High yield credit bubble anyone ?
bronco2078
Posts: 10,225 ✭✭✭✭✭
Doing a little blog browsing today I found this
Is there a massive bubble forming in high yield credit?
It's a bit long but I thought it was interesting. I've reading up on bonds lately since the latest greek 5 year auction that the media was trumpeting a few weeks ago.
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Comments
<< <i>In time, all bubbles will burst. >>
Even dollar bubbles?
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>
<< <i>In time, all bubbles will burst. >>
Even dollar bubbles?
Perhaps, but not in our lifetime. The Feds will make sure of that.
If these funds can put up 20% of their position junk paper made up of student loans or car loans then they are going to be in trouble.
I know when I bought my first truck new it was $17,000 and I put down $9000 and traded in an old cougar . That isn't how car loans work now. New car down payments are very low and with cars depreciating rapidly these loans are not well secured. Car loans are not much better than credit card balances
Student loans are a disaster unless the hope is the taxpayer will bail the issuer out.
<< <i>
<< <i>In time, all bubbles will burst. >>
Even dollar bubbles?
Aka, inflation bubble.
Knowledge is the enemy of fear
<< <i>
<< <i>
<< <i>In time, all bubbles will burst. >>
Even dollar bubbles?
Aka, inflation bubble. >>
Let's call it what it really is:
A bursting debt bubble
"The bottom line is that credit bubbles (due to relaxing credit standards and declining interest rates) are inherently dangerous."
Shouldn't the folks who brought you Zero Interest Rate Policy know this?
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>Shouldn't the folks who brought you Zero Interest Rate Policy know this? >>
They know it. They are owned by "the powers that be" - ZIRP will be with us for at least 2 more years or until a implosion ends it.
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<< <i>Shouldn't the folks who brought you Zero Interest Rate Policy know this? >>
They know it. They are owned by "the powers that be" - ZIRP will be with us for at least 2 more years or until a implosion ends it. >>
Japan has had it for 2 decades. How patient are you?
Knowledge is the enemy of fear
Which is exactly why 2008 happened.
Japan hasnt popped with 200% debt to GDP. By the time the US reaches a similar level GDP will probably be about $25 trillion. So we could easily see $50 trillion or 3x the debt load of today before it gets ugly. Maybe another 15-20 years. And since it hasnt popped in Japan, it might not here either. Thats a lot of time worrying about something you might not even live to see.
Knowledge is the enemy of fear
<< <i>
<< <i>
<< <i>Shouldn't the folks who brought you Zero Interest Rate Policy know this? >>
They know it. They are owned by "the powers that be" - ZIRP will be with us for at least 2 more years or until a implosion ends it. >>
Japan has had it for 2 decades. How patient are you? >>
It hasn't worked for Japan and they don't hold a reserve currency. End ZIRP and QE in the U.S. and watch what happens. Don't end then and watch what happens. 2 years tops.........