Saturday , 21 October 2017


Yes, the Debit Crisis Could Spread To The U.S.! Here's Why

From The Blog of HORAN Capital Advisors

 

From The Blog of HORAN Capital Advisors

Source: Center For Financial Stability

Of particular concern for the U.S. is the level of its budget deficit in spite of the fact revenues into the treasury continue to grow. The U.S. currently borrows nearly 39 cents for every dollar it spends. Additionally, interest expense is $241 billion or 6% of the government’s budget. Given the low level of  interest rates on the Treasury’s debt, the 10-year Bond is just over 2%, it would not take much of an interest rate spike in the U.S. to negatively impact the government’s budget.

Absolute Return Partners highlighted comments from the Fed’s summer Jackson Hole Wyoming meeting where the Bank for International Settlements concluded,

“…the debt problems facing advanced economies are even worse than we thought. Given the benefits that governments have promised to their populations, ageing will sharply raise public debt to much higher levels in the next few decades. At the same time, ageing may reduce future growth and may also raise interest rates, further undermining debt sustainability. So, as public debt rises and populations age, growth will fall. As growth falls, debt rises even more, reinforcing the downward impact on an already low growth rate. The only possible conclusion is that advanced countries with high debt must act quickly and decisively to address their looming fiscal problems. The longer they wait, the bigger the negative impact will be on growth, and the harder it will be to adjust.”

Conclusion

The U.S. must address their deficit issues sooner versus later. One significant component will be to create an environment that has a positive influence on economic growth. Additionally, the growth rate in entitlement expenditures must be curtailed. The solutions offered by the…deficit committee in Washington will certainly be important.

*http://disciplinedinvesting.blogspot.com/2011/11/could-debt-crisis-come-to-us.html

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It is widely accepted that Greece is insolvent even though the higher echelons of euro-zone politics still hesitate to use the term, and default swap prices…give virtually 100% odds that Greece will default. The handling of the issue has heightened the perception of risk for other problem countries of the euro zone…such that investors now give 60% odds of default by Portugal…and 30%-plus odds for default by Italy… Even France, with its S&P AAA rating, is now rated more likely to default than Brazil! [In addition, the U.S. is facing the liklihood of a fiscal policy impasse in Congress that could well lead to a recession. As such, as we see it, the risk of contagion in the financial system around the world has risen dramatically. We substantiate our contentions below.] Words:1612

5. George Soros: a Great Depression-like Scenario Could Very Well Play Out – Here’s Why

Europe is on the verge of a collapse, and unless something gets done relatively soon, (perhaps as soon as the next few weeks), Europe is likely to experience their own 2008 scenario. The U.S. and Chinese economies are heavily dependent on exporting goods to Europe, and with Eurozone growth slowing as a result of the potential default in Greece, and then on to the rest of the PIIGS, a “Great Depression-like scenario” could very well play out. [In fact,] George Soros thinks we are headed towards another Great Depression and, you know what, he’s right! What do you think? Is George Soros right? Are we headed for another depression? Words: 530

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For decades, the governments of the western world have been warned that they were getting into way too much debt. For decades, the major banks and the big financial institutions were warned that they were becoming way too leveraged and were taking far too many risks. Well, nobody listened so now we get to watch a global financial nightmare play out in slow motion. Grab some popcorn and get ready.  It is going to be quite a show. [Let me explain.] Words: 1075

7. Goldman Sachs Privately Telling Clients to Bet on Upcoming Economic Collapse!

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The debt crisis in the United States is unsustainable, and the debt crisis in Europe is unsustainable. As such, we are facing a global debt meltdown and are heading for an economic collapse. You aren’t going to hear that truth from the media or from our politicians, however, because keeping people calm is much more of a priority to them than is telling the truth – and right now we are in the calm before the storm. Nobody knows exactly when the storm is going to strike (i.e. when the collapse is going to happen) – but it is definitely on the way — and now even Goldman Sachs is admitting [that that is most likely the outcome of the present situation. Here is what they had to say recently in a “secret” document that has just now been made public.] Words: 1147