The Rag Reel


Tuesday, May 25, 2010

#1 Debt--->GDP

When you want to borrow money these days most lenders will look at your income and expenses before making a decision. The higher your precentage of debt to income, the risker you are as a borrower. Similary, the ratio of a nation's debt to its gross domestic product is a very strong financial indicator.

The European Union set its debt limit at 60 percent of GDP, but Greece has already hit 125 percent and economists are predicting an EU average of around 80 percent by 2012. The European Central Bank's chief economist predicts U.K. debt will hit 88 percent of GDP next year, with the U.S rising to 100 percent and Japan at 200 percent.

Some U.S. poloticians have tried to calm our fears by saying the debt-to-GDP ratio was much higher at the end of WWII. They fail to mention that 90 percent of that debt was earmarked for military spending, which dropped dramatically after the war. Back then, federal entitlement programs, interest expenses and discretionary spending amounted to just 10 percent of GDP.

Today, more than half of U.S. debt is tied to a rising tide of entitlements such as Social Security and Medicare. Cutting all the federal government's discretionary spending would save only 15 percent.

To solve this problem, most governments prefer to raise taxes, not spend less. But if more money is siphoned off in taxes and government borrowing less, less is left to invest in opprotunities such as job creation in America.

Thursday, May 13, 2010

Euro to a Zero.

All of the recent Stock Market chaos is very easy to explain. It all has to do with the de-value of the "Euro". For instance, most companies do a lot of global business and have delt with the euro as the base currency in those dealings. For the longest time the euro was worth more than the U.S dollar; which meant that when companies made profits over seas; the transfer from euro's to American dollars was almost 2 to 1. the profits were recieved here in the U.S as blow out earnings just on the fact that the conversion of the Euro to the U.S dollar.

Now the Euro is declining in value which hurts global businesses that have relied on the strength of the euro to further their businesses. It's very hard in the U.S to make a huge profit as a corporation because of all the taxes and what not. Thats why companies rely so heavaly on the Euro as a way to pair there U.S losses.

All the talk about Greece is not the issue, the issue is the Euro being down graded and thus hurting everybody in sight. The next real shoe to drop will be Ireland and their Huge banking sector. When that shoe drops so does the Euro, an thus causing businesses all over the world to fail; Get Ready!!!

Tuesday, May 11, 2010

The Apple was Green

Apple has one group of people to thank for there current success in the world of tech. That single group would be the liberal green party. When you look around at any University these days you will see smart cars and prius's parked in the student lot. Getting out of those eco-friendly cars are people who live in a reality of instant gradification. They will have the iphone strapped to there pants a ipod on there arm, a Ipad in there left hand & starbucks coffee in there right.

To any onlooker they may look as if they are going to a Yoga confrence somewhere. Apple has really put all there eggs in one basket but the underlying question is will they continue to have there blow-out success? Hardware can only take you so far, just ask Dell or HP.

Apple has a problem coming down the road and that is the software problem that is linux and the ability for that program to compete with windows 7 in the future of computing world wide. Linux was just meant as a quick means to and end for the fantastic hardware that Apple created. What will be the driving software of the future for Apple?

How will they further their hardware with no gas? These are just many questions facing Apple in the future.