By Tim Morgan: Primed to Detonate (O O Canada)

Maple Leaf Falling

Today’s essay by Tim Morgan is a must read.

https://surplusenergyeconomics.wordpress.com/2019/02/18/147-primed-to-detonate/

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:

  1. 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.
  2. Credit Dependency: This is the ratio of incremental debt to incremental growth and represents the “ponziness” of an economy.
  3. 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.
  4. 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.

SEEDS risk matrix, end-2018

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.

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