FX Street: Everywhere You Look, There's Too Much Debt!
Article by Chuck Butler on FX Street
Yesterday, both Citibank, and Goldman were sending out warnings about lower earnings that in their opinion were on their way. But to add to that, Well, it’s not just me that sees dark clouds ahead for the U.S. economy.
Apple and Samsung are experiencing inventory stockpiles not seen since before the 2008 Financial meltdown. That was a Bloomberg story on Tuesday that caught my eye, and made me think back ten years. Did you know we’re coming up on the 10 year anniversary of the shutdown of Lehman Brothers? That shutdown is pointed to as the snowflake that started the avalanche. Albeit being a rather large snowflake, don’t you think? But then again IT WAS a rather large avalanche, wasn’t it?
As Paul sang to Paulette…. Are you ready? And she replied: yes, I’m ready… Which would mean that she’s placed current stop loss orders on stocks, bought Gold & or Silver, and are ready for the coming tide…
Every day, a longtime reader of mine, Bob, sends me lots of stories to read, and I eventually get to all of them and some of them end up being FWIW section articles. But yesterday, Bob sent me (Thanks by the way!) a very good article that will be featured in the FWIW section today, but as just a teaser I thought I would give you a line from the article: “Ten years after the worst financial panic since the 1930s, growing debt burdens in key developing economies are fueling fears of a new crisis that could spread far beyond the disruption sweeping Turkey.—“
People around the world are beginning to realize that there is just too much debt in the world, and at this point most believe the majority of this debt will never be repaid. Defaults will be the new trending word going viral, folks… And then you’ll thank me that you bought some Gold or Silver… I’m just saying…
One of my favorite economists, Danielle Di Martino Booth, has been pointing out that inflation is getting ready to go on a moon shot ( my words), And the Fed Chairman Jerome Powell is doing the right thing by hiking rates now. I don’t know if I agree with that thought 100%, but she used to be an insider at the Fed, and knows more about this stuff than I can claim to know! What I do know is that if she's correct, then buying Gold at these current levels seems like an obvious thing to do, no?
Speaking of the shiny metal... Gold gained $5 yesterday, and it went up $8 in the early morning trading today. There comes a time in a person's life when they feel like the whole world is crashing down on top of them. They soon realize that it's not going to happen and they work out whatever was the problem that caused them to feel that way. But with our problem, which is too much debt in the world, the problem is never going to get "worked out"!
With every day that passes, the Debt loads get larger and larger. Debt with the government, States, and consumers. And where does the foundation of this debt pyramid begin to crack? When consumers begin to default on their loans. Uh-Oh... net bank chargeoffs for bad credit card debts have soared 16% year-on-year!
So, get your journals out, and record this day as the first day that I said that the cracks in the debt foundation are beginning to form. Yes, most of the world has debt up to their collective eyeballs, and I worry about that, but I'm more worried about my homeland debt.It's growing like an unattended weed, and it's only going to get worse. Please hear my warnings on this folks.
The U.S. Data Cupboard begins to get everyone ready for the Jobs Jamboree tomorrow, with the ADP Jobs report for August on the docket to print today. You know, something slipped my mind last week when Durable Goods printed. Durable Goods Orders have printed negative 3 of the last 4 months! Doesn't anyone at the Fed or the White House look at this and say, "something is wrong here?"
You've just got to wonder when it all comes crashing down on us....
Ten years after the worst financial panic since the 1930s, growing debt burdens in key developing economies are fueling fears of a new crisis that could spread far beyond the disruption sweeping Turkey.
The loss of investor confidence in the Turkish lira, which has surrendered more than 40 percent of its value this year, is only a preview of debt problems that could engulf countries such as Brazil, South Africa, Russia and Indonesia, some economists say.
“Turkey is not the last one,” said Sebnem Kalemli-Ozcan, an economics professor at the University of Maryland. “Turkey is the beginning.”
For now, few experts think that a broader crisis is imminent, though Argentina this week asked the International Monetary Fund to accelerate a planned $50 billion rescue as the peso crashed to a historic low. But the danger of a financial contagion that could hit Americans by crushing U.S. exports and sending the stock market plunging should be taken more seriously in light of a massive increase in global debt since the 2008 downturn, the economists said.
Total debt is a whopping $169 trillion, up from $97 trillion on the eve of the Great Recession, according to the McKinsey Global Institute.
While previous debt crises involved U.S. households and, later, profligate European governments such as Greece, this time the concern centers on companies in emerging markets that borrowed heavily in dollars and euros.
It only takes one default to beget another, and then another... I'm just saying...
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