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Started By
Message
U.S. debt to asset ratio is better than 1:7
Posted on 12/4/14 at 10:26 pm
Posted on 12/4/14 at 10:26 pm
We have 128 T in mineral assets.
LINK
The national debt is 18 T.
If a private company had debts equal to 1/7th of its assets - would its board of directors be worried?
Are private households with $1 in debt for every $7 in assets in bad shape?
LINK
The national debt is 18 T.
If a private company had debts equal to 1/7th of its assets - would its board of directors be worried?
Are private households with $1 in debt for every $7 in assets in bad shape?
This post was edited on 12/4/14 at 10:27 pm
19
Posted on 12/4/14 at 10:27 pm to SpidermanTUba
But your president hates oil , gas and coal?
Posted on 12/4/14 at 10:27 pm to Cosmo
Don't be silly. You can't hate inanimate objects.
Posted on 12/4/14 at 10:28 pm to SpidermanTUba
Debt was bad under W, but it's completely cool under Obama? Got it.
Posted on 12/4/14 at 10:28 pm to Cosmo
quote:
your president hates oil , gas and coal?
........and is making it harder and harder to extract and utilize.
Posted on 12/4/14 at 10:29 pm to SpidermanTUba
hell we'll eclipse 128 trillion in debt before we get all that shite out of the ground.
also, what happens when we are self-reliant on alternative energy and those minerals aren't worth shite?
also, what happens when we are self-reliant on alternative energy and those minerals aren't worth shite?
Posted on 12/4/14 at 10:32 pm to SpidermanTUba
Interesting. That would be a debt to equity ratio of 16%-17% - low by most standards. What is China's?
Of course, we'd need to consider how liquid (in terms of cash conversion, not oil mix) those massive underground reserves are and, more recently, whether they could be developed economically.
Of course, we'd need to consider how liquid (in terms of cash conversion, not oil mix) those massive underground reserves are and, more recently, whether they could be developed economically.
Posted on 12/4/14 at 10:35 pm to RedStickBR
quote:
Of course, we'd need to consider how liquid (in terms of cash conversion, not oil mix) those massive underground reserves are and, more recently, whether they could be developed economically.
That valuation is from January 2013 too. Crude prices look a tad different now, and IMO they don't rebound soon
Posted on 12/4/14 at 10:41 pm to SpidermanTUba
TUba, this is an awsome thread. I give you credit sir. 
Posted on 12/4/14 at 10:42 pm to 90proofprofessional
Assuming for the sake of this hypothetical that reserve value correlates nearly perfectly with oil price (down 33% since 01/10), the debt to equity ratio would be 27%.
But it appears he's referring only to mineral assets and not all assets, too.
But it appears he's referring only to mineral assets and not all assets, too.
Posted on 12/4/14 at 10:47 pm to RedStickBR
Word, I certainly realize it's not a gigantic difference in terms of $120 trillion. Then again, that difference is comparable in size to the entire national debt right now
This post was edited on 12/4/14 at 10:49 pm
Posted on 12/4/14 at 10:48 pm to RedStickBR
We got buildings and land with other resources too.
(Plus the biggest income stream in the world.)
Posted on 12/4/14 at 10:49 pm to SpidermanTUba
Not to trash your overall point Tuba. It's an important one
Posted on 12/4/14 at 10:50 pm to SpidermanTUba
You hate lower taxes? Guess you can hate inanimate objects!
Posted on 12/4/14 at 10:58 pm to SpidermanTUba
It's a good point, but like with any credit analysis, a solvency-based metric like this should be combined with numerous other metrics.
Debt-to-GDP of 100% is entirely too high, and we could be spending nearly 1/10 of our budget on net debt service alone in the future - those are real dollars that we can't spend on other things.
Debt-to-GDP of 100% is entirely too high, and we could be spending nearly 1/10 of our budget on net debt service alone in the future - those are real dollars that we can't spend on other things.
Posted on 12/4/14 at 11:11 pm to SpidermanTUba
I'd just like to point out that how much it costs to acquire said asset needs to be included in the equation.
IE, if that family had 1:7 ratio but the 7 required hiring people and buying equipment to actually have it, then quite obviously, that cost has to go into the equation and the 1:7 ratio needs to be adjusted accordingly.
I mean, the minerals aren't going to just jump out of the ground and get picked up by an American President.
IE, if that family had 1:7 ratio but the 7 required hiring people and buying equipment to actually have it, then quite obviously, that cost has to go into the equation and the 1:7 ratio needs to be adjusted accordingly.
I mean, the minerals aren't going to just jump out of the ground and get picked up by an American President.
Posted on 12/4/14 at 11:24 pm to SpidermanTUba
Did the gov't nationalize those mineral assets? If not, they don't own them and certainly couldn't claim them as an "asset" in the classical sense. It's a resource to which the gov't only realizes any value on if a producer turns it into taxable revenue.
Posted on 12/4/14 at 11:27 pm to SpidermanTUba
quote:
The national debt is 18 T.
If a private company had debts equal to 1/7th of its assets - would its board of directors be worried?
does the government own all of these mineral assets?
Posted on 12/4/14 at 11:31 pm to SlowFlowPro
quote:You're talking to Spidey here. As far as he's concerned, the government owns all of YOUR assets and you don't actually PAY taxes...........you're allowed to keep what the government doesn't choose to take.
does the government own all of these mineral assets?
Posted on 12/4/14 at 11:34 pm to Aubie Spr96
quote:
Did the gov't nationalize those mineral assets? If not, they don't own them and certainly couldn't claim them as an "asset" in the classical sense. It's a resource to which the gov't only realizes any value on if a producer turns it into taxable revenue.
Yeah, there is a point somewhere in there, but it's not really an apples to apples comparison.
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