Hussman posted this chart in his latest blog.
Speaking of margin debt, Doug Short recently provided this look at investor credit balances and the equity market. The bars (green when positive, red when negative) show the sum of: cash balances in investor cash accounts, plus cash balances in margin accounts, minus the margin debt of investors. To say that investors are “all in” would be an understatement here. They’re leveraged to the gills.
Nomi Prins: Easy Money Policy Allows for Another Crisis
Prins’ then builds on easy money policy stating, “We still have a problem of banks that are too big to fail. We still have a problem where the initial financial crisis that happened ten years ago in the United States, that was the result of the banks being too large and too speculative… in using the guarantees that the U.S government has provided to bank depositors and the provisions provided in the Glass-Steagall. Those deposits have become a guarantee for banks to become bigger and a guarantee for financial crises to become something that the government subsidizes. Our Federal Reserve, our central bank, also subsidizes this.”
Prepare for Turbulence
“The job of the central bank is to worry.”
– Alice Rivlin
“The central bank needs to be able to make policy without short-term political concerns.”
– Ben Bernanke
“… from the standpoint of the overall economy, my bottom line is we’re watching it closely but it appears to be contained.
– Ben Bernanke, repeatedly, in 2007
“Would I say there will never, ever be another financial crisis? You know, probably that would be going too far, but I do think we’re much safer, and I hope that it will not be in our lifetimes, and I don’t believe it will be.”
– Janet Yellen, June 27, 2017
“My good friends, for the second time in our history, a British Prime Minister has returned from Germany bringing peace with honor. I believe it is ‘peace for our time.’ Go home and get a nice quiet sleep.”
– Neville Chamberlain, September 30, 1938