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TMFHumbleServant (97.57)

How Long Until We Get There?



July 13, 2010 – Comments (4)

"There" is the right level of Debt to GDP. Unfortunately, we don't know what the right level is nor how long the deleveraging process will take to get us there.

The Early Warning blog takes a shot at estimating how long it will take in the post below.

I don't know if 15-20 years is the right answer and quite frankly, I hope it's not. I think the process will take 5-7 years and the level won't go down very far. But I do agree that the muddle-through economic outlook is probably the best bet. And one thing that really caught my eye was the chart that shows lots of countries are trying to deleverage at the same time. That could introduce a fallacy of composition problem and make the roller coaster ride a little bumpier along the way.

I still believe the future of the stock market is more likely volatility than sustained ups or downs. So my thinking is to be prepared with all of the stocks I want to buy and decent estimates of value. That way I can take advantage of the volatility and strike while the iron is hot.

Please share your thoughts about where you think debt to GDP is likely to go and how long it takes to get there.

Fool on!


4 Comments – Post Your Own

#1) On July 14, 2010 at 6:18 AM, outoffocus (23.73) wrote:

I would rather we just go back to being a creditor nation.

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#2) On July 14, 2010 at 7:03 AM, dbjella (< 20) wrote:


Amen!  I wish all nations would be debt free. 

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#3) On July 14, 2010 at 7:34 AM, ragedmaximus (< 20) wrote:

  why not have a 50 state gdp lottery every week ,like powerball except all the money goes to winners and costs and any surplus goes to gdp debt.unless they do this the answer is never,look at the analogy of typical american paying off credit card debt with minimal payments and high interest the answer is 99 years!

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#4) On July 14, 2010 at 2:51 PM, TMFHumbleServant (97.57) wrote:

All very interesting points. Thanks for sharing!

Fool on!


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