Greatest Equity Bubble Ever? Corporate Debt to GDP is at its High Point, Household Debt = Highest Level Ever & Rising…

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dshort.com does some of the best work out there! It is a bubble, however as long as job growth and wage growth (very little growth) continue. Bulls will have the ball. Do not get me wrong, this will end badly, but when is the trillion dollar question.

It’s 2007 Again for Commercial Mortgage Bonds, Moody’s Says

Commercial mortgage bonds are getting stuffed with the lowest-quality loans since the financial crisis by one measure, according to Moody’s Investors Service, a warning sign that the $517 billion market may be headed for harder times.

The securities are backed by as many interest-only mortgages as they were in late 2006 and early 2007, Moody’s said. Those loans are riskier because borrowers don’t pay any principal early in the debt’s life. When that period expires, the property owners are on the hook for much higher payments.

The percentage of interest-only loans in a commercial mortgage bond is an “important bellwether” for the industry, according to Moody’s analysts, because the loans are more likely to default and to bring bigger losses to lenders when they do. Underwriters aren’t taking steps to fully offset the rising risks, the ratings firm said.

2007 Redux?
Interest-only loans account for a growing percentage of mortgages in CMBS

The riskier debt getting packaged into commercial mortgage bonds mirrors a trend that’s infiltrated many corners of the credit markets, from leveraged loans to residential mortgage securities: As investors have flocked to debt investments that seem safe, underwriters have been emboldened to make the instruments riskier and keep yields relatively high by removing or watering down protections.

Contrary to public statements politicians like #debt .. creates short run artificial #economic #growth

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Financial institutions get upfront points fees then stand ready for bailouts

As we saw in 2008 cost to average Americans high .. wealthy not so much aka upfront profits

7 TRIGGER Events That Could SET OFF the Global Economic Collapse!

All of the debt is just going to accumulate until the pin meets the bubble. Until the trigger is flipped.

Tick, tock. Tick, tock…

What do you think the trigger will be?

Triggers:
Major bank failure (Lehman, Bear Stearns)
INTEREST RATES
Derivatives
Trade issues
OIL
HFT
BLACK SWAN
Real estate
China slowdown

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