Top ten charts of 2011

The last year was all about sovereign debt, house prices and volatile markets. And check out the Fed Gloomy Words Index and a curious demographics-to-share prices parallel.

The S&P price-earnings ratio


Are share prices cheap or expensive after the big fall that occurred in 2008? Depends on your time frame. Compared to the post-1985 average valuation, they’re cheap. Compared the pre-1985 average they’re a bit expensive. Compared to the bottoms that usually happen after strong bull markets (five to seven years), they’re very expensive.

The Gloomy Words Index

What better way to measure the economy than the Fed Gloomy Words Index, which measures the gloominess of the members of the Federal Open Markets Committee, going by the minutes of their meetings.

The deficit/debt scatter graph

This year was all about sovereign debt and government deficits. This chart graphically shows the worst (Japan), the best (Australia) and the OECD average.

Australian household income and consumption


This one sums up the Australian condition: incomes are rising above trend, but consumption is below trend, and the difference is the increase in the saving rate.

The debt ceiling and US presidents


In August, America got a fright when the Republican controlled Congress refused to raise the debt ceiling to allow the government to borrow more. This chart shows that the debt ceiling was increased by both Republican and Democrat presidents..

Household sector debt


Australia’s government debt may be among the world’s lowest, but not our household debt – it was among the highest, although we’ve been overtaken since then.

US federal government spending as a percentage of GDP


It’s been heading inexorably higher for 100 years. Yikes! No wonder the US is struggling.

House prices in the US and Japan


Despite all the comparisons to Japan, the US is actually doing worse than the former Asian powerhouse as house prices drop far further and faster – at least Japan had a slow descent.

Demographics and share prices

This chart shows the price earnings earnings ratio of shares and the ratio of middle aged to old aged people – old people sell shares, middle aged people buy them. As the number of old people rises, the valuation of shares fall – and that’s what lies ahead of us.

Shares of world GDP


Emerging? China and India are re-emerging.

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