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Old 02-13-2019, 04:05 PM
Danny B Danny B is online now
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Join Date: Oct 2012
Location: L.A. Ca.
Posts: 4,440
Private debt saturation and default

The stock market eventually depends on earnings. The earnings just aren't there so, they do buy-backs to look more profitable. That works to a point.

Stock Market Is Even Worse Than You Think It Is - Bloomberg
2/12 Latest warning sign for markets: a possible ‘earnings recession’ – NY Times
OK, so stocks eventually depend on consumption. Absent good wages, consumption depends on credit.
In the United States, total nonfinancial private debt is $27 trillion and public debt is $19 trillion. More telling, since 1950, U.S. private debt has almost tripled from 55 percent of GDP to 150 percent of GDP, and most other major economies have shown a similar trend.
2/13 A record number of Americans are 90 days behind on their car payments – CNBC
2/13 Household debt up 18 consecutive quarters to a new record – Mish
2/13 Red flags emerge as Americans’ debt load hits another record – Reuters

Debt saturation / exhaustion is creeping up on everybody.
It has become painfully obvious that everything financial depends 99.99% on fresh money printing from the FED. The lower loop fell flat and the PTB tried to save the upper loop from doing the same. The resulting price inflation only made it worse because it drove down consumption. The consumer doesn't have a printing press OR a job.
It remains to be seen what will happen when the lower loop defaults even more.
"Twenty-two percent of student loan borrowers fall into default"
"Nearly 40 percent of borrowers are expected to default on their student loans by 2023"
"the Fed's balance sheet had expanded in size—from about $870 billion in August 2007 to $4.5 trillion in September 2017"
The FED will stop reducing it's balance sheet which means that this money is orphaned and will act like MMT.... money that is printed but, never repaid.

Gen X seems to be not worried about all of this.
"They’ve got the most credit card debt of anyone — yet still spend more than anyone on non-essentials. Members of Gen X have higher levels of credit card debt — which tends to carry a higher interest rate than most other debt — than other generations."

Armstrong writes about farmers going bankrupt. To him, this signals a boom in food commodities. The more likely result is that people downshift from meat-to-chicken OR, chicken-to-vegetables. Leave it to Armstrong to see a silver lining when people can no longer afford food.
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