The Debt Bomb Risk ARE Rising In 2018
As an investment banker economist may we share in our blog reports some review of our concerns. The confluence of forces compressing RISK upward are in our opinion reaching a critical posture that given policy mistakes are common the recovery from a serious policy mistake today may no longer possible.
As we have reported the spiral of leveraged digital casino debt has created digital debt ratio’s against conventional debt ratios that are historically beyond any debt mountains the world has ever experienced. As all global depressions are caused and created by the following we should pay attention to the CAUSE of GLOBAL DEPRESSIONS which include these elements of economics:
- Debt spirals into a SUPER DEBT BUBBLE ahead of the bubble in all other meaning 100% of all other asset classes.
- Price Super Bubbles in 100% of asset classes are manipulated by wild speculations due to debt.
- Record Debt spirals ever higher until the DEBT bomb explodes. Creating systemic failure.
Today we see:
- Record historic high national sovereign nation debt
- Record high state county and civic debt
- Record high institutional and corporate debt
- Record high student loan debt 1.5 trillion in the USA alone
- Record high real estate debt loads
- Record high car and auto loans
- Record high commercial real estate debt loads
- Record high credit card and consumer debt world wide
- Record low savings to offset the DEBT SUPER BUBBLE
- Record high structured asset and silly debt spiraling to levels never known before globally on every asset imaginable
Almost all of this SUPER DEBT BUBBLE is short term debt. The Debt must roll over from “free money” at almost no interest – to market rate interest rising way too soon way too high way to fast as a FATAL POLICY ERROR the Fed executed to create the 1907 Global Depression and World War I and the 1929 Global Depression and World War II due to their policy errors – errors – they are making all over again but with debt higher than history has ever recorded it.
So what is the canary in the mine shaft saying to early warn us all?
Lets look at those facts and data points.
TRADE WAR ( The cause of Global Depression 1907 and 2919 ):
Today politics run economics not economics runs politics. Always a risk for contagion and systemic failure.
What do we know?
- America is no longer allowing trade goods to enter the USA with tariff taxes lower than our trade goods enter the trading nations markets. So if our automobiles are taxed at 30% we are going to now tax their automobiles at 30% or at zero if they relax theirs we relax ours. We are in full on trade war. In July 2018.
- Canada is richting up what has been enormously protective and unfair policy to trade with the USA. Those protocols that are unfair are OVER and will never return.
- Mexico – same. South America the same.
- EU the same.
- Asia the same.
What is happening with all these changes? Well lets look.
- China is in a flight of capital as trillions flow out of China. The Stock market in China has crashed last week – and is down almost 20%. The market is in free fall.
- Industrial output and manufacturing in China has been falling for months. Now it is crashing. If the trade war in China escalates further a economic disaster in China in 2018 is likely. We told you the USA holds a full house China holds two two’s. Trade war with the USA must resolve to restore China vitality or a civil war may erupt in China.
- Russia in Recession since the Ukraine invasion and sanctions. None of which are EU or USA and allies lifting anytime soon as Russia has not modified bad boy behaviors. With Saudi pumping up to 2 million barrels of oil a day Russia oil price will collapse. As a one asset nation a PETRO NATION Russia can’t pay is bills its defense or anything coming up and Putin will be under pressure from those losing trillions via failed policy. Trade wars are fatal to Russia in 2018 and 2019 economically. They face a full on collapse if the pressure is not received soon.
- Iran – has no way forward but to stop its bully pit and to make a contract deal on nukes. They don’t want nukes anyway. If they make a real contract they get prosperity. If they don’t they get a revolution. Their currency has fallen 40% since Trump pulled out and sanctions returned. New Sanctions are IRAN KILLERS. Iran can not survive economically if it fails to make a new deal. The ripple effects will be enormous.
- The EU is sinking into recession from trade war. The Brit Exit has many unknowns to the EU as does Italian Super Debt and Spanish Super Debt and others. The EU can’t pay these Debts or even manage Greece debts. The EU is burning to the ground as an idea – and those holding EU’s risk losing a great deal of their trust and Asset values. Trade war can sink the entire world into GLOBAL DEPRESSION.
What is the trigger ?
Debt Defaulting. As the economics of the world slow and reverse into recession area by area – as developing countries now see capital not investing – as the entire sucking sound of moving from growth to BACKWARDS all of a sudden – due to:
- Soaring interest costs
- Wild market speculation buy backs and debt impossible merge acquisitions ( see Disney and Fox )
- Crushing recessionary effects
- Crashing markets globally with margin calls that can never be paid in fact
- Soaring Debt CASCADES from Asia or EU spinning around the world until the systemic failures we suggest take place – Digitally – and without warning – and in hours not days.
There is a DEBT SUPER BUBBLE in 2018 and it is only spiraling upward outside any regulatory frame work.
There is a 100% ASSET PRICE SUPER BUBBLE that will explode and deleverage to create DEFLATION as the systemic failure unfolds from DEBT CASCADING DEFAULTING.
Liquidity Evaporation Day is when digital AI creates all sell orders – world wide – a period of only SELL SELL SELL and zero buying to offset the selling – LED DAY.
The system freezes and collapses following LED Day a feature of world cascading debt defaulting. The trigger is:
- Failed central bank policy raising interest to fast too soon too rapidly.
- Trade Wars derailing forward growth and prosperity in 2018 and 2019.
- Debt roll over into Debt Cascade Defaulting the end
- LED DAY
- System failure and world war to rebalance accounts
So how high is the risk?
Higher say than a California LAKE COUNTY WILD FIRE RISK which remains SUPER HIGH today.
So how close is the risk?
Are any moderating forces working to rebalance or off set the risk?
No. just the opposite the trade wars are getting nasty out of any control and politics leads the policy versus economics. The outcome is potential system failure world wide. The system is fragile with this level of debt super bubble.
IS the system worse than 1929 in risk?
The system is so hugely worse than 1929 on risk it is impossible to overstate the data. The ratio of price earnings trading driven by debt and digital margin trading never known before is beyond anything 1929 experienced. Today 440 Trillion leveraged dollars manipulate prices of 3 to 5 trillion economic stake holder investing where the leverage of speculation is many many times higher than 1929 and that weaker speculation ration folded the banks to collapse world wide. Fast too. Its much worse by data than 1929.
in 1929 we did not have AI controlling all the circulation as we do today. This immature code – this 13 year old AI is not mature and later generation AI. The weakness of PUPPY AI driving all capital circulation is a risk of itself higher than 1929 could ever conceive or consider.
All these risks operate outside any safety net – any regulatory scheme or order – as the regulations are all local and the rates today are all in the cloud and removed from regulatory oversight. The G 100 have lost control of the market place.
That in the end is the source of the GYNORMOUS RISK rising today for world systemic failure the IMF and World bank are warning about. Without a G 100 regulatory re-frame a re-think of modernizing digital global regulatory frame works – I believe the system will fail.
The question is when?
It may last into 2020 – 2022 – or even 2025. But the system without regulatory reform is doomed in my data and opinion. For the risk we set forth here – all landing on DEBT SUPER BUBBLE at Levels that tsunami economics until the system fails utterly. The system is a system of the FEW against the many for elite greed.
1% control more wealth than 99% of billions of us. This is not sustainable economics – the Few against the many – as a system model. It is greed based and always unethical out of integrity and immoral and criminal – lacking any check and balance or transparency a system filled with secrets favoring elites.
This model of economics always fails – always.
Can human’s do better?
Well yes but only with economic education. Economic illiteracy will never get us where we need to truly end up.
As the economic education deficit is significant by default the elites control the system modeling. With their best intentions they can not work out of the present imbalances for the reasons we have set forth.
A lot of speculation and boom growth will occur before the system fails. Fortunes will be made. It is all musical chairs however and when the music dies you will wish to drive your chevy to the level and cry.
I suggest peak out and sell high and reposition everything into diversified insurance investing – with licensed professionals advising you along that exploration. Why? They protected wealth and paid when banks were closed in both last great depressions globally. No one lost money who did that step. I’d do that step again.
My last blog discusses the SUPER CHANGE MARKET and how to maximize profits and growth in 2018. I suggest each of you create your own economy. I suggest you register and attend CEOSPACE July 16th as an insulator and accelerator while we have time. You have time to profit and grow but using time wisely while monitoring risk events against the information we have suggested here may prove useful. We’ll see. A lot can happen out there but the economics never lie – they just never lie.
The economics display a rising risk that is worrisome.
Berny Dohrmann – HAPPY FOURTH JULY 2018