Why the upcoming economic crisis maybe worse than the 08

by The_Great_Flux

Lets start with a few points.

  • 1) Yield curve inversion has lasted more than 3 months. A downturn is evident. We only have only about two years (max and i think that is generous) from the start of the point of inversion.
  • 2) Right now the market is addicted to cheap money, like an addict would be to heroin. This has been going on for a decade. Business are over-levered and borrowed and they are addicted to those low interests rates.
  • 3) Many Americans are in their eyeballs in debt
       *  Student loan debt is also at a record high of $1.9 trillion dollars. 
       *  Auto loans are at $1.3 trillion. 
       *  Credit cards at $900 billion.  
       * Mortgages are at $9.5 trillion
    
  • 4) three major banks (Goldman Sachs, Morgan Stanley, and Deustache bank failed the stress test last year) and this year the fed decided to stress less less banks for this fiscal year.
  • 5) Majority of trades are done via bots, i.e computers, only 10% by some estimates are done by humans
  • 6)I m gonna quote the article i found this is on because it says it better than i can Corporate debt levels have reached a 70% of gross domestic product. A figure higher than 2007’s, right before the last recession hit. An increasing number of corporate issues are rated as junk or near junk status. Data from Moody’s Capital Markets Research shows a record $2.96 trillion issues are rated Baa. This is the level just before the high-yield mark. This makes up about 48% is of all investment-grade bonds.
  • 7) Inequality the highest since the gilded age.

Now the fed is considering cutting rates, and its not even recession time yet…which kills our ability to fight off a recession. Usually cutting rates staves off recessions…

:/

This upcoming economic crisis maybe worse than the last one..

 

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