- “The following article by John Mauldin deals exclusively with debt – personal, corporate and government debt and the charts of numbers and trends over the recent short term, mostly following the ‘Great Recession’ of 2008/09, are mind boggling.
- We can all speculate, but clearly the key Central Banks starting with the US FED, European Central Bank and the Japanese are the real villains. However, one can’t dismiss the second tier crowd…Canada, UK, China and much of the Emerging Markets world who are on the hook for repayment in USD’s, thanks to historical low interest rates arbitrarily caused by these same central banks.
- When will it all blow up? When ‘confidence’ evaporates. The key is the prefix ‘CON’ in the word confidence. Obviously none of the participants, or the willfully ignorant public, wants to contemplate the inevitable economic and financial conflagration ahead.
- The question is when? Is it this year, 2019 or a period into perhaps 2023? What follows is disaster and opportunity for those prepared for the inevitable.”]
- Source: Market Intelligence Report (see sample here & subscribe in the top right hand corner of page – it’s FREE) subscriber AB.
Today’s letter is chapter 5 in my Train Crash series. If you’re just joining us, here are links to help you catch up.
- Credit-Driven Train Crash (May 11)
- Train Crash Preview (May 18)
- High Yield Train Wreck (May 25)
- The Italian Trigger (June 1)
As we’ll see today, the world has so much debt that the cracks could happen anywhere…[continue reading here].[Mauldin concludes his article by saying:]
If you are holding cash…[you will be] in position to buy some of the valuable assets that will get “restructured” in the next few years.
- Doing it successfully will take extensive research and iron discipline.
- Many will try, few will do it well.
- Start preparing now and you may be one of the few.
Remember, in 2009, it was easy to find great companies paying 4% to 6% dividends with single digit P/E ratios. You didn’t have to be an accredited investor to pick up juicy returns. You will get another chance not too many years from now. Patience, grasshopper!