Category Archives: Bubbles

August 22, 2017

Global Debt Crisis. Prepare Yourself Accordingly – Stefan Molyneux (Video)

What unspoken crisis could drastically impact the life of just about every human being on planet earth – and could happen in the very near future? Stefan Molyneux once again shines a spotlight on the global debt crisis and speculated what will happen when the system inevitability collapses.

June 5, 2017

The US college debt bubble is becoming dangerous

Student loans are now 90 per cent public, in an eerie echo of the housing crisis.

Rapid run-ups in debt are the single biggest predictor of market trouble. So it is worth noting that over the past 10 years the amount of student loan debt in the US has grown by 170 per cent, to a whopping $1.4tn — more than car loans, or credit card debt. Indeed, as an expert at the Consumer Financial Protection Bureau recently pointed out to me, since 2008 we have basically swapped a housing debt bubble for a student loan bubble. No wonder NY Federal Reserve president Bill Dudley fretted last week that high levels of student debt and default are a “headwind to economic activity”.

In America, 44m people have student debt. Eight million of those borrowers are in default. That’s a default rate which is still higher than pre-crisis levels — unlike the default rate for mortgages, credit cards or even car loans.

Rising college education costs will not help shrink those numbers. While the headline consumer price index is 2.7 per cent, between 2016 and 2017 published tuition and fee prices rose by 9 per cent at four-year state institutions, and 13 per cent at posher private colleges.

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July 3, 2016

How 2 US senators profited from America’s financial crisis (Video)

Documents connect Senators Bob Corker and Mark Warner to controversial Wall Street deals.

“The idea that Wall Street came out of this thing just fine, thank you, is just something that just grates on people. They think you didn’t just come out fine because it was luck. They think you guys just really gamed this thing real well.”

So said then-Senator Edward E. Kaufman, a Democrat from Delaware, at the Congressional hearing in the spring of 2010 where assorted members of Congress lambasted Goldman Sachs’ activity in the run-up to the financial crisis.

But it turns out two members of Congress actually made money from that crisis, according to publicly available documents. During the crisis years, two now-senators, Mark Warner (D-Va.) who was the governor of Virginia until his Senate term began in 2009, and Bob Corker (R-Tenn.), who took office in 2007, were invested in a fund that appears to have made sizable profits from Goldman products that were designed to bet against the real estate market.

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February 7, 2016

Donald Trump: America Is Currently in a ‘Jobs Recession,’ when ‘Bubble’ Pops ‘It’s Going To Be Ugly’

Billionaire and national 2016 GOP presidential frontrunner Donald Trump pushed back on the notion put forth by President Barack Obama that America is doing well economically.

In an exclusive interview with Breitbart News on Friday, Trump laid out how he believes the United States is currently in another recession—something that proves President Obama’s economic policies have failed, as have those of his GOP enablers in Congress.

“I think you’re sort of in a recession now, you’re certainly in a jobs recession now,” Trump said when asked to react to a new report from the Financial Times detailing the potential rising risk of a new recession. “We have millions of people out of work, and the jobs they have are bad jobs. We’re in a bubble. We’re in a bubble. The sad part is it may not pop now, it may pop two weeks into the new administration and the new administration will be blamed for it. One of those things, right? But we’re in a bubble and it’s going to be ugly.”

The Financial Times piece, written by John Authers, details how there is a rising risk of another major recession in the United States.

“The dollar is falling sharply, while the market bets ever more confidently that there will be no rate increases from the Federal Reserve in 2016,” Authers wrote. “This is driven by a rising belief that the U.S. could be slipping into a recession this year — a possibility that only a few weeks ago was regarded as negligible. In response, brokerages and investment banks have started to pump out research, trying to assess the risk of a recession. Almost universally, they conclude that the risks remain low — but that they are rising.”

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January 23, 2016

Global Banker: World Faces ‘Avalanche of Bankruptcies’

“Debts have continued to build up over the last eight years and they have reached such levels in every part of the world that they have become a potent cause for mischief,” he said.

From Ambrose Evans-Pritchard writing at the Telegraph:

The global financial system has become dangerously unstable and faces an avalanche of bankruptcies that will test social and political stability, a leading monetary theorist has warned.

“The situation is worse than it was in 2007. Our macroeconomic ammunition to fight downturns is essentially all used up,” said William White, the Swiss-based chairman of the OECD’s review committee and former chief economist of the Bank for International Settlements (BIS).

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January 13, 2016

RBS cries ‘sell everything’ as deflationary crisis nears

Clients told to seek safety of Bunds and Treasuries. ‘This is about return of capital, not return on capital. In a crowded hall, exit doors are small’

RBS has advised clients to brace for a “cataclysmic year” and a global deflationary crisis, warning that major stock markets could fall by a fifth and oil may plummet to $16 a barrel.

The bank’s credit team said markets are flashing stress alerts akin to the turbulent months before the Lehman crisis in 2008. “Sell everything except high quality bonds. This is about return of capital, not return on capital. In a crowded hall, exit doors are small,” it said in a client note.

Andrew Roberts, the bank’s research chief for European economics and rates, said that global trade and loans are contracting, a nasty cocktail for corporate balance sheets and equity earnings. This is particularly ominous given that global debt ratios have reached record highs.

“China has set off a major correction and it is going to snowball. Equities and credit have become very dangerous, and we have hardly even begun to retrace the ‘Goldlocks love-in’ of the last two years,” he said.

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January 7, 2016

New Democrat Brainstorm: Forgive Student Loan Debt, So the Kids Can Take Out Mortgages

If you think there’s anything accidental about the student loan debt bubble, you haven’t been paying attention to how the Left works.

Debt is a fantastic way to control people, because politicians can offer to relieve portions of that debt in exchange for votes. The political battlespace has been well-prepared by teaching citizens to hate the banks that loan them money to fulfill their ambitions and satisfy their desires.

Student loan debt is an especially useful instrument of control, because young people deeply resent it… especially when they can’t find decent jobs after graduation. They’ve been told college is an entitlement, and anyone who doesn’t go is destined for a life of miserable blue-collar drudgery.

Their exorbitant university tuition purchases them a low-quality education that seems, at some institutions, to consist primarily of training in how to become a useless, bitter radical that no sane business owner would employ. The Left tacitly acknowledges the poor quality of the incredibly expensive educational institutions it dominates by telling Americans they need to import huge numbers of skilled foreign workers, even as the citizen workforce dwindles and wages remain flat.

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January 3, 2016

Government Debt Bubble Is Based On Credit Theft

So all of these trillions of public debt, which benefit only public union employees, were created through what may be characterized as credit theft. This is because these debts are secured not by the assets of the city or the public union but by unknowing victims; the taxpayers.

Right now there are ten cities in Illinois where all of the property tax payments made by residents are used exclusively by the local city government to pay pensions and municipal bonds, the two biggest types of debt created by local and state government.

Illinois is not the only state that has public pension and municipal bond debt. All states and virtually all units of government have these types of debt. These debts are not trivial. The total amount of public pension and municipal bond debt was $8.3 trillion at the most recent reckoning. The largest part of this debt, the public pension debt, was created by government, to help only government employees.

In many localities the residents know that teachers, firemen and policemen collect pensions. But until recent years they often did not know how much money was involved in these pensions. What is worse is that they do not know that most of the money these public servants will receive in their pensions has to be paid for by the residents. It is not paid for with contributions made by the government employees themselves.

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October 17, 2015

Washington Sets the Stage for Another Financial Crisis

Fannie and Freddie are again guaranteeing mortgages with as little as 3 percent down payment. Have we learned nothing at all?

My 13-year-old son told me at the dinner table the other day that Franklin Roosevelt was one of America’s “greatest presidents” because “he ended the Great Depression.” He’s usually a good student, so I checked where he got this tripe, and sure enough, the fairy tale was right there in his American history book.

The textbook tells kids that the New Deal ended the Great Depression and even saved capitalism. Of course, the New Deal exacerbated the pain and financial devastation of a stock market crash, and unemployment lingered in double digits for a decade after Roosevelt was elected until the start of World War II.

We get this kind of rampant revisionism because the left writes the history books—which they are doing right now.

Here’s the latest story line: bailouts, trillions of dollars of government spending and debt, easy money, and re-regulation of Wall Street ended the 2008 Great Recession. The myth took on new life last week when Ben Bernanke took a bow in the Wall Street Journal for, in his mind, saving the economy with his $3 trillion of quantitative easing and zero interest rate policy. No, actually, this is what created the crisis. Don’t be surprised if Bernanke receives a Nobel Peace Prize.

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October 12, 2015

Goldman Sachs: Welcome to the ‘third wave’ of the financial crisis

Central banks all rushed to lower interest rates in response to the first two debt-fueled crises, encouraging investors to lend in emerging markets such as China for a decent return.

Remember the 2008 financial crisis? Well, it’s back.

The financial disaster, which started seven years ago with the US real estate and investment banking collapse, has entered its third phase according to a team of Goldman Sachs analysts.

This wave is characterised by rock bottom commodities prices, stalling growth in China and other emerging markets economies and low global inflation, Goldman Sachs analysts led by Peter Oppenheimer said in a big-picture note.

This triple-whammy has its roots in the response to the first two waves of crisis — the banking collapse and European sovereign debt crisis — and its all part of the so-called debt supercycle of the last few decades.

Central banks all rushed to lower interest rates in response to the first two debt-fueled crises, encouraging investors to lend in emerging markets such as China for a decent return.

Now that interest rates are looking like they might go up, lenders are heading for the exits and investors are pulling out of commodities, which are closely linked to the fate of the emerging economies.

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