Global Debt Time Bomb explodes soon

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Re: Global Debt Time Bomb explodes soon

Post by raptor » Fri Sep 13, 2019 6:51 pm

MPMalloy wrote:
Fri Sep 13, 2019 6:27 pm
boskone wrote:
Fri Sep 13, 2019 4:54 pm
MPMalloy wrote:
Fri Sep 13, 2019 12:25 am
From Bloomberg: U.S. Recession Indicators Haven’t Made Up Their Minds
I've been keeping a light eye on this, and I'd say that's understatement. Several times I've seen one or another publication run articles both ways simultaneously.
I haz whiplash.. :mrgreen:

Here is the truth....

#1) There will be another recession. Business does run in cycles. There will always be another recession...always.

#2) The news media must sell clicks or copies or they will have their own negative business cycle. They cannot sell clicks with headlines that say everything is ok for now but may get worse later. ... SO ...ZOMG...A recession is imminent and we all be broke, naked and hungry except for (fill in the name the scapegoat du jour) because they caused it and want it to happen.

#3) Sooner or later because of truth #1 the folks who spout #2 will at some point be right and they get entra internet cred which helps them sell clicks.


In all seriousness the following is my opinion (not truth)and does not constitute advice:

The current economy is slowing down a bit.
It expanded rapidly in 2017 at an unsustainable pace. Economies cannot expand at the rate continuously so a slow down and even a contraction is to be expected.

The employment #s have not been this great in a long time. Try to replace an employee and see how hard it is to find a replacement. Wages are up and raising for this reason. There are a few areas in the US where this may not be the case but for the most part all 50 states are enjoying a prosperous period.

Consumer spending is high and consumer debt levels are rising indicated confidence in the future at all levels. Interest rate levels rose too quickly but that did not impact the economy as much as I expected. The Fed saw this reacted accordingly.

Barring some unknown black swan event I do not see anything but very soft technical recession as likely in the next 12 months...obviously YMMV.

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Re: Global Debt Time Bomb explodes soon

Post by raptor » Tue Sep 17, 2019 12:22 pm

Here is a weird one. Not a Black Swan but certainly not normal. It is likely a one off event to do exactly what the Fed was designed to do ...ensure the normal flow of commercial transactions... but still this is unusual at least recently.

https://finance.yahoo.com/news/n-y-fed- ... 04831.html
But the central bank didn’t wait until then to do something, resorting to a money-market operation it hasn’t deployed in a decade. The New York Fed bought $53.2 billion of securities on Tuesday, hoping to quell the liquidity squeeze. It appeared to help. For instance, the cost to borrow dollars for one week while lending euros retreated after almost doubling Monday.

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Re: Global Debt Time Bomb explodes soon

Post by SCBrian » Tue Sep 17, 2019 2:36 pm

raptor wrote:
Fri Sep 13, 2019 6:51 pm
#2) The news media must sell clicks or copies or they will have their own negative business cycle. They cannot sell clicks with headlines that say everything is ok for now but may get worse later. ... SO ...ZOMG...A recession is imminent and we all be broke, naked and hungry except for (fill in the name the scapegoat du jour) because they caused it and want it to happen.
>offtopic

Everytime I read this, I think of this video:



>/offtopic

:)
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Re: Global Debt Time Bomb explodes soon

Post by absinthe beginner » Tue Sep 17, 2019 3:38 pm

This seems irregular.

$53.2 Billion In QE Lite: Fed Concludes First Repo In A Decade Amid Liquidity Panic

https://www.zerohedge.com/markets/fed-h ... ates-again

https://www.zerohedge.com/markets/repo- ... gh-markets
Last edited by absinthe beginner on Tue Sep 17, 2019 4:02 pm, edited 3 times in total.

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Re: Global Debt Time Bomb explodes soon

Post by raptor » Tue Sep 17, 2019 3:38 pm

SCBrian wrote:
Tue Sep 17, 2019 2:36 pm

>offtopic

Everytime I read this, I think of this video:
Actually it is not off topic. It is IMO closer to the truth than many "news" reports.

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Re: Global Debt Time Bomb explodes soon

Post by absinthe beginner » Wed Sep 18, 2019 8:21 am

Liquidity Shortage Getting Worse: Fed's Repo Oversubscribed As Funding Demand Soars 50% Overnight

https://www.zerohedge.com/health/fed-be ... ross-board

20 minutes after today's repo operation began, it concluded and there was some bad news in it: as we feared, yesterday's take up of the Fed's repo operation which peaked at $53.2 billion has expanded substantially, and according to the Fed, today there was a whopping $80.05BN in bids submitted, an increase of $27 billion, or 50% more than yesterday.

It also meant that since the operation - which is capped at $75BN - was oversubscribed by over $5BN, that there were participants who did not get the last-minute liquidity they needed, and that the Fed will see demands to either expand the size of its operations, or implement a fixed operation and/or transition to permanent open market operations, i.e. QE

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Re: Global Debt Time Bomb explodes soon

Post by absinthe beginner » Wed Sep 18, 2019 11:29 am

Gregory Mannarino on the Fed's injection of liquidity into the banking system to head off a credit freeze (and 2008-style meltdown). Creating massive new debt to prevent the existing debt bubble from imploding - sounds like can-kicking to me.

https://www.youtube.com/watch?v=HPgWSYHcOWc&t=315s

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Re: Global Debt Time Bomb explodes soon

Post by Stercutus » Wed Sep 18, 2019 1:55 pm

I am not a hundred percent sure this wasn't less of a "need" operation and more of a "greed" operation. There is still plenty of room in the middle to make a ton of cash if you have the funds to move money around. Either way the Fed figured that was enough and cut basis points instead. If it is a greed operation then that should trim it. I guess we will know in ten days.
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Re: Global Debt Time Bomb explodes soon

Post by Stercutus » Wed Sep 18, 2019 4:07 pm

I am ROTFLOL over some of the Twitter commentary on the fed actions we don't discuss here. :lol:
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Re: Global Debt Time Bomb explodes soon

Post by absinthe beginner » Thu Sep 19, 2019 8:00 am

Liquidity Shortage Getting Worse: Fed's Repo Oversubcribed Even More As Funding Demand Jumps

https://www.zerohedge.com/markets/fed-b ... rates-ease

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Re: Global Debt Time Bomb explodes soon

Post by raptor » Thu Sep 19, 2019 12:01 pm

This is a link to overnight LIBOR rates. This is what is used for investing overnight by banks and what the Fed is trying to affect.

This chart ges fro 2001 to 2019 note the huge spike between 2008 & 2009 that was indicative of the liquidity crisis that occurred then. This spike was due to the fact that banks did not want to lend to other banks.

I do not see that now.
I am not saying everything is great only that this liquidity seems to be a lessor event (or at least different from 2008.) It is not likely TEOTWAWKI.
https://www.global-rates.com/interest-r ... night.aspx

Image

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Re: Global Debt Time Bomb explodes soon

Post by absinthe beginner » Thu Sep 19, 2019 3:44 pm

Liquidity Shortage Getting Worse: Fed's Repo Oversubcribed Even More As Funding Demand Jumps

https://www.zerohedge.com/markets/fed-b ... rates-ease

Liquidity Scramble: Fed Announces Overnight Repos Every Day Next Week, Introduces Term Repos

https://www.zerohedge.com/markets/liqui ... term-repos

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Re: Global Debt Time Bomb explodes soon

Post by absinthe beginner » Sat Sep 21, 2019 10:14 am

The Panic in Interest Rates is Just Getting Started

https://www.theburningplatform.com/2019 ... g-started/

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Re: Global Debt Time Bomb explodes soon

Post by MPMalloy » Sat Sep 21, 2019 5:10 pm

From Visual Capitalist: The Anatomy of a Market Correction

which leads to....

From Visual Capitalist: The 150 Apps that Power the Gig Economy

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Re: Global Debt Time Bomb explodes soon

Post by MPMalloy » Sun Sep 22, 2019 8:47 pm

From USA Today: Will America's massive debt really doom us? - Believe it or not, this is a feel-good story.

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Re: Global Debt Time Bomb explodes soon

Post by raptor » Mon Sep 23, 2019 12:21 pm

MPMalloy wrote:
Sun Sep 22, 2019 8:47 pm
From USA Today: Will America's massive debt really doom us? - Believe it or not, this is a feel-good story.
The following is opinion not fact.

Short answer: So long as the US$ is the world reserve currency the US will sustain stupid high levels of debt.

Longer answer:
The US $ will likely be the world reserve currency for at least the next decade since there is no other better alternative in the foreseeable future. The Yuan may offer competition but due to the PRC's clear issues it will take a while for them to achieve the PRC's goal of replacing the US $.

The wild card:
The second that the US stops being a World Power you can expect a US $ currency collapse.
By this I do not mean another world power emerges (again most likely PRC) or that the US gets its nose bloodied in a war but rather the US gets it butt kicked either by internal or external forces to the extent that it is clear the US not powerful.

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Re: Global Debt Time Bomb explodes soon

Post by MPMalloy » Wed Sep 25, 2019 8:24 am


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Re: Global Debt Time Bomb explodes soon

Post by MPMalloy » Sun Sep 29, 2019 10:58 pm



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Re: Global Debt Time Bomb explodes soon

Post by Stercutus » Wed Oct 02, 2019 8:19 pm

Well a slew of bad news has started off the end of the US bull market:

1. Politics do not discuss, is resulting in uncertainty in one of the three branches of the government that has been very favorable to US business interests. Businesses hate uncertainty. This is a near exact cause and effect.

2. Manufacturing is starting to slow. Some of this is short cycle some of this is long cycle. It is still really strong.

3. The price of oil never recovered from last year. It is down over $25 a barrel. Despite the Saudi attacks, near revolt in Iraq and Iranian seizures. As I predicted several years ago much to the scoffing of the Peak Oil theorists this would be a huge powerhouse for the US Economy.
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Re: Global Debt Time Bomb explodes soon

Post by Stercutus » Wed Oct 02, 2019 8:37 pm

That power chart is whacked. The US produces 96Gw of wind power annually and it is growing at double digit percentage every year. Seems to have mysteriously disappeared.

For comparison sake the US produces about 100Gw of electricity from nuclear power every year. So within the next 2-3 years wind will easily surpass nuclear as very little expansion of nuclear power is happening. If the congress renews the WPA next year it will likely grow even faster.
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Re: Global Debt Time Bomb explodes soon

Post by MPMalloy » Thu Oct 10, 2019 10:38 am


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Re: Global Debt Time Bomb explodes soon

Post by raptor » Thu Oct 10, 2019 12:48 pm

MPMalloy wrote:
Thu Oct 10, 2019 10:38 am
The father of the yield curve indicator says now is the time to prepare for a recession

Maybe, maybe not, it depends, I'm sure. (ala Red/Green) :clownshoes:
It is always time to prepare for a recession. Business has a cycle. It has always had a cycle and despite what anyone says it will always have a cycle.

So how to prepare for recession:

1. Live below your means and save the difference.
If you get a pay raise bank in the increase instead of spending it. If you clear $100 a week after taxes learn to live on $80.

2. Use credit wisely.
Fixed rate debt for long lived durable long lived goods (i.e. house or car) does make sense so long as the debt can be serviced and the life of the debt is less than the life of the durable good. Avoid variable rate debt except in unusual circumstances or very short term borrowings.

3. Have 6 months to 1 year of living expenses in the bank or otherwise available.

4. Develop and maintain marketable skills.


I also found this web site. It has some good ideas. I am not saying everything her is great but clearly a smart ZS'er knows how to sow the wheat from the chaff.
https://www.howtofire.com/

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