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发帖数: 29846 | 1 Debt Bubble is More Threatening Than Any Single Economic Sector Now
History shows that once a financial bubble bursts, it can take a long time
to bounce back. We had a crash in 2008 and since then nothing has been fixed
other than printing money and handing it out to the failed banks. Now we
are doing more of the same that brought us the crash. How long can it last?
Will there be another economic crash soon?
Recent history offers an example: Real estate prices topped in 2006-2007 -
then came the worst part of the sub-prime mortgage crisis in 2008.
Yet instead of recovering with the passage of time, real estate prices just
keep getting worse:
Home prices dropped for the fifth consecutive month in January, reaching
their lowest point since the end of 2002.
– CNNMoney, March 27
As values sink and desperation grows, the number of owners giving their
timeshares away for $1 — or less — has doubled in the past year, says
Brian Rogers, of Timeshare Users Group, an owner advocacy group. “There’s
never been a worst time to try to sell a timeshare,” he says.
– SmartMoney, April 4
Observers have called for a bottom numerous times in the five or so years
since the bubble burst.
Again, this is what can happen. Recovery can take far longer than many
expect.
Real estate is just one sector of the economy. Let’s consider another
sector:
According to Citigroup economist Steven Wieting health care is the next
big bubble looming in the distance.
And to make matters all the more worrisome, his analysis suggests it’s
like nothing we’ve seen before.
- CNBC.com, April 12
Although health care is a huge part of the economy, it’s still just one
sector. Let’s consider yet another sector:
The amount Americans owe on student loans is far higher than earlier
estimates…Total student debt outstanding appears to have surpassed $1
trillion late last year…That would be roughly 16% higher than an estimate
earlier this year by the Federal Reserve Bank of New York.
- Wall Street Journal online, March 22
As big as each of the above sectors are, they are just a fraction of the
bigger picture:
…the property market, to me, was a microcosm…of what shape the whole
world is in right now — in debt up to its ears and ultimately unable to pay
. And that’s what crushed the real estate market and I think it’s going to
crush…the entire debt market across the globe… Nobody’s worried…
– Robert Prechter, Financial Sense Newshour interview, March 22
Far from being worried, lenders are once again trying to push credit on
risky clients:
[A Brooklyn resident] just emerged from bankruptcy and doesn’t have a
job, and her car was repossessed last year. Still, after spending her days
job hunting, she returns to her apartment in Brooklyn where, in disbelief,
she sorts through the piles of credit card and auto loan offers that have
come in the mail.
- New York Times, April 10
As bubbles balloon in individual sectors of the economy, the psychology of
the pre-financial crisis days have returned.
That’s why it’s important to remember that hardly anyone was concerned
about the real estate market in 2006. Then the whole house of cards fell in.
Now consider the entire global debt market: the biggest bubble of all time. |
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