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– China’s Central Bank Chief Admits “The Bubble Has Burst” (ZeroHedge, Sep 5, 2015):
In a stunningly honest admission from a member of the elite, Zhou Xiaochuan, governor of China’s central bank, exclaimed multiple times this week to his G-20 colleagues that a bubble in his country had “burst.” While this will come as no surprise to any rational-minded onlooker, the fact that, as Bloomberg reports, Japanese officials also confirmed Zhou’s admissions, noting that “many people [at the G-20] expressed concerns about the Chinese market,” and added that “discussions [at the G-20 meeting] hadn’t been constructive” suggests all is not well in the new normal uncooperative G-0 reality in which we live.
Uploaded on Feb 12, 2010
– Presenting America’s $900 Billion Auto Loan Bubble In 6 Charts (ZeroHedge, July 21, 2015)
– London Housing Bubble Watch: $630/Month For A Bed “In” A Shared Kitchen! (ZeroHedge, May 13, 2015):
You know it’s a bubble when… A listing has appeared online advertising a single bed in a house in London where the mattress is located in the kitchen.…
– The Fate of The Tech Bubble Is In The Hands Of Just One Company (ZeroHedge, April 24, 2015):
With the Nasdaq sitting at new highs having finally eclipsed the previous record of 5,048 set in March of 2000 and with consumers not-so-eagerly awaiting their chance to get in on the supposed wave of the wearables future by purchasing their very own Apple Watch, we learn that the fate of the tech bubble now rests entirely on the shoulders of Tim Cook because as FactSet notes, “blended Q1 Y/Y EPS growth for the Information Technology sector is 0.7% [but] excluding Apple, the blended earnings growth rate for the sector would fall to -5.1%.”
That rather disconcerting statistic makes this the scariest chart in the world for tech investors:
And as it turns out, it’s not just the tech space. Y/Y EPS growth for the entire S&P 500 is expected to come in at -2.8% — excluding Apple knocks more than a full percentage point off the already negative results: “The blended earnings decline for the entire S&P 500 is -2.8%. Excluding Apple, the blended earnings decline for the S&P 500 would increase to -3.9%.”
In other words, the market better hope there are a lot of these people out there:
From the article:
As the FT reports, “sales of homes worth more than £2m have dropped by 80 per cent in the past year.”… “It is like the 1970s again, when waves of wealthy people left Britain and it was a disaster.”
– UK Housing Bubble Bursts: Sales Of Luxury Homes Crash By 80%; “Waves Of Wealthy People Are Leaving” (ZeroHedge, April 12, 2015):
About a year ago, when the Chinese housing bubble had just begun to burst (as a reminder Chinese house prices are now crashing at a faster pace than in the US after Lehman) and forcing the real estate bubble blowers to consider a different venue, namely the stock market, another housing bubble several thousand miles away was in full blown escape velocity mode – that of the UK. In fact, as we showed in the following table from last June, the appreciation in UK home prices had surpassed that of China as recently as 10 months ago.
Now that sums up the current situation nicely.
From the article:
“This is not going to be a 1921-style two-year recession that we bounce back from after a little bit of pain and unpleasantness. After a 50-year global economic boon involving what is now a $59 trillion expansion of credit in 50 years, this isn’t going to be a one or two-year hard recession. This is going to be a multi-decade global depression and I’m not sure that anyone alive today would live long enough to see the recovery. I mean, it’s like Rome: when Rome fell, there was a recovery, but it was 1,000 years later. This is the kind of depression we’re looking at if we allow this $59 trillion credit bubble of ours to implode.”
– Richard Duncan: The Real Risk Of A Coming Multi-Decade Global Depression (Peak Prosperity, April 5, 2015):
Richard Duncan, author of The Dollar Crisis and The New Depression: The Breakdown Of The Paper Money Economy, isn’t mincing words about the risks he sees ahead for the world economy.
Essentially, he sees the past 50 years of economic prosperity fueled by globalization and easy credit in serious danger of being unwound, as the doomed monetary policies currently being pursued by the word’s central banks result in a massive multi-decade depression that spans the globe.
The first version of The Dollar Crisis, the hardback, came out in 2003, so I wrote it in 2002. And at that time, the dollar against gold was $300. So the dollar has lost more than 75% of its value since The Dollar Crisis was written, and I don’t think it’s going to stop here. I expect it to continue to lose value over the years and decades ahead.
But what we’re seeing is that the real theme of The Dollar Crisis was that the post-Bretton Woods international monetary system was fundamentally flawed because it couldn’t prevent trade imbalances between countries. And the US had developed an enormous trade deficit with the rest of the world and this blew the trade surplus countries like Japan and China into bubbles. And then, the dollars boomeranged back into the United States and blew it into a bubble, as well. I didn’t know when the housing bubble was going to pop in the US but I knew it would. And I wrote in The Dollar Crisis that when it did, we would have a severe global economic recession/depression that would involve a systemic banking sector crisis in the United States and necessitate trillion-dollar budget deficits and unorthodox monetary policy to prevent a Great Depression from occurring.
– The Canadian Housing Bubble Has Begun To Burst (ZeroHedge, March 24, 2015):
Energy accounts for 10% of Canadian GDP and around 25% of exports and the swift fall in oil prices is having a profound effect in the nation’s oil producing regions where home sales are collapsing by as much as 65%.
– Surprise: Tech Company Valuations Are Completely Made Up (ZeroHedge, March 18, 2015):
Talk of a massive bubble in the red hot world of private tech companies is getting louder of late. As we noted last week, Prem Watsa recently highlighted what he called excessive “speculation” in tech stocks and predicted that at the end of the day, habitually slapping billion-dollar valuations on unproven companies that often have little more than an app and a dream will end “very badly.” This comes on the heels of Mark Cuban’s warning that stretched valuations in private tech companies are far more dangerous than any perceived Nasdaq bubble 2.0, as at least with overvalued publicly traded firms there’s liquidity.
Well, now that everyone is jumping on the “there’s no way that app is worth $50 billion” bandwagon, Bloomberg is out with a startling revelation: “Snapchat, the photo-messaging app raising cash at a $15 billion valuation, probably isn’t actually worth more than Clorox.”
No, probably not, but it sure is more fun than doing laundry, which is why it absolutely makes sense that the number VCs are putting on the app makes absolutely no sense.
– The One Chart You Need To Predict The Future (Of Two Minds, March 6, 2015):
We are witnessing a profound secular sea-change: the failure of expanding debt and leverage to lift the real economy of wages and household income.When push comes to shove, you only need one chart to predict the future: debt and wages ( credit and compensation). This chart displays debt and wages as a ratio: debt/wages. What it reveals is the endgame of financialization: creating more debt no longer pushes wages higher.
I have broken the past five decades into easily recognizable economic periods. During the organic growth of the 1960s that many view as the ideal–what I term the pre-financialized economy, the line is almost flat, as debt and wages expanded in a balanced fashion.
– Biggest Nordic Buyout Fund Sees “Asset Bubbles Wherever We Look” (ZeroHedge, Feb 19, 2015):
“We’re more leveraged today than in 2006-2007,” warns Thomas von Koch – managing partner at EQT, the largest buyout fund in the Nordic region, adding that “there are financial bubbles being built up and how they’ll be solved, I don’t know.” As Bloomberg reports, von Koch concludes, an unprecedented era of monetary stimulus is inflating asset prices across markets to extreme levels, with history offering little help in predicting how it will all end – “The problem is global, not just for Europe. It’s the asset bubbles in general that concern me. It’s wherever we look.”
– Is the Auto Loan Bubble Bursting? Delinquent Loans Jump 27% Year-Over-Year (Liberty Blitzkrieg, Dec 5, 2014):
I’ve covered the ever expanding subprime auto loan market on several occasions over the past couple of years, most recently in the post: Chinese Homebuilders Expand in America as U.S. Auto Loans Hit Record Levels. As they always do, it appears that the chickens are starting to come home to roost.
The New York Times reports the following:
An increasing number of borrowers are falling behind on their car payments, even as the total amount of outstanding debt reaches new heights, according to the latest report by Experian, the credit and research firm.
In a presentation on Wednesday, Experian said the balance of loans that were 60 days delinquent increased 27 percent, to roughly $4 billion, in the third quarter from the same period a year ago.
– This Has Never Happened Before Without A Massive Bubble Bursting (ZeroHedge, Oct 28, 2014):
Back in June we first observed that “America’s Most Important Housing Market Signals A Red Alert For Housing Bubble Watchers” and showed the following chart:
– The Real Bubble Isn’t Stocks… and It Will Make 2008 Look Like a Picnic (ZeroHedge, Oct 2, 2014):
The 2008 crisis was just a warm-up.
The 2008 crisis was a banking and equities crisis. In the simplest terms, investment banks, leveraged to the hilt with garbage mortgage derivatives, became insolvent and began to collapse.
This collapse triggered a selling panic throughout the financial system as every financial entity questioned the quality of the assets backstopping its derivatives trades. The derivative market was over $700 trillion at the time. So just about every major global bank had broad exposure to this market.
– 18 Sobering Facts About The Unprecedented Student Loan Debt Crisis In The United States (The American Dream, Oct 7, 2014):
The student loan debt bubble in America is spiraling out of control, and it is financially crippling an entire generation of young Americans. At this point, the grand total of student loan debt in the United States has reached a staggering 1.2 trillion dollars, and an all-time record high 40 million Americans are currently paying off student loan debts. Just when our young people should be planning on buying homes and starting families, they find themselves financially paralyzed by oppressive levels of debt. What makes all of this even worse is that only some of our college graduates are able to get the “good jobs” that we promised them. So with limited job prospects and suffocating levels of debt, this generation of young Americans is increasingly putting off major life commitments such as buying a home and getting married. As a society, we really need to rethink how we are “educating” our young people, because what we are doing now is clearly not working. The following are 18 sobering facts about the unprecedented student loan debt crisis in the United States…
– Deutsche Bank: The Bubble Must Go On To Sustain The “Current Global Financial System” (ZeroHedge, Sep 10, 2014):
When all is said and done, it all basically boils down to this: from Deutsche Bank’s Jim Reid.
The bubble probably needs to continue in order to sustain the current global financial system and the necessary future deleveraging. However with yields moving ever lower in many parts of the world in recent times, partly due to weak growth, and with debt levels still moving higher, the chances are that most government bondholders are unlikely to achieve a positive real return over the medium to long-term from this starting point. Inflation or even the risk of sovereign restructuring will likely prevent this.
So there you have it: either the bubble goes on, or the “current global financial system” gets it.
– Car Repos Soar 70% As Auto Subprime Bubble Pops; “It’s Contained” Promises Fed (ZeroHedge, Aug 20, 2014):
The auto loan subprime bubble may be the latest to burst (after student loans) as the rate of car repossessions jumped 70.2 percent in the second quarter, with much of that increase coming from finance companies not run by automakers, banks or credit unions. “The number of delinquencies and repossessions rising is what we would expect as the auto industry sells more vehicles,” “But this slight uptick is one to keep an eye on.” The surge in delinquencies and repossessions is being driven primarily by borrowers with subprime and deep subprime credit scores.