The Leverage Problem

[g5000]

Yes, the crash when it comes, will again somehow be poor people's fault.

I don’t recall poor people ever getting blamed for a crash. What did I miss?

One of the favorite scapegoats of the tards was the CRA. Incredibly, there are still some idiots around who espouse that horseshit.

 

[Ambivalent1]

It is ever thus, the West can only think in terms of the West. We, Trump, Barry, Bush's, Clinton's are only a small part of the problem. Fractional Reserve Banking and the Central Bank systems are the slave holders of today and we are the slaves.

 

[g5000]

Dude, I've been ranting about government debt since coming to this forum. And long before that.

Our politicians are only doing what we demand of them. If they didn't overspend, we would fire them and elect someone who will.

We get the politicians we deserve.

Pseudocons think it's the poor and Mexicans who are causing all this spending, when they really should be looking in the mirror for the culprit.

Tax expenditures are DOUBLE what we spend on welfare.

Sorry son, you are fixated on Trump and too myopic to admit all of the Gov is to blame, there is no differences in any of the political class.. They don't give a shit about what "we" want, they do what the Banks tell them to do. Do you think repeating the "pseudocon" makes you look smart? It's no different than franco using the word derp in every sentence.
Grow up.

Irony. Your are projecting your own narrow conspiracy theory thinking onto others.

Next, you'll be telling us its the international Jewish bankers behind all this.

LOL, your lack of knowledge is not my problem. Your Trump hatred has made into a little child. The Central Bank system and the BIS, learn something and get back to me.

I know all about central banking and BIS system, dipshit. You have probably watched a few cartoons and think you know something.

You don't know shit or you wouldn't confine your rage to Trump. You have a micro view of a macro problem. You're minor league boy.

You have a comprehension problem, retard. I simply pointed out Trump is doing nothing to mitigate the next crash, and is in fact exacerbating it.

Trump did not bring the debt-to-GDP ratio where it is today all by himself. As I told you at least once already, I have been ranting about the debt since coming to this forum. So let me connect the dots for you, okay moron? I came to this forum in 2011.

I even provided a link to a topic I created way back in 2012 about the Fed's bond bubble doomsday machine.

So how could my rage be confined to Trump?

All caught up now, idiot?

Now go back to watching your cartoons.

 

[georgephillip]

Investors have a new biggest worry about the stock market

For the first time since the financial crisis, corporate leverage is the chief concern for the professional investors who handle Wall Street’s largest funds.

<snip>

Debt has emerged as a bigger concern with corporate bonds outstanding now eclipsing the $9 trillion mark. Investors have gotten more concerned over leverage, or the amount of debt companies hold compared to the value of their equity.

A net 48 percent of the market pros surveyed believe corporate balance sheets are overlevered.

<snip>

This is the first time since 2009, or just after the financial crisis, that investors have listed leverage as their principal concern. Companies spent the years after the crisis raising cash but also running up debt, which had become cheap as the Federal Reserve slashed interest rates in an effort to stimulate the economy.


The cash to debt ratio reached 12 percent in 2017, the lowest it had been since 2008.

<snip>

Pessimism about global growth have intensified, with 60 percent indicating that a slowdown in GDP gains is coming over the next 12 months. That’s the worst outlook since the depths of the crisis in July 2008, just two months before Lehman Brothers collapsed and set off a global financial panic.

However, investors do not believe conditions will get bad enough for a recession, with just 14 percent seeing negative growth. Instead, they see a condition known as “secular stagnation,” which posits that the global economy is in a long-term stasis in which growth will remain below trend.

The same Wall Street behemoths that crashed the global economy in 2008 are more dangerous today.

Trump's swamp draining efforts in that regard include putting Wall Street lawyer Jay Clayton in charge of the SEC, and foreclosure king, Steven Mnuchin, leading the US Treasury and the Financial Stability Oversight Council.

Mucking through the Wall Street Banks’ Earnings This Week

"The capital of big Wall Street banks is very much on the minds of their regulators and Wall Street watchers. Citigroup’s shares lost 30 percent of their value from the opening day of trading to the last day of the trading year in 2018.

"Goldman Sachs managed to best that, losing 35 percent of its share value.

"Morgan Stanley sagged 24 percent; Bank of America lost 18 percent while JPMorgan managed to take a more moderate 10 percent share price loss.

"Warnings about the looming problem are starting to dot the media landscape.

"On January 10, the New York Times posted an OpEd to its website by Sheila Bair and Gaurav Vasisht.

"Bair is the former Chair of the Federal Deposit Insurance Corporation (FDIC) that insures the deposits of U.S. commercial banks.

"Vasisht is the director of financial regulation for the Volcker Alliance.

"The duo warned about the following:

"'The corporate bond market has swelled to nearly $7 trillion. The debt owed by businesses as a percentage of gross domestic product is at a record high. But the credit quality of investment-grade bonds has deteriorated.'

"'Underwriting standards on ‘leveraged loans’ to risky companies have eroded. And until recently, yields on junk debt remained low, a sign that investors are too willing to take on the risk of bonds held by companies with less-than-stellar credit.'"

 

[BuckToothMoron]

LOL, son EVERYTHING begins and ends with the Fed. We print bonds, they buy them. ALL of the Gov is complicit in this fraud, not just Trump as you pretend.

There would not be a Fed bond bubble if our government wasn't borrowing the money which caused those bonds to be created in the first place.

Since Trump has DOULBED our federal deficit, and spent more money last year than anyone in human history, then he is contributing to the problem.

Of course he is, put your ego aside and admit they are ALL part of the problem. This shit has been on steroids since Willy left office.

Dude, I've been ranting about government debt since coming to this forum. And long before that.

Our politicians are only doing what we demand of them. If they didn't overspend, we would fire them and elect someone who will.

We get the politicians we deserve.

Pseudocons think it's the poor and Mexicans who are causing all this spending, when they really should be looking in the mirror for the culprit.

Tax expenditures are DOUBLE what we spend on welfare.

US debt is a funny thing. And when it gets too large compared to the GDP, bad things can happen. Debt isn’t a problem until the issuer losses faith in the debtor’s ability to repay.

Expand that thought from micro to macro.

For a country, loss of confidence means the money you borrow will cost you more in interest, thus you get to use less out of each dollar. From there it spirals, and if your economy (tax base) isn’t growing you end up forfeiting collateral.

 

[g5000]

The Federal Reserve is not forcing the government to overspend.

The Federal Reserve is not forcing corporations to over leverage.

Talk about narrow minded idiocy!

The person responsible for personal and government debt is in your mirror.

 

[Ambivalent1]

Sorry son, you are fixated on Trump and too myopic to admit all of the Gov is to blame, there is no differences in any of the political class.. They don't give a shit about what "we" want, they do what the Banks tell them to do. Do you think repeating the "pseudocon" makes you look smart? It's no different than franco using the word derp in every sentence.
Grow up.

Irony. Your are projecting your own narrow conspiracy theory thinking onto others.

Next, you'll be telling us its the international Jewish bankers behind all this.

LOL, your lack of knowledge is not my problem. Your Trump hatred has made into a little child. The Central Bank system and the BIS, learn something and get back to me.

I know all about central banking and BIS system, dipshit. You have probably watched a few cartoons and think you know something.

You don't know shit or you wouldn't confine your rage to Trump. You have a micro view of a macro problem. You're minor league boy.

You have a comprehension problem, retard. I simply pointed out Trump is doing nothing to mitigate the next crash, and is in fact exacerbating it.

Trump did not bring the debt-to-GDP ratio where it is today all by himself. As I told you at least once already, I have been ranting about the debt since coming to this forum. So let me connect the dots for you, okay moron? I came to this forum in 2011.

I even provided a link to a topic I created way back in 2012 about the Fed's bond bubble doomsday machine.

So how could my rage be confined to Trump?

All caught up now, idiot?

Now go back to watching your cartoons.

You're ego simply can't take being shown up son. We all get it Trump is the devil. Trump dances to the Bankers tune, they ALL do. You're getting schooled and it bugs you.Grow up kid. You ain't all that.

 

[g5000]

Irony. Your are projecting your own narrow conspiracy theory thinking onto others.

Next, you'll be telling us its the international Jewish bankers behind all this.

LOL, your lack of knowledge is not my problem. Your Trump hatred has made into a little child. The Central Bank system and the BIS, learn something and get back to me.

I know all about central banking and BIS system, dipshit. You have probably watched a few cartoons and think you know something.

You don't know shit or you wouldn't confine your rage to Trump. You have a micro view of a macro problem. You're minor league boy.

You have a comprehension problem, retard. I simply pointed out Trump is doing nothing to mitigate the next crash, and is in fact exacerbating it.

Trump did not bring the debt-to-GDP ratio where it is today all by himself. As I told you at least once already, I have been ranting about the debt since coming to this forum. So let me connect the dots for you, okay moron? I came to this forum in 2011.

I even provided a link to a topic I created way back in 2012 about the Fed's bond bubble doomsday machine.

So how could my rage be confined to Trump?

All caught up now, idiot?

Now go back to watching your cartoons.

You're ego simply can't take being shown up son. We all get it Trump is the devil. Trump dances to the Bankers tune, they ALL do. You're getting schooled and it bugs you.Grow up kid. You ain't all that.

I just realized I'm debating an eighth grader. Go back to watching your cartoons.

 

[Ambivalent1]

The Federal Reserve is not forcing the government to overspend.

The Federal Reserve is not forcing corporations to over leverage.

Talk about narrow minded idiocy!

The person responsible for personal and government debt is in your mirror.

LOL, no they aren't, they're doing what they ere set up to do, they're enabling it. God you're slow and narrow.

 

[Ambivalent1]

LOL, your lack of knowledge is not my problem. Your Trump hatred has made into a little child. The Central Bank system and the BIS, learn something and get back to me.

I know all about central banking and BIS system, dipshit. You have probably watched a few cartoons and think you know something.

You don't know shit or you wouldn't confine your rage to Trump. You have a micro view of a macro problem. You're minor league boy.

You have a comprehension problem, retard. I simply pointed out Trump is doing nothing to mitigate the next crash, and is in fact exacerbating it.

Trump did not bring the debt-to-GDP ratio where it is today all by himself. As I told you at least once already, I have been ranting about the debt since coming to this forum. So let me connect the dots for you, okay moron? I came to this forum in 2011.

I even provided a link to a topic I created way back in 2012 about the Fed's bond bubble doomsday machine.

So how could my rage be confined to Trump?

All caught up now, idiot?

Now go back to watching your cartoons.

You're ego simply can't take being shown up son. We all get it Trump is the devil. Trump dances to the Bankers tune, they ALL do. You're getting schooled and it bugs you.Grow up kid. You ain't all that.

I just realized I'm debating an eighth grader. Go back to watching your cartoons.

No, you realized you can't beat me down and it bugs you. Deal with it.

 

[g5000]

Deficit Donald's FY2019 budget contains a trillion dollar deficit. Those darned international Jewish bankers made him do it!

He did call himself the King of Debt. It's not like you couldn't see this coming from a mile off.

Government debt is an easy way to artificially juice GDP growth.

 

[Ambivalent1]

Trump's FY2019 budget contains a trillion dollar deficit. Those darned international Jewish bankers made him do it!

Trump, Trump, Trump. What does it matter what the nationality of the Bankers who play the tune is? You hate Jooos too?
I'm starting to feel sorry for you G, apparently your entire being is wrapped up in this and it causes you to make everything personal.

 

[Toddsterpatriot]

Yes, the crash when it comes, will again somehow be poor people's fault.

No it will be the Banks and their lending policies, the poor are just collateral damage.

The Banks got to double dip, they got Bush's and Bammy's bailout money AND the houses they foreclosed on.
Pretty good gig eh?

Banksters also went to the Treasury Dept.'s window to get 0(zero)% loans for a long time.
Where does the average person get 0% loans?

Banksters also went to the Treasury Dept.'s window to get 0(zero)% loans for a long time.

The Treasury doesn't have a "lending window".

Of course it does. It is where the Bonds are printed.

Of course it does.

It really doesn't have a window where banks can borrow at 0% or at any rate.

It is where the Bonds are printed.

Bonds are all book-entry only now.

 

[Toddsterpatriot]

Regulators can minimize this effect AHEAD OF TIME, by stopping assholes from overleveraging themselves.

Banks are a lot less leveraged than they were in 2007.

Incorrect.

Here is some more information for you to ignore: The biggest red flag for the next recession? Corporate debt-to-cash ratios, top economist says

The cash-to-debt ratio of speculative-grade borrowers reached a record low of 12 percent in 2017, below the 14 percent level in 2008

Incorrect.

If only you could look at current capital levels, compared to 2007 capital levels, to prove my error.

The cash-to-debt ratio of speculative-grade borrowers reached a record low of 12 percent in 2017,

Scary! Also unrelated to my comment about banks.

 

[Toddsterpatriot]

Yes, the crash when it comes, will again somehow be poor people's fault.

No it will be the Banks and their lending policies, the poor are just collateral damage.

The Banks got to double dip, they got Bush's and Bammy's bailout money AND the houses they foreclosed on.
Pretty good gig eh?

Banksters also went to the Treasury Dept.'s window to get 0(zero)% loans for a long time.
Where does the average person get 0% loans?

Banksters also went to the Treasury Dept.'s window to get 0(zero)% loans for a long time.

The Treasury doesn't have a "lending window".

Is it starting to make sense to you now?

Is it starting to make sense to you now?

Did you post something to back up your claim yet?

 

[Toddsterpatriot]

Private/corporate debt is at record high numbers, kids. Way, way higher than before the 2007-2009 crash. Way higher.

So is nominal GDP.

Allow me to educate you on the debt-to-GDP ratio.

Private and public debt have grown much faster than GDP. With a lot of help from Trump, who has doubled our deficits.

Private and public debt have grown much faster than GDP.

And your proof is a chart that shows private debt/GDP declining?

 

[Toddsterpatriot]

Investors have a new biggest worry about the stock market

For the first time since the financial crisis, corporate leverage is the chief concern for the professional investors who handle Wall Street’s largest funds.

<snip>

Debt has emerged as a bigger concern with corporate bonds outstanding now eclipsing the $9 trillion mark. Investors have gotten more concerned over leverage, or the amount of debt companies hold compared to the value of their equity.

A net 48 percent of the market pros surveyed believe corporate balance sheets are overlevered.

<snip>

This is the first time since 2009, or just after the financial crisis, that investors have listed leverage as their principal concern. Companies spent the years after the crisis raising cash but also running up debt, which had become cheap as the Federal Reserve slashed interest rates in an effort to stimulate the economy.


The cash to debt ratio reached 12 percent in 2017, the lowest it had been since 2008.

<snip>

Pessimism about global growth have intensified, with 60 percent indicating that a slowdown in GDP gains is coming over the next 12 months. That’s the worst outlook since the depths of the crisis in July 2008, just two months before Lehman Brothers collapsed and set off a global financial panic.

However, investors do not believe conditions will get bad enough for a recession, with just 14 percent seeing negative growth. Instead, they see a condition known as “secular stagnation,” which posits that the global economy is in a long-term stasis in which growth will remain below trend.

Read Tragedy and Hope, you'll find that debt is what runs the economy.

Money runs the economy, debt creates money.

Hence debt runs the economy. Fractional Reserve Banking is why the crash will come.There is more debt than there is money.

There is more debt than there is money.

There is more savings than there is money.

 

[Toddsterpatriot]

Money runs the economy, debt creates money.

Hence debt runs the economy. Fractional Reserve Banking is why the crash will come.There is more debt than there is money.

Yes, debt is the spending of tomorrow's income today.

Trump's fake tax cut stole $1.5 trillion out of the pockets of the unborn.

You are a very limited thinker G. Your thinking is stunted by your myopic hatred. Adults grow out of that.

Horseshit.

I watched the pseudocons wail and moan for eight years about Obama's overspending, and then suddenly go totally radio silent when Trump took office and promptly began doubling the deficit.

So fuck you, asshole.

That is the problem with belonging to a particular political party- you lose objectivity. Trump got elected by pandering to un and under employed people. He promised tariffs (horrible idea) to create American manufacturing jobs and a trade surplus. Trade deficits are generally an indication of a wealthy and healthy country.

Anybody confused needs to watch the short clip by a very good economist.

Trade deficits are generally an indication of a wealthy and healthy country.

Like Greece.....wait what?

 

[william the wie]

Investors have a new biggest worry about the stock market

For the first time since the financial crisis, corporate leverage is the chief concern for the professional investors who handle Wall Street’s largest funds.

<snip>

Debt has emerged as a bigger concern with corporate bonds outstanding now eclipsing the $9 trillion mark. Investors have gotten more concerned over leverage, or the amount of debt companies hold compared to the value of their equity.

A net 48 percent of the market pros surveyed believe corporate balance sheets are overlevered.

<snip>

This is the first time since 2009, or just after the financial crisis, that investors have listed leverage as their principal concern. Companies spent the years after the crisis raising cash but also running up debt, which had become cheap as the Federal Reserve slashed interest rates in an effort to stimulate the economy.


The cash to debt ratio reached 12 percent in 2017, the lowest it had been since 2008.

<snip>

Pessimism about global growth have intensified, with 60 percent indicating that a slowdown in GDP gains is coming over the next 12 months. That’s the worst outlook since the depths of the crisis in July 2008, just two months before Lehman Brothers collapsed and set off a global financial panic.

However, investors do not believe conditions will get bad enough for a recession, with just 14 percent seeing negative growth. Instead, they see a condition known as “secular stagnation,” which posits that the global economy is in a long-term stasis in which growth will remain below trend.

Read Tragedy and Hope, you'll find that debt is what runs the economy.

Money runs the economy, debt creates money.

investment debt increases the money supply but current consumer expenditure debt not so much. Durable goods and housing yes, vacations, cable bills et al not so much.

 

[AceRothstein]

Trump is expanding the economy, that grew at 3.2% in 2018,

where did you come up with this bullshit number?

I averaged the 4 quarterly growth rates.

The annual GDP growth for last year was 3.0 percent.

4th Qtr numbers has not even been published, there is no way to know what the annual growth was

I used 2.8% from here GDPNow - Federal Reserve Bank of Atlanta

You also don't just add up the quarterly totals and divide by 4 to get the yearly growth.