The Later The Fed Raises The Interest Rates, The Worse The Collapse: Housing, Bond, Credit Bubbles Are Now All Unprecedented!

Fitch Analyst: China’s Credit Bubble About to Implode, Unlike Anything In Modern History

China’s shadow banking system is out of control and under mounting stress as borrowers struggle to roll over short-term debts, Fitch Ratings has warned.

The agency said the scale of credit was so extreme that the country would find it very hard to grow its way out of the excesses as in past episodes, implying tougher times ahead.

“The credit-driven growth model is clearly falling apart. This could feed into a massive over-capacity problem, and potentially into a Japanese-style deflation,” said Charlene Chu, the agency’s senior director in Beijing.

Fresh concerns are emerging about the state of China’s financial system after a report by Fitch Ratings said China was pumping up an unprecedented credit bubble. China’s total borrowings now amount to more than 200 per cent of GDP so are cracks in the system beginning to appear? Last week the interbank lending rate nearly trebled, a sure sign that liquidity is drying up.

Neal Woolrich


Fitch says China credit bubble unprecedented in modern world history

China’s shadow banking system is out of control and under mounting stress as borrowers struggle to roll over short-term debts, Fitch Ratings has warned.  

 The agency said the scale of credit was so extreme that the country would find it very hard to grow its way out of the excesses as in past episodes, implying tougher times ahead.

“The credit-driven growth model is clearly falling apart. This could feed into a massive over-capacity problem, and potentially into a Japanese-style deflation,” said Charlene Chu, the agency’s senior director in Beijing.

“There is no transparency in the shadow banking system, and systemic risk is rising. We have no idea who the borrowers are, who the lenders are, and what the quality of assets is, and this undermines signalling,” she told The Daily Telegraph.

America’s Bubble Economy Is Going To Become An Economic Black Hole

What is going to happen when the greatest economic bubble in the history of the world pops?  Themainstream media never talks about that.  They are much too busy covering the latest dogfights in Washington and what Justin Bieber has been up to.  And most Americans seem to think that if the Dow keeps setting new all-time highs that everything must be okay.  Sadly, that is not the case at all.  Right now, the U.S. economy is exhibiting all of the classic symptoms of a bubble economy.  You can see this when you step back and take a longer-term view of things.  Over the past decade, we have added more than 10 trillion dollars to the national debt.  But most Americans have shown very little concern as the balance on our national credit card has soared from 6 trillion dollars to nearly 17 trillion dollars.  Meanwhile, Wall Street has been transformed into the biggest casino on the planet, and much of the new money that the Federal Reserve has been recklessly printing up has gone into stocks.  But the Dow does not keep setting new records because the underlying economic fundamentals are good.  Rather, the reckless euphoria that we are seeing in the financial markets right now reminds me very much of 1929.  Margin debt is absolutely soaring, and every time that happens a crash rapidly follows.  But this time when a crash happens it could very well be unlike anything that we have ever seen before.  The top 25 U.S. banks have more than 212 trillion dollars of exposure to derivatives combined, and when that house of cards comes crashing down there is no way that anyone will be able to prop it back up.  After all, U.S. GDP for an entire year is only a bit more than 15 trillion dollars.

But most Americans are only focused on the short-term because the mainstream media is only focused on the short-term.  Things are good this week and things were good last week, so there is nothing to worry about, right?

Unfortunately, economic reality is not going to change even if all of us try to ignore it.  Those that are willing to take an honest look at what is coming down the road are very troubled.  For example, Bill Gross of PIMCO says that his firm sees “bubbles everywhere”…

We see bubbles everywhere, and that is not to be dramatic and not to suggest they will pop immediately. I just suggested in the bond market with a bubble in treasuries and bubble in narrow credit spreads and high-yield prices, that perhaps there is a significant distortion there. Having said that, it suggests that as long as the FED and Bank of Japan and other Central Banks keep writing checks and do not withdraw, then the bubble can be supported as in blowing bubbles. They are blowing bubbles. When that stops there will be repercussions.

There Is A Financial Crunch In The global Markets And Indian Economy Facing Serious Risk Of Plunging Into Crisis

The Indian economy is facing further trouble. There is a financial crunch in the global markets. This will dry up the foreign investments in the country. Rising interest rates in United States has triggered the crisis. Investors are selling-off in the Asian stock markets. They have already withdrawn heavily from Thailand, Indonesia and Philippines. Indian rupee too has already depreciated by 8% in the last few weeks and that is going to push inflation. The country imports most of it crude oil requirement. Oil is its single biggest import commodity. The retail prices of petrol and Diesel has been increased. Gold is another major import component.

Abenomics Will Be A Giant Fail If Japan Doesn’t Address Looming Debt

Read more:

Bank of England advisor: ‘We’ve intentionally blown the biggest government bond bubble in history’

A key Bank of England policymaker has warned of the risks to global financial stability when “the biggest bond bubble in history” bursts.

In a wide-ranging testimony to MPs, Andy Haldane, Bank of England director of financial stability, admitted the central bank’s new financial policy committee is taking too long to force banks to hold more capital and appeared to criticise the bank’s culture under outgoing governor Sir Mervyn King.Haldane told the Treasury select committee that the bursting of the bond bubble – created by central banks forcing down bond yields by pumping electronic money into the economy – was a risk “I feel acutely right now”.

He also said banks have now put the threat of cyber attacks on the top of their the worry-list, replacing the long-running eurozone crisis.

“You can see why the financial sector would be a particularly good target for someone wanting to wreak havoc through the cyber route,” Haldane said.

But he described bond markets as the main risk to financial stability. “If I were to single out what for me would be biggest risk to global financial stability right now it would be a disorderly reversion in the yields of government bonds globally.” he said. There had been “shades of that” in recent weeks as government bond yields have edged higher amid talk that central banks, particularly the US Federal Reserve, will start to reduce its stimulus.


Japan Market Crash: A Slow Leak in the “Central Bank Bubble”
There’s a truism in investing that the last one into a market is the first one out. And that certainly seems to be the case today, with Japan’s Nikkei index crashing off the back of two things: First, hints from the Federal Reserve that the U.S. economy is improving enough to justify a slow pull-back from the central bank’s market-goosing asset buying program known as “quantitative easing;” and second, that the Chinese economy is slowing down even more than we thought.

For some time now, I’ve been writing that the global equity markets have been inflated by central banks — and that this was a bubble that would eventually pop once people realized that monetary policy, rather than the real economy, was behind the boom.

Economic apocalypse is here!! NO JOKE!! The 30 years Japanese bubble is blowing up!!

Beware Long-Term Damage From Stock Market Bubble Forming Now


Housing Bubble 2.0 Edition: “25 Markets Where Flipping Homes Is Most Profitable”

Tuesday’s Case Shiller update index showed something very troubling: as a whole, the US housing market in its broadest sense, has barely budged in the past four years (chart). And yet, what is unmistakable, and what has given many the impression that there is a “recovery” (despite clear recent signals to the contrary) are media attempts to spark a buying frenzy in several of the key markets that were responsible for the prior housing bubble, such as Florida, California, Nevada and Arizona. And how do we know they are succeeding, if only until the Bernanke liquidity bubble pops again? Courtesy of articles such as this: “25 markets where flipping homes is most profitable.” Nuff said.

The full-blown bubble may not be here, but what is worse is that the bubble is certainly raging in key “liquidity-pocket” MSAs, even as various other regions continue to drag the overall housing market ever lower.

Which makes sense: in an America in which everything is increasingly polarized into two camps, and where even the Fed is schizophrenic about the future of the country, it is only logical that a New Normal housing bubble rages even as the overall housing market continues to tank.

Finally, it is quite obvious that none of these “homes” are being bought as homes, and all are basically speculative momentum chasing instruments, where everyone is certain a greater fool idiot will step up and buy the flip. And yes, we have seen all of this before and it ended in tears.

Presenting: The Housing Bubble 2.0

Exhibit A:

The red line is the 7 day rolling average of median LA house prices per Altos (more data here). It is up 50% since the beginning of the year. One can only stand back and stare.

Still not convinced? After all those West Coast folks are known for being a little trigger happy when it comes to “flipping that house.” Which is why, from the heartland of the East Coast, we present…

The Biggest Housing Bubble Is In Canada

The Dow Hits An All-Time High! Translation: A Bubble Is Always Biggest Right Before It Bursts

Reckless money printing by Federal Reserve Chairman Ben Bernanke has pumped up the Dow to a brand new all-time high.  So what comes next?  Will the Dow go even higher?  Hopefully it will.  In fact, it would be great if the Dow was able to hit 15,000 before it finally came crashing down.  That would give all of us some more time to prepare for the nightmarish economic crisis that is rapidly approaching.  As you will see below, the U.S. economy is in far, far worse shape than it was the last time the Dow reached a record high back in 2007.  In addition, all of the long-term trends that are ripping our economy to shreds just continue to get even worse and our debt just continues to explode.  Unfortunately, the Dow has become completely divorced from economic reality in recent years because of Fed manipulation.  All of this funny money that the Federal Reserve has been cranking out has made the wealthy even wealthier, but this bubble will not last for too much longer.  What goes up must come down.  And remember, a bubble is always biggest right before it bursts.


If you don’t use your money it will be lost in savings and inflation.