What is the True Debt Level

Strategic Investment Conference

May 17, 2014 

Each year there is a conference where the foremost thinkers and leaders of society gather and listen to speakers pontificate on the current and future state of society. This year the conference was held May 13-1 6 in San Diego, CA.  

There are many excellent speakers and the information is widely repeated on the internet. The connection to the site follows.

INVESTING IN A TRANSFORMATIONAL WORLD

The pace of technological change is accelerating. Business models are being upended. Entire industries are being revolutionized. At the same time, many nations are facing crippling debt burdens, sluggish growth, and a dwindling menu of policy options.

In this transformational climate, the challenge for investors is clear:

How do you identify and optimize opportunity in a world that holds unprecedented potential but also significant risks?

 

The Level of Debt  – Comparing Debt Across the Developed World

Some of the information presented at the conference is reproduced below, regarding a comparison of debt levels across the developed world. What follows is information published by John Mauldin  May 16, 2014 Special Updates from the Strategic Investment Conference: Day 2

What is most interesting, is that by all conventional metrics, whether a country ranks as financially well managed, or not, every country has debt that is far above what the average onlooker would suspect. A chart is shown below, that might surprise you.

Some Quotes from John Mauldin’s Report

That’s a worrying dynamic if we pay attention to the Heritage Foundation’s Stephen Moore, who harps on the distortions in public policy, or if we consider Hoisington Management’s Dr. Lacy Hunt, who explained to us today that, in aggregate and contrary to popular belief, total debt-to-GDP across the world’s major economies has INCREASED by nearly 35% in the years since 2008. And even more importantly, the new debt has been taken on disproportionately by the real problem economies: Japan, the Eurozone, and China.

With a powerful grasp of an enormous body of academic research (and armed with some hard-hitting discoveries of his own), Dr. Hunt warns that debt deflation – not inflation – is the biggest near-term risk. While inflationists like to chant Milton Friedman’s famous mantra “Inflation is always and everywhere a monetary phenomenon,” Lacy pulled back the curtain on Friedman’s lesser-known research and explained that the famous characterization of inflation ultimately depends on stable or rising monetary velocity… sans sufficient monetary velocity, inflation does not materialize. 

 

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By Larry Cyna

Mr. Cyna is an accomplished investor in the Canadian public markets for over 20 years, and has managed significant portfolios. He is a financing specialist for private and public companies, and has expertise in real estate and debt obligations. He has assisted private companies accessing the public markets, has been a founding director of public companies and continues as a strategic consultant to selected clientele. He is and has been a director, a senior officer and on the Advisory Board of a number of TSX and TSXV public companies in the mining, resource, technology and telecommunications sectors, and the Founding Director of two CPC’s with qualifying transactions in mining and minerals. He was an honorary director of the Rotman School of Management MBA IMC program, has completed the Canadian Securities Institute Canadian Securities Course & Institute Conduct and Practices Handbook Course, was a former Manager under contract to an Investment Manager at BMO Nesbitt Burns, a roster mediator under the Ontario Mandatory Mediation Program, Toronto, a member of the Institute of Corporate Directors of Ontario, a member of the Upper Canada Dispute Resolution Group, and the Ontario Bar Association, Alternate Dispute Resolution section. He obtained his designation as a Chartered Accountant in Ontario in 1971 and was the recipient of the Founder’s Prize for academic achievement together with a cash reward. He became a CPA in the State of Illinois, USA in 1999 under IQEX with a grade of 92%. He is a Member of the Institute of Chartered Accountants of Ontario and the Canadian Institute of Chartered Accountants. He holds certificates in Advanced ADR & in Civil Justice in Ontario, Faculty of Law, University of Windsor, certificate in Dispute Resolution from the Ontario Institute of Chartered Accountants. Previous accomplishments are Manager of Cymor Risk Consultants LP specializing in Risk Management Assessment; CEO of Cyna & Associates specializing in mediation and ADR; Founder & Senior Partner of Cyna & Co, Chartered Accountants, a fully licensed and accredited public accountancy firm with international affiliations; and was a partner in a large public accountancy firm. Mr. Cyna is well known in the Canadian Investing community. He is invited to, and attends presentations given by public companies usually 3 or 4 times each week. These presentations are intended by the various hosting companies to present their inside story to sophisticated parties and Investment Managers for the purpose of attracting funding, or of making parties more interested in acquiring shares of those companies. Being a part of this keeps Mr. Cyna deeply involved in the current market and leads to numerous investment opportunities.