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"Low interest rates and massive levels of central bank intervention have failed to generate strong economic growth and are beginning to endanger investors, bond guru Bill Gross said in his latest analysis."
"Around the world, high debt levels combined with slow economic growth and tumbling oil prices are providing obstacles that extreme easing has been unable to cure, he said."
"They all seem to believe that there is an interest rate SO LOW that resultant financial market wealth will ultimately spill over into the real economy. ... How successful have they been so far?" he wrote. "Why after several decades of 0 percent rates has the Japanese economy failed to respond? Why has the U.S. only averaged 2 percent real growth since the end of the Great Recession?"
"The number of corporate issuers in the distressed category rose 6 percent from December to 264, which is just 27 away from its credit crisis peak, Moody's said Wednesday. The total has grown 44 percent from a year ago, pressured mainly from energy companies."
"However, Moody's said the energy contagion is beginning to spread, with more than half its downgrades coming outside the sector. Its Liquidity Stress Index jumped to 7.9 percent in January, the highest level since December 2009 and the biggest single-month gain since March 2009."
To be honest, these last few years does feel A LOT like 2007, before the big financial crash.
Back then, the housing bubble made the economy and workers look and feel more prosperous (on paper) before it collapsed. From what I remember after the 2008 financial, people felt that the economic "good times" was a mirage that was built on flimsy foundation...
This time, there a number of bubbles that are doing the same...
In other words, the underlying fundamentals for this economic "recovery" are extremely weak. Especially when some upcoming trends (like automation) are going to make their impact felt pretty soon...
To be honest, these last few years does feel A LOT like 2007, before the big financial crash.
Back then, the housing bubble made the economy and workers look and feel more prosperous (on paper) before it collapsed. From what I remember after the 2008 financial, people felt that the economic "good times" was a mirage that was built on flimsy foundation...
This time, there a number of bubbles that are doing the same...
In other words, the underlying fundamentals for this economic "recovery" are extremely weak. Especially when some upcoming trends (like automation) are going to make their impact felt pretty soon...
The fundamentals of our economy has been basically debt, debt, debt, and more debt to pay bills. Classic Ponzi Scheme. Wages are stagnant. Growth is stagnant. Standard of living is in a decline. When debt, somewhere is no longer serviced due to bankruptcies, the Debt Bubbles pops. Exactly the same as the previous Bubbles but much, much bigger.
To be honest, these last few years does feel A LOT like 2007, before the big financial crash.
Back then, the housing bubble made the economy and workers look and feel more prosperous (on paper) before it collapsed. From what I remember after the 2008 financial, people felt that the economic "good times" was a mirage that was built on flimsy foundation...
This time, there a number of bubbles that are doing the same...
In other words, the underlying fundamentals for this economic "recovery" are extremely weak. Especially when some upcoming trends (like automation) are going to make their impact felt pretty soon...
The only bubble popping is China compounded by a glut of oil in my opinion. Domestically, there will be quite a few bankruptcies in the energy sector that will spill over as the OPs article suggests. Commodities is taking a beating, but eventually those low prices will spur demand again. India has been gaining steam and while the country is politically disorganized among their billion plus people; sooner than later SE Asia in general (an astounding amount of people) and Africa will be picking up that slack from China.
The only bubble popping is China compounded by a glut of oil in my opinion. Domestically, there will be quite a few bankruptcies in the energy sector that will spill over as the OPs article suggests. Commodities is taking a beating, but eventually those low prices will spur demand again. India has been gaining steam and while the country is politically disorganized among their billion plus people; sooner than later SE Asia in general (an astounding amount of people) and Africa will be picking up that slack from China.
China's bad loans are estimated at $5 trillion after a surreal seven year spending spree which ballooned their debt from $9 trillion to over $30 trillion, 3X their GNP!! Because the whole nation is so corrupt and there is so much underground loans, the number is probably far worse. Cities such as London, Vancouver, LA, NY, LA, have all become giant laundries for corrupt cash real estate purchases from China driving up prices and making it impossible for long time residents to stay in the city.
To put things in perspective, the sub-prime mortgage debacle consisted of only a fraction of this number. In addition to to the above catastrophe in the making, there are $trillions in bad debt in Europe, South America, and other parts of Asia.
Americans are not the only ones partying on more and more debt over the last seven years. So has the rest of the world at the using of Central Banks. Now we are going to find out what happens when the borrowers don't care whether or not they pay back the debt, especially when they have the cash hidden away in some off-shore bank accounts.
I think the world should throw a special holiday to celebrate the Madness of Debt Day and honor all those who once again created and supported yet another worldwide financial crises. They all should be remembered.
The economy is sick. Zero prime for a long time should've gotten lots of inflation, it didn't. Conformational bias. You see what you want to see. I want to get 2% unemployment in my local labor pool and I'm just looking at what needs to change in order to get that.
If the economy was healthy, zero prime for any length of time should've gotten 2% unemployment. It hasn't.
Oh if you are looking at doom and gloom there is something wrong with you. The flip side of this is if you think everything is rosy then there is something wrong with you. The labor market sucks. Zero prime should've fixed it and didn't. Why?
China's bad loans are estimated at $5 trillion after a surreal seven year spending spree which ballooned their debt from $9 trillion to over $30 trillion, 3X their GNP!! Because the whole nation is so corrupt and there is so much underground loans, the number is probably far worse. Cities such as London, Vancouver, LA, NY, LA, have all become giant laundries for corrupt cash real estate purchases from China driving up prices and making it impossible for long time residents to stay in the city.
To put things in perspective, the sub-prime mortgage debacle consisted of only a fraction of this number. In addition to to the above catastrophe in the making, there are $trillions in bad debt in Europe, South America, and other parts of Asia.
Americans are not the only ones partying on more and more debt over the last seven years. So has the rest of the world at the using of Central Banks. Now we are going to find out what happens when the borrowers don't care whether or not they pay back the debt, especially when they have the cash hidden away in some off-shore bank accounts.
I think the world should throw a special holiday to celebrate the Madness of Debt Day and honor all those who once again created and supported yet another worldwide financial crises. They all should be remembered.
The fundamentals of our economy has been basically debt, debt, debt, and more debt to pay bills. Classic Ponzi Scheme. Wages are stagnant. Growth is stagnant. Standard of living is in a decline. When debt, somewhere is no longer serviced due to bankruptcies, the Debt Bubbles pops. Exactly the same as the previous Bubbles but much, much bigger.
What we need is the wages to service the debts with. Or what the fertilizer let it pop.
... but eventually those low prices will spur demand again.
The debts loaned against those commodities are bad, the debts those were collateral for are bad too, and so on. The out of work oil workers aren't spending any more. Pop.
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