financial planning (or complete lack thereof).  You may think this crazy, but indeed I stand by my statements: If your income level is such that you cannot easily afford your mortgage payment (up to 3X salary is more like it), then INDEED you should refrain from that particular purchase, OR save up sufficient cash to get you within more reasonable debt load levels.

"...Debt matters - if you want to optimize your returns..."

This completely ignores the possibility that said investment declines in value, in which case you are completely up shit's creek with a deflated asset but fixed debt level.  The average investor has no business whatsoever borrowing to invest.  It is one thing to lose your (cash) principal, but to do that AND have debt on top of that is the surest way to enslave yourself.

This type of 'easy money' mentality if what got us (Western developed countries) into deep trouble.  I don't want to see these mistakes repeated here in Asia! 
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TheWrathOfGrapes
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« Reply #17 on: 01 June 2010, 8:51:28 AM »

There you go again, V, completely off tangent and out of context. My whole original post was to provide more data to OP.  The last 2 sentences on Japan and Titanic were tagged on to answer Scarbowl's query - period.  Stop distorting my statements.

You think ALL debt is bad. I don't think ALL debt is bad. In fact, some debt are good (and for crying out loud - don't take all these subsequent statements and plonk it onto the original one).

Up to now, you have not answer my question - should all property purchases be done on a cash basis?  Answer this and stop stalling.

Have a nice day....
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Vulcanl
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« Reply #18 on: 01 June 2010, 9:09:49 AM »

Wrath,

I am not taking anything out of context...indeed I pasted your original post as you requested.

"...You think ALL debt is bad..."

Yes, I do

"...I don't think ALL debt is bad..."

Yes, I know.

"...In fact, some debt are good..."

I disagree.  I would go as far to say that debt may be a necessary evil in certain (limited) circumstances

"...should all property purchases be done on a cash basis?  Answer this and stop stalling..."

You know darn well I am not stalling on anything.  I have nothing to fear (including my being proven wrong about something).  It should be obvious to you by now what my answer to this question is, but you are being coy (I know you are smarter than this - I shouldn't have to spell anything out for you) and I will play along.

In a perfect World ALL purchases (including property) should be done on a cash basis.  Since we don't live in one, the next best thing one can do is to MINIMIZE debt loads.  This is possible by maintaining up to date information as to one's financial situation and evaluating what a reasonable debt level is.  After that point - pay down that sucker as fast as you can!

Again - I will grant that it is not always possible, but the goal on a personal and public level should be ZERO debt.  Always strive for this, and you will not go far off course.
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TheWrathOfGrapes
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« Reply #19 on: 01 June 2010, 9:12:50 AM »

You asked for it so here it is:

"...I think it is more relevant and pertinent to look at the External Debt, instead of Public Debt. The figures below are from the CIA World Factbook, against GDP(ppp)...The word for Japan is, "still okay", as most of the debt are public debt and funded internally. The external debt is only about half its GDP.

V, since you have a pathological inability to understand English nuances, let me, just this one time, run you through the argument chronologically so that you get it.

Pinzon came out with the screamer - US's debt more than 90% - sinking like Titanic.

Scarbowl then rebutted with Japan's 170% debt and still staying afloat - what do you call that?

I added the data and suggested that the real deal is to look at external (you owe other country money) debt rather that public debt (SG government does not need to print money, the public debt is largely to develop the local debt capital market.)  You would think the SG government is dumb and immoral (according to your flawed understanding of finance and warped sense of morality) because they are in debt, yet they have foreign reserves of US$188 billion sitting pretty.

Why is US sinking like a Titanic with 90% debt and yet Japan has been floating nicely for 21 years since the Tokyo bubble burst in 1989, and with a debt of 170% to boot.  But if you look at Japan's external debt, it is only 51% of GDP - that "its okay" remark is directed at Scarbowl query "what do you call Japan" then, given its much higher public debt.

Quote
BTW, the Titanic actually sank rather slowly, with plenty of time to launch lifeboats to save the passengers..."

The comment on Titanic is facetious, but then again if I have to explain to you, you will call me callous as thousands died in the Titanic. But the fact - and it is a fact - the Titanic took a long time to sink, with time for the orchestra to play many songs and to launch the lifeboats so that many passengers were save.  Perhaps Pinzon should have used the phrase "sinking like the Cheonan" (V - for your benefit - the Cheonan is the South Korean navy ship allegedly sunk by a North Korean torpedo.).
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TheWrathOfGrapes
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« Reply #20 on: 01 June 2010, 9:24:19 AM »

Again - I will grant that it is not always possible, but the goal on a personal and public level should be ZERO debt.  Always strive for this, and you will not go far off course.

V, excuse me for disturbing your dreams every now and then. Your personal goal is just that - yours alone and I think you are in a very, very tiny minority when it comes to purchasing property on a cash basis.  Take a stab, what percentage of house-owners plonk down cash for property purchase without any debt? 0.00001%?  0.0001? 0.001? 0.1? Take your pick.

Name me one country with ZERO debt - public or external, other than oil-rich Brunei (and possibly other oil producing countries).  Even Kuwait and Saudi Arabia have external debt.

V, your halo is hurting my eyes...
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Vulcanl
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« Reply #21 on: 01 June 2010, 12:27:46 PM »

Wrath,

As I mentioned earlier, I am disappointed to see that you are not very open-minded at all.  You keep going on about how 'everyone takes on debt' and so this is OK.  It tells me that you think 10X leverage in your personal finances is a normal thing - well, it's not bucko.

What is hurting your eyes is the clean bright light of truth delivered to you by me.  Don't shoot the messenger!

I have enjoyed this....
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pinzon
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« Reply #22 on: 01 June 2010, 14:56:07 PM »



The comment on Titanic is facetious, but then again if I have to explain to you, you will call me callous as thousands died in the Titanic. But the fact - and it is a fact - the Titanic took a long time to sink, with time for the orchestra to play many songs and to launch the lifeboats so that many passengers were save.  Perhaps Pinzon should have used the phrase "sinking like the Cheonan" (V - for your benefit - the Cheonan is the South Korean navy ship allegedly sunk by a North Korean torpedo.).


Eh, no. I already explained my analogy. The Titanic sank on its first voyage - fast. The US Empire began sinking only a decade after it became the undisputed power - fast. Also, like the Titanic it will probably take some time from the first leak till it finally goes under.
« Last Edit: 01 June 2010, 14:59:49 PM by pinzon » Logged
Kubes.SG
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« Reply #23 on: 01 June 2010, 15:14:22 PM »

There is good debt and bad dept.  You seem to understand this difference.

V, debt for for assets that appreciate in value, and which can be funded comfortably by available cash flows are good debt.  Good debt should be included in any reasonable person's investment strategy.    Bad debt is when people/entities borrow funds to purchase assets that depreciate in value, and do not generate income, or the debt is at a level the cost cannot be covered by cash flow.

You are blindly assuming that all debt is bad dept.  It is not.  My MNC, one of the richest on the planet, has borrowed extensively over the last 24 months to fund plant expansions and other investments, while at the same time paying massive dividends to shareholders and doing significant stock buy backs.  This is because right now, the cost of borrowing and tax concessions, much less than these other investments or paying through cash flow.

But it simply in terms you might understand: 

1) Borrowing $25,000 for a holiday for the family in the US, flying business and staying in 5-stars is a bad debt.
2) Borrowing $500,000 to buy a non-SG investment property in a market that is not inflated and has growth potential, that you plan to hold for 10+ years is a good debt. 


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The object in life is not to be on the side of the Majority, but to escape finding oneself in the ranks of the Insane.
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« Reply #24 on: 01 June 2010, 15:15:49 PM »

pinzon,

Time and time again you have proven to have a large chip on your shoulder for all things American and British, to the point of being racist.

Clearly your analogy was bad if you need to explain yourself.

America is going through a tough time now, like most countries, but its not going to fall like Rome.

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TheWrathOfGrapes
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« Reply #25 on: 01 June 2010, 15:34:54 PM »

But it simply in terms you might understand: 

1) Borrowing $25,000 for a holiday for the family in the US, flying business and staying in 5-stars is a bad debt.
2) Borrowing $500,000 to buy a non-SG investment property in a market that is not inflated and has growth potential, that you plan to hold for 10+ years is a good debt. 

Kubes - one of the few times we see eye to eye - and the same comment goes - I like your platform shoes.

Since V seems to have difficulty understanding English, simple or otherwise, might as well obfuscate him further with financialese.  Here goes:

As long as the ROI is higher than the cost of borrowing, it is okay to borrow. And for any listed company, it is a SIN to be cash rich. It just mean the company does not know what to do with the cash pile and should return them to shareholders as dividends.

Now, V, repeat after me:
Four legs good; two legs bad.
Cash is good; debt is bad.
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pinzon
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« Reply #26 on: 01 June 2010, 16:23:16 PM »

pinzon,



America is going through a tough time now, like most countries, but its not going to fall like Rome.



It sure will. It's financially, demographically, and culturally ruined.

American debt is bad debt. It's not being invested in any infrastructure that will yield return. Financing the debt will become increasingly burdensome as your economy dwindles. Good luck with your lifeboat, friend.
« Last Edit: 01 June 2010, 16:30:28 PM by pinzon » Logged
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« Reply #27 on: 01 June 2010, 16:27:55 PM »

pinzon,

I'm not American. How is it demographically ruined though?

For all the American bashing which has been going on for years, they have done more good than bad. America is too interconnected to be allowed to fail.
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T2K
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« Reply #28 on: 02 June 2010, 8:22:07 AM »

Predictions about the collapse of the US are obviously premature, though its relative decline is obvious given the rise from the bottom of other large countries.

However, when I ask the obvious question of: where would I want to live, the US, EU, Japan, China or India?  The first three are in, the last two are out.  Quality of life, daily standard or living - both matter a lot.  When the situation reverses, then we'll know the world has really changed.
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TheWrathOfGrapes
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« Reply #29 on: 02 June 2010, 8:46:03 AM »

The comment on Titanic is facetious, but then again if I have to explain to you, you will call me callous as thousands died in the Titanic. But the fact - and it is a fact - the Titanic took a long time to sink, with time for the orchestra to play many songs and to launch the lifeboats so that many passengers were save.  Perhaps Pinzon should have used the phrase "sinking like the Cheonan" (V - for your benefit - the Cheonan is the South Korean navy ship allegedly sunk by a North Korean torpedo.).


Eh, no. I already explained my analogy. The Titanic sank on its first voyage - fast. The US Empire began sinking only a decade after it became the undisputed power - fast. Also, like the Titanic it will probably take some time from the first leak till it finally goes under.

Er, yes. Pinzon, I like your definition of "sinking fast". And in the next sentence, you go "it will probably take some time from the first leak till it finally goes under."  Just like the snail telling the tortoise, "I am going as fast as I can'.

If you want to know what "fast sinking" really means, try hitching a ride on one of the South Korean navy ships when they go hunting for the North Korean submarines.

Not to worry, if Ireland, the UK, Portugal, Spain, Greece, Italy and Australia are still afloat, there is no worry about the US sinking.

In fact, I will make a bold prediction and declaration: -- as long as the greenback remains the world currency, the US will never sink.
« Last Edit: 02 June 2010, 8:57:15 AM by TheWrathOfGrapes » Logged
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