01/11/11 Paris, France – We met a friend for a drink last night. He’s an American who has lived in Paris for twenty years.
“I’m glad you’re back here,” he began. “There’s no better place for an American to live than here in Paris. It’s much better here than in the US. Almost everywhere in the US you have to get in your car and drive somewhere – to a mall – just to get a cup of coffee. That’s no way to live.
“It’s much better here. Especially if you’re an American. Because you can pretty much ignore all the nonsense that goes on here. If you’re French, Paris isn’t so much fun. French salaries, after all the social charges, are too low to enjoy it. Besides, the French have to know all the social codes and stick to them. But we can do what we want. They just dismiss us as crazy foreigners. And if you’re French, you’ll get all worked up about what goes on in the government or in your business. Running a business here is a nightmare. But I don’t even read the local news. I’ve never paid any attention to what the government does. Why should I? I can’t even vote here.
“And if you’re French you have to worry about the country going broke. There is no way they can continue to pay all those people who are retired. They seem to live forever…and they’re very expensive. France is going broke. But it doesn’t bother me…
“Trouble is, America is going broke too.”
In terms of debt and deficits the country that most resembles France is the United States of America. Both are going broke. But so are many other “European” nations…and eventually, probably all of them.
There are the nations of Europe. Then, there are the nations of Europeans – Argentina, Chile, Australia, New Zealand, Canada, and the US.
The point is, most of them are going broke. Their model is exhausted. This was the social welfare model derived from Bismarck – take from workers; pay to non-workers. It was okay as long as the pool of workers was growing faster than the pool of non-workers. But that’s no longer the case.
Curiously, the nation furthest along on the road to bankruptcy is a non-European nation that picked up the model early, Japan. Already, there are more people retiring in Japan than there are people entering the workforce. Overall, the population is falling, while the number of people over 65 increases at 3% per year. In 1990, there were more than 4 people working for every retiree. Now there are barely two.
Practically all the European nations, and all the nations lived in predominantly by people from Europe…as well as Japan…are headed down this dead-end road.
Bill Bonner
for The Daily Reckoning
Bill Bonner
Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America's most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind The Daily Reckoning. Dice Have No Memory: Big Bets & Bad Economics from Paris to the Pampas, the newest book from Bill Bonner, is the definitive compendium of Bill’s daily reckonings from more than a decade: 1999-2010.
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I’m from Alberta Canada. We are rich in oil here.
Let me know when the U.S. is totally broke, I am coming down to buy a State or two. I’ve got dibs on Florida.
Only two people working in Japan to support each retiree you say?
Country must be very rich and productive to make that happen.
Don’t hold your breath waiting for it to go broke.
Cheers Bill,
Something to compliment your article
http://www.bbc.co.uk/news/world-asia-pacific-12157786
Think creatively.
China officially thinks it has too many people (one child policy is the proof). China has tons of U.S. dollars.
Let China send people to live in America with a $100,000 or more payment to the Treasury per person.
If my math is correct a mere 13 million people paying 1 million each is 13 trillion and wipes out the national debt. Or 130 million paying a mere $100,000 each and of course require them to have an extra 100,000 per person to live on.
It will be a HUGE boon to the United States Economy. Housing crisis instantly SOLVED.
Seriously, the Chinese are generally peacefukl folks. They are smart and well ediucated and you can require them to speak English.
So that is one creative solution. Another is to sell California to Alberta.
Quebec has dibs on Lousiana but you must change the lanquage back to French only.
Okay, eh!
Friend –
So….. Let me see if I understand….. a crushing debt-addled welfare state is your indicator of relative affluence? Let me speculate….. your main mode of conveyance is an abnormally short bus?
One might not want to hold their breath waiting (an extremely short investment horizon), but staking an investment predicated on the Japanese averting a debt implosion is sheer lunacy….. call it monetary malpractice. But I suppose….. par for the course in the “Investor’s Friend” repertoire of incredibly bad advice.
Micah,
Do please send a memo to the markets where Janpanese long term debt trades for about 1.2% yields. That market has apparently not been informed of the impending debt implosion.
P.S. What State are you in and how much does your broke State Government want for it? How soon can all ya all clear out?
Everyone assumes he can get through the door before the other suckers….. most bubble-buyers at least realize that there will be bagholders….. I don’t know what to make of someone who thinks it lasts forever….. but PT Barnum was on the right trail……
You should definitely buy up all the bonds at 1.2% you can lay hands on – its a no-brainer….. right? I mean…. you can’t lose because they can’t default….. ah…. the glorious perpetual motion machine of eternal wealth that is the printing press. Where would the world be without it’s application to our monetary wants?
All who buy this pap…. be sure see investors to get in on this can’t-miss opportunity. For the rest….. remember to thank the good Lord tonight that he blest you with at least a rudimentary understanding of economics.
Perhaps you should hold the mirror up to your face when you write such as this.
Of course we’re all broke. Stop with making it all about you and those like you. It’s poor form, and a Katzensprung from unacceptable.
jmr saiz we are all broke…
I guess then the debt is owed to rich Martians?
Friend,
Canada has the exact same problem, baby boomers are retiring at a rate that is higher then the numbers entering the workforce. The cliff is further away, but it is still a cliff.
All Western countries are facing the same issue.
As for Ft. McMurray, no matter how you spin it, it will wind up like Red Deer except uglier. Stop patting yourself on the back, it’s distasteful (this is coming from another CDN here).
13 million Chinese with $1 million. Dream on.! It’s more like 1 million. At 14 trln the Us debt dwarfes China’s measly 2.85 trln in reserves so their government couldn’t help either. Face it. American is doomed. Destined for financial collapse and possibly social unrest. Stock up on guns and ammo or emigrate.
Okay, good point about social unrest.
Alberta wants all guns out of California by the closing date when we buy it. In fairness the people can stay. But Alberta will own all State property and California will become the 11th Canadian Province.
This is what happens when you are bankrupt, you lose control…
Gerald Celente said “When people lost it all, they loss it”. I think people of California when it goes bankrupt will probably invade Alberta and make it into another California because we have guns a you f*ckers don’t have any.
So we are on the Road to Bankruptcy then.
One Question:
Are we there yet?
Friend…
After Quebec splits off and declares its liberte/egalite/fraternite you’ll need Kalifornia just to keep your country bilingual and incoherent. Just imagine – a brand new walled-off province leading the rest around by the nose!
Omaha is where your mentor Buffett lives, so you should buy Nebraska instead. Besides, it’s more like Alberta: crappy weather, wheat, cattle, oil – but no mountains.
“The point is, most of them are going broke. Their model is exhausted. This was the social welfare model derived from Bismarck – take from workers; pay to non-workers. It was okay as long as the pool of workers was growing faster than the pool of non-workers. But that’s no longer the case.”
As is mostly true for gambling here in the US, Ponzi schemes are only permissible when offered by government.
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