I'm reading an interesting book at the moment by Bill Bonner and Addison Wiggin called 'Empire of Debt - The Rise of an Epic Financial Crisis'. Essentially the book is about the 'US Empire' and its mountain of debt but it's really broader than that as it also touches on a number of other 'Empires' throughout history. I haven't finished the book yet, but it's already made me examine a number of my basic assumptions...... Oh......by the way, if you are a big fan of Alan Greenspan or a supporter of most of the wars that the US have been involved in you probably won't immediately gel with the authors. The book starts with a review of the rise and fall of many 'Empires' over thousands of years and I guess this brief history lesson reminded me how quickly we disregard the lessons of history. Often our current view of reality is what has happened in our own life only.......or worse still, in a shorter 'investment life'. For the 'lucky generation', Historical incidents such as World Wars, Depressions etc really do seem more like Events that belong in the far distant past than something we can conceive of happening in our immediate futures. Similarly, given my age, I've only ever known the US to be either one of the World's Superpowers, or the World Superpower. But could this change in my lifetime? If I stop looking at a historical timeframe of decades or even a few hundred years, I would have to say, when you look at the number of Empires that have risen and fallen over the last few thousand years, the odds on the US remaining top dog for an extended period of time would seem to have the odds stacked against it. Beyond a general discussion of 'Empires' the book then gets into the US Empire and more specifically its current financial position. I knew some of the information but it certainly confirmed my opinion that I shouldn't be asking good old George W. or a number of previous Presidents to be my Financial Adviser! A couple of sample snippets from the book: * The price of labor in the rich countries is high. The average cost of an hour of someone's time in the United States is $20.73. The average cost in China, on the other hand is somewhere between 13.5 and 65 cents. * Today, people own less of their own homes - homeowner equity has fallen from nearly 70 percent in the late 1970s to less than 55 percent in 2005. Plus the average person owes more money to more people than ever before. Household debt in the fall of 2005 is 113 percent of annual income; prior to 1980, it was 58 percent. * The foreigners own more and more of what used to be American wealthproducing assets. When Ronald Reagan arrived at the White House, foreign-owned US assets were less than 15% of GDP. Now they're are 78 percent. * The US needs $2 billion in capital inflows every day to cover the foreign trade deficit. * In 2004 the International Monetary Fund estimated that the US had a $47 trillion shortfall for future Social Secuirty and Medicare obligations. * For every dollar of product that the United States sells abroad, it buys $1.60 worth of imported items, almost all of it consumer goods. * Each year, Americans buy, net, about $700 billion more in foreign imports than they make in overseas sales. * Since 1990, income for the average American has risen only 11 percent while household spending has has jumped 30 percent. * The baby born in the US in 1913 came into the world with nothing. But he owed nothing. Now, he comes into the world owing his share of $37 trillion; that's about $128,560 with his name on it. Is he richer? Is he better off? That doesn't include his share of Federal obligations that he'll have to pay, which could add $100,000 more. * The total value of all assets in America is only about $50 trillion. Current US debt is about $37 trillion. Add to it the present value of Fed Govt liabilities and America is broke. Busted. Bankrupt. It couldn't pay its debts even if it wanted to. Interesting reading so far.........anyway........back to the book.