Sunday , 25 June 2017


How Much Time Before “The 7 Bubbles of America” Start to Burst?

History has shown us that all financial bubbles eventually burst. It is not a question of “if” they will burst.  It is dollar bubblesonly a question of “when” and when the 7 current financial bubbles in America burst, the pain is going to be absolutely enormous. That being said, how much time do you believe that we have before these bubbles start to burst?

The above introductory comments are edited excerpts from an article* by Michael Snyder (theeconomiccollapseblog.com) entitled Bubbles, Bubbles Everywhere.

The following article is presented courtesy of Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!) and   www.FinancialArticleSummariesToday.com (A site for sore eyes and inquisitive minds) and has been edited, abridged and/or reformatted (some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. This paragraph must be included in any article re-posting to avoid copyright infringement.

Snyder goes on to say in further edited excerpts:

Is there any doubt that we are living in a bubble economy?  At this moment in the United States we are simultaneously experiencing:

  1. a stock market bubble,
  2. a government debt bubble,
  3. a corporate bond bubble,
  4. a bubble in San Francisco real estate,
  5. a farmland bubble,
  6. a derivatives bubble and
  7. a student loan debt bubble.

Similar things could be said about most of the rest of the planet as well.  In fact, the total amount of government debt around the world has risen by about 40 percent just since the last recession but it is never sustainable when asset prices and debt levels increase much faster than the overall level of economic growth.

[In a recent poll of investors, Bloomberg found that 47% of those surveyed believed the equity market was close to “unsustainable levels” while 14% already saw a “bubble.” In the high yield bond market, the results were even more alarming, with 70% of those surveyed saying the rally in junk-rated bonds was “in a bubble or close to one.” Source:**

(click to enlarge)

Source: Bloomberg Poll]

The Stock Market Bubble

When most people think of financial bubbles the very first thing they think of is the stock market and, without a doubt, we are in a stock market bubble right now.  [As illustrated in the chart below] the Dow has risen more than 10,000 points since the depths of the last recession and it is nearly 3,000 points higher than it was at the peak of the last stock market bubble in 2007 when our economy was far stronger than it is now.

Dow Jones Industrial Average 2014

These stock prices, however, do not reflect economic reality in any way whatsoever.  Our economy has not even come close to recovering to the level it was at prior to the last financial crisis, and yet thanks to massive Federal Reserve money printing stock prices have soared to unprecedented heights.

At some point a massive correction is coming.  No stock market bubble lasts forever.  For a whole bunch of technical reasons why serious market turmoil is on the horizon, please see…[the large number of articles linked below].

The bubbles in the financial markets have become so glaring that even the central bankers are starting to warn us about them.  For example, just consider what the Bank for International Settlements is saying:

The Bank for International Settlements has warned that “euphoric” financial markets have become detached from the reality of a lingering post-crisis malaise, as it called for governments to ditch policies that risk stoking unsustainable asset booms.

While the global economy is struggling to escape the shadow of the crisis of 2007-09, capital markets are “extraordinarily buoyant”, the Basel-based bank said, in part because of the ultra-low monetary policy being pursued around the world. Leading central banks should not fall into the trap of raising rates “too slowly and too late”, the BIS said, calling for policy makers to halt the steady rise in debt burdens around the world and embark on reforms to boost productivity.

In its annual report, the BIS also warned of the risks brewing in emerging markets, setting out early warning indicators of possible banking crises in a number of jurisdictions, including most notably China.

“Particularly for countries in the late stages of financial booms, the trade-off is now between the risk of bringing forward the downward leg of the cycle and that of suffering a bigger bust later on,” it said.”

Sadly, just like in 2007, most people are choosing not to listen to these warnings.

U.S. Consumer Credit

Another very troubling bubble that is brewing is the massive bubble of consumer credit in the United States.  According to the Wall Street Journal, consumer credit in the United States increased at a 7.4 percent annual rate in MayThat might be okay if our paychecks were increasing at a 7.4% annual rate, but that is not the case at all.  In fact, median household income in America has gone down for five years in a row! 

As the quality of our jobs goes down the drain, our paychecks are shrinking even as our bills go up.  This is putting an incredible amount of stress on tens of millions of American families.

U.S. Total Debt

When you look at the overall debt bubble in this country, things become even more frightening.

…[There has been]  incredible growth of total debt in the United States.  Over the past 40 years, it has gone from about 2.2 trillion dollars to nearly 60 trillion dollars [as illustrated in the chart below].

Total Debt

Is this sustainable? Of course not. None of these financial bubbles are. It is not a question of “if” they will burst.  It is only a question of “when” and some believe that we are rapidly approaching that point. 

It’s the question investors everywhere are wrestling with: Are asset prices in a bubble, or do they simply reflect the fact that the global economy is growing once again? For Marc Faber, editor of the Gloom, Boom & Doom Report, the answer is clear. He says the bubble may already be bursting, “I think it’s a colossal bubble in all asset prices, and eventually it will burst, and maybe it has begun to burst already.”

Conclusion

What do you think? How much time do you believe that we have before these bubbles start to burst?

Please feel free to share your thoughts by posting a comment below [scroll down to the bottom of the page under “Related Articles”].

Editor’s Note: The author’s views and conclusions in the above article are unaltered and no personal comments have been included to maintain the integrity of the original post. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.

*http://theeconomiccollapseblog.com/archives/bubbles-bubbles-everywhere (Copyright © 2014 The Economic Collapse) **http://pensionpartners.com/blog/?p=544

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2 comments

  1. Whatever IT is, when it happens it will either happen slowly or quickly and depending upon what speed IT happens, investors will either have little or NO time to respond!

    To me that is the biggest reason to consider adding some PM to the portfolio’s you administer!

    Also posted here: http://www.munknee.com/will-pop-money-bubble/#comment-135524