Today’s essay by Tim Morgan is a must read.
Morgan has developed new metrics for measuring the health of economies that are grounded in an understanding of the energy that drives our civilization.
Here he considers 4 risk factors:
- Debt: Instead of using the conventional debt to GDP ratio Morgan backs out the portion of GDP created by the spending of borrowed money to obtain a ratio of debt to prosperity that better represents the actual debt risk.
- Credit Dependency: This is the ratio of incremental debt to incremental growth and represents the “ponziness” of an economy.
- Systemic Exposure: This metric takes a broader view of risk by considering an economy’s dependence on its financial sector and is calculated as the ratio of financial assets to prosperity.
- Acquiescence Risk: This metric represents the change in discretionary prosperity and is a good measure of expected social unrest when the next financial crisis occurs.
Morgan compares these risk factors for various countries and concludes that Canada is among the top 6 riskiest countries on the planet.
Other observations include:
- China is a ponzi bomb waiting to detonate.
- Ireland, Holland, Britain, Japan and China are accidents waiting to happen.
- Ireland is the craziest country on the planet.
- France has the highest social unrest today for good reason.