Tag: Economy

What Will Cause The Next Stock Market Crash?

Summary:

  • Investors feeling safer than they should is the primary cause of market crashes.
  • Consumer debt is at unhealthy levels, but it is not reflected in consumers’ credit scores.
  • Bonds in every sector have the potential to be much riskier than their credit ratings indicate.
  • It may be a good time to avoid long-term bonds and securitized debt and to look for investments less exposed to high levels of debt.

Stock market crashes, like those that hit the U.S. markets in 1929, 1987, and 2008, tend to follow the same formula. This makes people wonder why they keep happening and we cannot prevent or even predict them. In fact, the act of thinking that we can prevent or predict them can at least partially be credited with causing them.

The formula is essentially as follows…

Continue reading at Seeking Alpha.

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Market Monday #1: Capitalists Addicted to Debt

Welcome to Market Monday! Check in every Monday for this weekly economic digest.

Capitalism has long had an addiction to debt, and this week’s headlines show that it is off the wagon again. Governments, corporations, and households are getting in over their heads again. Continue reading “Market Monday #1: Capitalists Addicted to Debt”

Book Review: Stress Test

stress testTimothy Geithner was President of the Federal Reserve Bank of New York from 2003 to 2009 and U.S. Secretary of the Treasury under from 2009 to 2013. Many people would have loved to be a fly on the wall in some of the meetings that Geithner was in during the financial crisis, the Great Recession, and the recovery. Geithner provides some insights, but he is also overly concerned with addressing his critics, especially those he calls “moral hazard fundamentalists.” Continue reading “Book Review: Stress Test”

These 3 Charts About Student Loans Should Scare Everyone

Rick Rieder, Chief Investment Officer of Global Fixed Income at BlackRock, wrote a startling article on “the economic side effects of the student loan crisis.”

1. Homeownership is on the Decline

chart1-homeownership

2. More Student Loan Debt Among Older Age Groups

chart2-studentloan

3. College Education is Still Key to Employment and Earnings

chart3-earnings

So you have to have a college education to earn decent income and steady employment, but the cost of that degree makes it nearly impossible to purchase a home, save for retirement, etc.

Rieder offers some excellent perspective on why this is some seriously alarming data for the economy.

How the Next Bust is Brewing

Check out my article, “How The Next Bust Is Brewing,” which was just published by Seeking Alpha. It covers…

  • Consumer credit scores have reached a record high.
  • The mistakes that caused the 2008 financial crisis are falling off credit reports.
  • Credit card debt remains on the rise.
  • FICO is lowering the standards for achieving a high credit score.
  • The average American household is a higher credit risk than it appears to be.

These are very concerning developments that every investor should be aware of.