Commodity Trade Mantra

Posts Tagged ‘Credit Growth’

Is the Massive Debt Growth Holding Back Economic Growth?

Ten years on from the great financial crisis & it seems as if no one has learned anything from the event. Unless credit creation increases markedly from current levels, the 10-year yields moving average should be no greater than 2.5% by the end of 2018. If credit growth fails to materialize, the case for another interest rate rise becomes weaker. High levels of leverage are holding back economic growth.

Temporary Stimulus Policies turn Permanent; Credit & Debt Expansion is Here to Stay

Given the extraordinary failure of both Keynesian stimulus & private-sector credit growth to create a self-sustaining cycle of expansion whose benefits flow to the entire workforce rather than to the top few percent, what can we expect going forward? Can we just keep expanding the economy’s debt load every few years? What if household incomes continue declining? Are these trends sustainable?

What Needs to Happen Before We See a Big Recovery in Economy?

Will real economy mend before excessive financial risk-taking kills the patient? What needs to happen before we get a robust recovery: 1) Households need to borrow at the pace we normally see in economic expansions. 2) Household income needs to grow strongly – More of the second & less of first.

Emerging Markets Banking Crises Are Next

The concern for emerging markets is that carry trades and subsequent inflows of capital have created substantial credit and real estate bubbles in many of these markets. The unwinding of these bubbles is likely to lead to banking crises in several countries, including China.

The Problem With Credit Booms Is That They Are Followed by Busts

Research on private sector credit booms over the last 20 years show that whenever credit to the private sector expanded by 30% or more within a 10-year period, a banking crisis & recession resulted without any exception. Credit booms always end badly & last longer than rational minds expect.

The Four Pillars of Poverty - Marc Faber

The increase in poverty rests on four pillars: Cultural & social factors, educational issues, excessive debt & government handouts, which encourage people not to work. Other factors: International competition – keeps wages down; Monetary policies – create bubbles & impoverish the majority.

Is Africa - China And Japan's Next Battleground?

Africa is precisely where the smart money has refocused all attention in the past year precisely because it is the last and only bastion of untapped credit growth and capacity. So it is unsurprising that China and Japan, with apparently bottomless wells of printed money are taking aim also.

5 Ways To Profit From A China Downturn In 2014

Signs that China’s economy is in serious trouble include a still booming credit growth but lower output growth, softening inflation, spiking inter-bank rates indicating stresses in the financial system, as well as large corporate defaults and bankruptcies.

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