Recently it was (under)-reported that for the first time in history, Australia's debt levels have pushed passed GDP. A frightening figure, and one that suggests that we may not have learnt the most important lesson of the global financial crisis:

Do not, and I repeat do not, live beyond your means. 

A child could explain it- you can't get something for nothing.

And even if all these fancy economic and finance models create even more complicated ways to make debt manageable, eventually it will catch up with us.

There will be a point where everything collapses. 

Why can't we be a little more patient?

Fresh fears over the size of Dubai's debt have sent shock waves through international markets, with major stocks and oil prices falling sharply. Dubai World, the country's largest conglomerate, wants to suspend payment on its sixty billion dollar debts until next May at the earliest. RT's financial contributor Max Keiser says the World is entering the Phase Two of the global economic crisis.

Central banks throughout the world presently hold some $2.5 trillion of U.S. Treasury bonds, and another trillion dollars in private-sector U.S. dollar debt. As the dollar’s exchange rate falls, these banks suffer losses when their holdings are denominated in their own currencies. Even more serious, the principal itself is now in question. There is no foreseeable way in which the United States can redeem its foreign debt.

Its trade surplus continues to deteriorate, while its foreign military spending adds to the overall balance-of-payments deficit. This means that the United States is pumping more and more dollars into the rest of the world without any means of repaying them – or any intention to do so. That is why foreign countries are beginning to treat these dollars as “hot potatoes,” trying to get rid of them as fast as they can.

But how can they all do this? China is using its new dollar inflows to try and buy up foreign raw materials assets, land and other assets needed for its long-term growth. And some Middle Eastern countries are buying long-term supply agreements for food and raw materials produced abroad. But fewer countries are eager to accept these dollars. And the U.S. Government is blocking foreign investment in the most desirable and remunerative domestic U.S. sectors as its politicians become more nationalistic. This threatens to limit foreign investment in the United States to the junk-mortgage market, to real estate that is falling in price, and loans to bail out U.S. banks and financial institutions as they fight off insolvency and their stock-market prices plunge...

This means that Middle Eastern oil exporters – and indeed, European industrial exporters – are in effect giving their oil and other products away to U.S. consumers in exchange for paper IOUs that are in danger of becoming unspendable and hence worthless. [More]

Banks are losing hundreds of billions of dollars and those in the industry tell us only losing $1billion is considered a good news event these days. This is the kind of sociopathic insanity we have to listen to. Then their answer is to give us more money to throw at the problem and we will solve it. They are lying and they simply can't help themselves. They get totally divorced from reality...

We are also told that the infusion of capital from foreign institutions into the banking system to cover up their mistakes is a sign of strength. That is mindless. All the foreigners are doing is dumping dollars, which are the wages of de-industrialization, de-regulation, free trade, globalization, offshoring and outsourcing... It has made us dependent on capital from the outside world. We have become junk-bond junkies.

[The U.S. is] no longer the most productive nation in the world. We have been converted into sniveling, pathetic debtors who have been betrayed by our large transnational conglomerates. Cities, towns, counties and states are slashing municipal services past the point of pain... Spending by states has fallen precipitously forcing communities to rely more on property tax revenues, or use savings or services. The loss in revenue and inflation are killing these entities. Wait until they have to cut real estate taxes due to falling values. That is when the real problems will begin. [More]