Antidote for Economic Denial: "The Ring of Fire"

Posted on February 20, 2010


Maryland On My Mind takes a break from our wall-to-wall winter weather coverage to ponder our economic predicament.

It’s so rare that I find a graph I can actually understand. Here’s something interesting, courtesy of  PIMCO’s Bill Gross:

“The most vulnerable countries in 2010 are shown in PIMCO’s chart “The Ring of Fire.” These red zone countries are ones with the potential for public debt to exceed 90% of GDP within a few years’ time, which would slow GDP by 1% or more. The yellow and green areas are considered to be the most conservative and potentially most solvent, with the potential for higher growth.”

For intelligent discussion of the situation, I refer you to Bill Gross and Jon Taplin. (Note to President Barack Obama: Please take a look at these two links.)

Some of the countries in the most serious trouble — Italy and Japan — also have seriously graying populations. I’ve been wondering for a long time — how do you achieve economic growth in a country with a shrinking and increasingly feeble population of old folks? Of course, the one factor that keeps the U.S. from joining the downward-spiraling, graying nations is a steady infusion of immigrant workers.

Sad to see that Ireland, England and France are inside the ring of fire, along with Greece and Spain, which have been causing Wall Street so much worry these past few weeks.  The U.S., burdened with stupid and stupendous military spending and imperial delusions (as Jon Taplin frequently points out), might have more difficulty setting our economic house in order than, say, Ireland, where the problems are quite simple, by comparison to the U.S.

We can take hope from the stronger economic positions of Canada, Australia, and some northern European countries that are often ridiculed for their supposed “socialist” tendencies and their civilized, universal, health care systems.

— Bernie Hayden