by
JW
Podcast
by
Chris Martenson
Executive Summary
- Corporate junk bonds: All-time highs
- Equities: All-time highs in Germany and U.S.
- Other equities: Spiking upwards (Japan, Greece, Australia)
- Margin Debt: Second highest on record
- Excuses: Consistent with bubble territory
- Timing: When reality will likely express itself
If you have not yet read Part I: Four Signs That We're Back in Dangerous Bubble Territory, available free to all readers, please click here to read it first.
In Part I, we discussed four signs that we are in bubble territory – in both stocks and bonds – plus all of the usual rationalizations that accompany bubbles. In truth, there are many more signs which we'll discuss further here, and I want to go deeper into the data exploring the warning signs in the equity and bond markets.
I want to spend time cataloging and explaining my reasoning because when bubbles burst, it's traumatic for everyone, but especially those that aren't prepared.
Further, these bubbles are so large that it's useful to employ historical analogues to weigh them against and parse for clues as to just how bad developments could get.
The Big Picture
What we do at Peak Prosperity is track the big picture. We look at the macro risks and trends, and try to figure out what's coming next. Over the long haul. we have very little doubt that several decades of debt accumulation partnered with structurally higher oil prices will result in anything other than reduced standards of living for most people.
And that’s if everything goes smoothly.
At the other end of the spectrum lies the potential for currency, political, and fiscal crises, the likes of which have never been seen before, given the global nature of the situation.
Leaving oil prices aside for the moment, in purely economic terms, living beyond one’s means now necessitates living below one’s means later on. Whether that period of negative adjustment is the same length and depth, shorter and deeper, or longer and shallower is open to question. But I'm leaning towards ‘shorter and deeper’ because history shows that bubbles tend to burst more rapidly than they form.
That is, we could view this as a bubble in financial assets, particularly credit (debt), but we could just as easily view it as a bubble in living standards. We overdid things and now it's just a question of figuring out who is going to eat the losses. Historically, that answer has always been 'the little people,' but today we have dropped such disparaging terms in favor of the more politically palatable 'taxpayers.'
To understand the current predicament, the most important chart to look at is the ratio of total national debt to GDP (debt-to-income)…
Protect Your Wealth in Advance of the Bubble’s Bursting
PREVIEW by Chris MartensonExecutive Summary
- Corporate junk bonds: All-time highs
- Equities: All-time highs in Germany and U.S.
- Other equities: Spiking upwards (Japan, Greece, Australia)
- Margin Debt: Second highest on record
- Excuses: Consistent with bubble territory
- Timing: When reality will likely express itself
If you have not yet read Part I: Four Signs That We're Back in Dangerous Bubble Territory, available free to all readers, please click here to read it first.
In Part I, we discussed four signs that we are in bubble territory – in both stocks and bonds – plus all of the usual rationalizations that accompany bubbles. In truth, there are many more signs which we'll discuss further here, and I want to go deeper into the data exploring the warning signs in the equity and bond markets.
I want to spend time cataloging and explaining my reasoning because when bubbles burst, it's traumatic for everyone, but especially those that aren't prepared.
Further, these bubbles are so large that it's useful to employ historical analogues to weigh them against and parse for clues as to just how bad developments could get.
The Big Picture
What we do at Peak Prosperity is track the big picture. We look at the macro risks and trends, and try to figure out what's coming next. Over the long haul. we have very little doubt that several decades of debt accumulation partnered with structurally higher oil prices will result in anything other than reduced standards of living for most people.
And that’s if everything goes smoothly.
At the other end of the spectrum lies the potential for currency, political, and fiscal crises, the likes of which have never been seen before, given the global nature of the situation.
Leaving oil prices aside for the moment, in purely economic terms, living beyond one’s means now necessitates living below one’s means later on. Whether that period of negative adjustment is the same length and depth, shorter and deeper, or longer and shallower is open to question. But I'm leaning towards ‘shorter and deeper’ because history shows that bubbles tend to burst more rapidly than they form.
That is, we could view this as a bubble in financial assets, particularly credit (debt), but we could just as easily view it as a bubble in living standards. We overdid things and now it's just a question of figuring out who is going to eat the losses. Historically, that answer has always been 'the little people,' but today we have dropped such disparaging terms in favor of the more politically palatable 'taxpayers.'
To understand the current predicament, the most important chart to look at is the ratio of total national debt to GDP (debt-to-income)…
by
JW
by
FerFAL
We bring back to the forefront an article from contributor Fernando "FerFAL" Aguirre. With the many new sources of turbulence in the financial system and many new unknowns of how our predicaments will play out, we can always look to the past for guidance. The following is an account from a long time Peak Prosperity member who has lived through economic collapse. FerFAL experienced the hyperinflationary destruction of Argentina's economy in 2001 and continues to blog about his experiences and observations of its lingering aftermath. His website and his book Surviving the Economic Collapse offer windows into the probable outcomes to expect during a collapsing economy. Note: Our site's What Should I Do? Guide offers specific guidance relevant to a number of the steps FerFAL recommends below. Review, Learn, and Get Prepared. Better a year early than a day late.
How can I prepare for an economic collapse? is one of the most common questions I get. It usually takes me a second to start to explain how complex such a question is. It’s like asking an auto mechanic, Say, how do you build a car? or asking a computer engineer, What’s all that stuff inside my laptop?
I do have some first-hand experience in this matter, though. The economy in my country, Argentina, has gone through various crises, but none as large as when the economy collapsed in 2001 after a decade of apparent prosperity. The currency devaluated, and Argentina defaulted on its USD$132 billion debt, the largest default ever. The middle class took to the streets after bank accounts were frozen, and the president was forced to resign, escaping the presidential building in a helicopter.
What I’ll do is provide five quick foundational steps, based on what I know, for you to follow so as to be better prepared if something like what happened in my country ever happens in yours.
Preparing for Economic Collapse
by FerFALWe bring back to the forefront an article from contributor Fernando "FerFAL" Aguirre. With the many new sources of turbulence in the financial system and many new unknowns of how our predicaments will play out, we can always look to the past for guidance. The following is an account from a long time Peak Prosperity member who has lived through economic collapse. FerFAL experienced the hyperinflationary destruction of Argentina's economy in 2001 and continues to blog about his experiences and observations of its lingering aftermath. His website and his book Surviving the Economic Collapse offer windows into the probable outcomes to expect during a collapsing economy. Note: Our site's What Should I Do? Guide offers specific guidance relevant to a number of the steps FerFAL recommends below. Review, Learn, and Get Prepared. Better a year early than a day late.
How can I prepare for an economic collapse? is one of the most common questions I get. It usually takes me a second to start to explain how complex such a question is. It’s like asking an auto mechanic, Say, how do you build a car? or asking a computer engineer, What’s all that stuff inside my laptop?
I do have some first-hand experience in this matter, though. The economy in my country, Argentina, has gone through various crises, but none as large as when the economy collapsed in 2001 after a decade of apparent prosperity. The currency devaluated, and Argentina defaulted on its USD$132 billion debt, the largest default ever. The middle class took to the streets after bank accounts were frozen, and the president was forced to resign, escaping the presidential building in a helicopter.
What I’ll do is provide five quick foundational steps, based on what I know, for you to follow so as to be better prepared if something like what happened in my country ever happens in yours.
by
Adam Taggart
by
JW
by
JW
by
Chris Martenson
Everyone knows the odds of winning in a casino are worse than 50% (often much worse depending on the game played). So who wouldn't rush to a casino, where instead, the odds were overwhelmingly in the gambler's favor?
That's the promise of today's stock market, which has been experiencing an aberrantly high percentage of up days all year. Toss your money into the market, and on any given day, you're much likelier to make money than not.
The S&P 500 Is Now a Gambler’s Paradise With 76.9% Up Days in May So Far
by Chris MartensonEveryone knows the odds of winning in a casino are worse than 50% (often much worse depending on the game played). So who wouldn't rush to a casino, where instead, the odds were overwhelmingly in the gambler's favor?
That's the promise of today's stock market, which has been experiencing an aberrantly high percentage of up days all year. Toss your money into the market, and on any given day, you're much likelier to make money than not.
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