Author Topic: Credit Bubble?  (Read 2040 times)

Offline Solar

  • Hero Member
  • *****
  • Posts: 66451
  • Gender: Male
Credit Bubble?
« on: October 11, 2016, 07:20:34 AM »
Has the interest free Fed loans been nothing more than a bubble?
Of course, like all things free, it can't go on forever, especially where credit is concerned, eventually payment comes due, and when it does and you can't pay it back, your only options are to eat the debt or file bankruptcy.
Makes one wonder if the govt will change bankruptcy 'rules via EO' in order to save face for the Marxist WH.....

I can neither affirm nor negate the validity of the article, but its stats seem very plausible, but it is after all Newsmax, a questionable site at times...

Bankruptcy filings by U.S. businesses soared 38 percent in September from a year earlier in an ominous sign of a weakening economy, says Wolf Richter, editor of the Wolf Street blog.

Last month’s bankruptcies reached 3,072 to bring the year-to-date total to 28,789 and marked the eleventh straight month of increases from 2015, according to data from the American Bankruptcy Institute.

“Rising bankruptcies are an indicator that the ‘credit cycle’ has ended,” Richter says in a commentary about the limits of the Federal Reserve’s ability to help an economic recovery. “The Fed’s policy of easy credit has encouraged businesses to borrow – those that could. But by now, this six-year debt binge has created an ominous debt overhang that is suffocating these businesses as they find themselves,

http://www.newsmax.com/Finance/Economy/bankruptcy-restaurant-Wolf-Richter-economy/2016/10/10/id/752515/
#WWG1WGA

Offline Hoofer

  • Hero Member
  • *****
  • Posts: 4770
  • Gender: Male
  • HAM Radio - the last form of free expression
Re: Credit Bubble?
« Reply #1 on: October 13, 2016, 11:45:42 AM »
Has the interest free Fed loans been nothing more than a bubble?
Of course, like all things free, it can't go on forever, especially where credit is concerned, eventually payment comes due, and when it does and you can't pay it back, your only options are to eat the debt or file bankruptcy.
Makes one wonder if the govt will change bankruptcy 'rules via EO' in order to save face for the Marxist WH.....

I can neither affirm nor negate the validity of the article, but its stats seem very plausible, but it is after all Newsmax, a questionable site at times...

Bankruptcy filings by U.S. businesses soared 38 percent in September from a year earlier in an ominous sign of a weakening economy, says Wolf Richter, editor of the Wolf Street blog.

Last month’s bankruptcies reached 3,072 to bring the year-to-date total to 28,789 and marked the eleventh straight month of increases from 2015, according to data from the American Bankruptcy Institute.

“Rising bankruptcies are an indicator that the ‘credit cycle’ has ended,” Richter says in a commentary about the limits of the Federal Reserve’s ability to help an economic recovery. “The Fed’s policy of easy credit has encouraged businesses to borrow – those that could. But by now, this six-year debt binge has created an ominous debt overhang that is suffocating these businesses as they find themselves,

http://www.newsmax.com/Finance/Economy/bankruptcy-restaurant-Wolf-Richter-economy/2016/10/10/id/752515/

Am I the only one who is really suspicious of the credit TERMs (hidden, no doubt), or the possibility of new LAW governing credit - with a negative impact on those who use credit?  These practially ZERO interest rates - where is this leading us?
All animals are created equal; Some just take longer to cook.   Survival is keeping an eye on those around you...

Offline Solar

  • Hero Member
  • *****
  • Posts: 66451
  • Gender: Male
Re: Credit Bubble?
« Reply #2 on: October 13, 2016, 11:55:28 AM »
Am I the only one who is really suspicious of the credit TERMs (hidden, no doubt), or the possibility of new LAW governing credit - with a negative impact on those who use credit?  These practially ZERO interest rates - where is this leading us?
When the bubble pops? :unsure:
What really scares me is the Fed allowing banks to charge for taking cash withdrawals from the bank, in turn forcing us into a cashless society.
Once govt controls your treasure, they control your every move in life, not to mention where you are on any given day.
I hate to say it, but I believe we will arrive there without a whimper in 20 years.
#WWG1WGA

Offline Hoofer

  • Hero Member
  • *****
  • Posts: 4770
  • Gender: Male
  • HAM Radio - the last form of free expression
Re: Credit Bubble?
« Reply #3 on: October 14, 2016, 08:10:32 AM »
When the bubble pops? :unsure:
What really scares me is the Fed allowing banks to charge for taking cash withdrawals from the bank, in turn forcing us into a cashless society.
Once govt controls your treasure, they control your every move in life, not to mention where you are on any given day.
I hate to say it, but I believe we will arrive there without a whimper in 20 years.

I've been wondering about where we've come from, traditional lending vs this crowd sourcing, the underground "cash" economy and if there isn't a different direction on the horizon.  When the government regulations smother small businesses, they turn to rather creative ways for financing, marketing and building an alternate type of business.  I've never seen such an elaborate drawing, such as THIS.

http://ritholtz.com/wp-content/uploads/2016/10/hioneycomb.png

Some of the stuff - like click bait, I was really looking for a little background on Harry Dent - he hit ONE stock market prediction, and since then has been hilariously wrong on a regular basis... might have something to do with Alex Jones or Glenn Beck?  Psssst... the stockmarket hit 33,000 pts. between 2008-2010, you just didn't notice it, eh?  Darn, another opportunity MISSED!!!  (he cashed in on book sales)

But, this is worth looking into...!

Based on the book:  The Sharing Economy: The End of Employment and the Rise of Crowd-Based Capitalism (MIT Press)
Quote
Sharing isn't new. Giving someone a ride, having a guest in your spare room, running errands for someone, participating in a supper club -- these are not revolutionary concepts. What is new, in the "sharing economy," is that you are not helping a friend for free; you are providing these services to a stranger for money. In this book, Arun Sundararajan, an expert on the sharing economy, explains the transition to what he describes as "crowd-based capitalism" -- a new way of organizing economic activity that may supplant the traditional corporate-centered model. As peer-to-peer commercial exchange blurs the lines between the personal and the professional, how will the economy, government regulation, what it means to have a job, and our social fabric be affected?

Drawing on extensive research and numerous real-world examples -- including Airbnb, Lyft, Uber, Etsy, TaskRabbit, France's BlaBlaCar, China's Didi Kuaidi, and India's Ola, Sundararajan explains the basics of crowd-based capitalism. He describes the intriguing mix of "gift" and "market" in its transactions, demystifies emerging blockchain technologies, and clarifies the dizzying array of emerging on-demand platforms. He considers how this new paradigm changes economic growth and the future of work. Will we live in a world of empowered entrepreneurs who enjoy professional flexibility and independence? Or will we become disenfranchised digital laborers scurrying between platforms in search of the next wedge of piecework? Sundararajan highlights the important policy choices and suggests possible new directions for self-regulatory organizations, labor law, and funding our social safety net.


I think this guy might have identified an OLD ECONOMY as the NEXT ECONOMY for the way out of overreaching government regulations that are crushing new business start ups.  And I'd dare say, anyone over 60yrs who came from a small community, agriculture, non-industrial area - probably grew up with this kind of "service based" economic model.  This kid might have rediscovered "Those Old Farts had it right all along!"    :ttoung:

Would this be going backwards, or did the rapid Industrial Revolution growth have a natural waning, the Technology Revolution is headed towards "workerless, component size reductions", leave us with the originals needs we always had?   (... watching a piglet wander around the side yard, looking for sweet treats, yet a pasture full of hay is 20' away...  reminds me of our basic needs are, and always will be.)

This is what's wonderful about America, everywhere we look, is opportunity!   Socialists & Communists must loathe the idea an individual can create a better life for themselves without any government intervention at all.  Elisabeth Warren is full of BS, "I can build that!" - no need for her bankrupt Socialism & Communism.
All animals are created equal; Some just take longer to cook.   Survival is keeping an eye on those around you...

Offline Solar

  • Hero Member
  • *****
  • Posts: 66451
  • Gender: Male
Re: Credit Bubble?
« Reply #4 on: October 14, 2016, 10:27:56 AM »
I've been wondering about where we've come from, traditional lending vs this crowd sourcing, the underground "cash" economy and if there isn't a different direction on the horizon.  When the government regulations smother small businesses, they turn to rather creative ways for financing, marketing and building an alternate type of business.  I've never seen such an elaborate drawing, such as THIS.

http://ritholtz.com/wp-content/uploads/2016/10/hioneycomb.png

Some of the stuff - like click bait, I was really looking for a little background on Harry Dent - he hit ONE stock market prediction, and since then has been hilariously wrong on a regular basis... might have something to do with Alex Jones or Glenn Beck?  Psssst... the stockmarket hit 33,000 pts. between 2008-2010, you just didn't notice it, eh?  Darn, another opportunity MISSED!!!  (he cashed in on book sales)

But, this is worth looking into...!

Based on the book:  The Sharing Economy: The End of Employment and the Rise of Crowd-Based Capitalism (MIT Press)

I think this guy might have identified an OLD ECONOMY as the NEXT ECONOMY for the way out of overreaching government regulations that are crushing new business start ups.  And I'd dare say, anyone over 60yrs who came from a small community, agriculture, non-industrial area - probably grew up with this kind of "service based" economic model.  This kid might have rediscovered "Those Old Farts had it right all along!"    :ttoung:

Would this be going backwards, or did the rapid Industrial Revolution growth have a natural waning, the Technology Revolution is headed towards "workerless, component size reductions", leave us with the originals needs we always had?   (... watching a piglet wander around the side yard, looking for sweet treats, yet a pasture full of hay is 20' away...  reminds me of our basic needs are, and always will be.)

This is what's wonderful about America, everywhere we look, is opportunity!   Socialists & Communists must loathe the idea an individual can create a better life for themselves without any government intervention at all.  Elisabeth Warren is full of BS, "I can build that!" - no need for her bankrupt Socialism & Communism.
If you truly want to see our future, just look to Russia and it's underground economy. It actually functions if you have a little cash/equity to work with, otherwise you're stuck with whatever the govt allots to you.
#WWG1WGA

Offline Hoofer

  • Hero Member
  • *****
  • Posts: 4770
  • Gender: Male
  • HAM Radio - the last form of free expression
Re: Credit Bubble?
« Reply #5 on: October 14, 2016, 05:27:29 PM »
If you truly want to see our future, just look to Russia and it's underground economy. It actually functions if you have a little cash/equity to work with, otherwise you're stuck with whatever the govt allots to you.

Very True!!!  Theft from the government is also rampant... and hardly frowned upon.
All animals are created equal; Some just take longer to cook.   Survival is keeping an eye on those around you...

Offline walkstall

  • Global Moderator
  • Hero Member
  • *****
  • Posts: 25541
  • Gender: Male
  • WYSIWYG
Re: Credit Bubble?
« Reply #6 on: October 14, 2016, 07:08:39 PM »
Very True!!!  Theft from the government is also rampant... and hardly frowned upon.

Hillary would fit right in.   :lol:
A politician thinks of the next election. A statesman, of the next generation.- James Freeman Clarke

Politics is supposed to be the second-oldest profession.  I have come to realize that it bears a very close resemblance to the first.  ~ Ronald Reagan ~

Always remember "Feelings Aren't Facts."

Offline Hoofer

  • Hero Member
  • *****
  • Posts: 4770
  • Gender: Male
  • HAM Radio - the last form of free expression
Re: Credit Bubble?
« Reply #7 on: October 15, 2016, 03:42:24 PM »
Hillary would fit right in.   :lol:

She once spoke with admiration of Argentina.

Makes me wonder if the Clintons have any personal debt (other than "favors" to donors).   Sitting on how many millions or billion, are they responsible enough to have cleared all their debts?   :rolleyes:
All animals are created equal; Some just take longer to cook.   Survival is keeping an eye on those around you...

Offline Possumpoint

  • Full Member
  • ***
  • Posts: 164
  • Gender: Male
Re: Credit Bubble?
« Reply #8 on: November 19, 2016, 05:00:16 PM »
You have called this a Credit Bubble. My Opinion is that it should be called a Debt Bubble. Why? My example would be that I have all kinds of credit extended to me that I chose not to exercise. I carry very little debt and it will be paid by the end of the month.

It's the growth of the debt levels that is causing problems in the personnel and corporate sectors and will cause immense trouble in governmental finances if the politicians don't pull their heads out and balance the budget.

Insolvency is growing on the corporate front and that could lead to a domino effect on personal finances. If we experience a recession then the debt levels carried in the sub prime auto loans and student loans will narrow the options available to the consumer. Consumers, reading the tea leaves, are slowing down their spending and all of a sudden we're having all of these premature Black Friday sales going on in an effort to generate sales to keep the retailers solvent.


Offline Solar

  • Hero Member
  • *****
  • Posts: 66451
  • Gender: Male
Re: Credit Bubble?
« Reply #9 on: November 19, 2016, 05:28:13 PM »
You have called this a Credit Bubble. My Opinion is that it should be called a Debt Bubble. Why? My example would be that I have all kinds of credit extended to me that I chose not to exercise. I carry very little debt and it will be paid by the end of the month.

It's the growth of the debt levels that is causing problems in the personnel and corporate sectors and will cause immense trouble in governmental finances if the politicians don't pull their heads out and balance the budget.

Insolvency is growing on the corporate front and that could lead to a domino effect on personal finances. If we experience a recession then the debt levels carried in the sub prime auto loans and student loans will narrow the options available to the consumer. Consumers, reading the tea leaves, are slowing down their spending and all of a sudden we're having all of these premature Black Friday sales going on in an effort to generate sales to keep the retailers solvent.
Truth is, we've been in the longest depression in US history, the only difference is the Fed ran up the debt to give away free food, extended employment benefits, expanded welfare to states, so they can keep people on the roles even longer.
Problem is, that bill is one day going to come due.
#WWG1WGA

Offline Possumpoint

  • Full Member
  • ***
  • Posts: 164
  • Gender: Male
Re: Credit Bubble?
« Reply #10 on: November 19, 2016, 05:45:47 PM »
Maybe I'm wrong but I thought that most of the money printed went to the banks and then the stock market. This has given an artificial view of an improving economy. The improvement was without a reality base.

In any event massive amounts of money was printed to cover government spending that is out of control.

Offline Solar

  • Hero Member
  • *****
  • Posts: 66451
  • Gender: Male
Re: Credit Bubble?
« Reply #11 on: November 19, 2016, 06:17:15 PM »
Maybe I'm wrong but I thought that most of the money printed went to the banks and then the stock market. This has given an artificial view of an improving economy. The improvement was without a reality base.

In any event massive amounts of money was printed to cover government spending that is out of control.
Exactly! There has been zero improvement in the economy.

First it propped up bad and failed loans, then a phony stimulus package, not to mention The Marxist so called "Green Energy" scam and the list goes on and on, all the while running up the debt thanks to the GOP writing them a blank check via Continuing Resolutions.
Something I refer to as 'Q-E Infinity Omnibus Bills.'
#WWG1WGA

Offline supsalemgr

  • Hero Member
  • *****
  • Posts: 12911
  • Gender: Male
Re: Credit Bubble?
« Reply #12 on: November 20, 2016, 04:52:00 AM »
You have called this a Credit Bubble. My Opinion is that it should be called a Debt Bubble. Why? My example would be that I have all kinds of credit extended to me that I chose not to exercise. I carry very little debt and it will be paid by the end of the month.

It's the growth of the debt levels that is causing problems in the personnel and corporate sectors and will cause immense trouble in governmental finances if the politicians don't pull their heads out and balance the budget.

Insolvency is growing on the corporate front and that could lead to a domino effect on personal finances. If we experience a recession then the debt levels carried in the sub prime auto loans and student loans will narrow the options available to the consumer. Consumers, reading the tea leaves, are slowing down their spending and all of a sudden we're having all of these premature Black Friday sales going on in an effort to generate sales to keep the retailers solvent.

Credit in and of itself is not the problem. The problem is how much of one's credit limit is being used. I have a significant amount of credit limit out of convenience. However, I use very little of it and consequently my wife's and my credit scores are excellent. Compare that to our government. It not only is not reducing debt, but has to raise its own debt limit two or three times a year. That is the real bubble.
"If you can't run with the big dawgs, stay on the porch!"

 

Powered by EzPortal