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>I believe we are about 9months away from the greatest financial disaster of our times Why 9 months? What would precipitate that?

david927 6y ago
By nine months it will be a debt crisis which has become a liquidity crisis which then forces a fire-sale of assets.
- devalgo 6y ago
  But most of the debt has been around for years at this point. What in the next 9 months changes that?
  - david927 6y ago
    Debt is fine if payments can be made. What's coming is an inability to make payments. Further, credit is tightening, so that, say, companies that have been using credit to stay alive (zombie companies) won't be able to anymore. Up until around 2003, zombie companies were no more than 2 or 3% of total companies, as you would expect. This grew to 5-6% in the 2008 crisis. But that crisis wasn't allowed to resolve naturally, so it's been continuing to grow, and now it's almost at 20% -- of all companies.* https://www.axios.com/zombie-companies-us-e2c8be18-6786-484e-8fbe-4b56cf3800ac.html https://www.axios.com/zombie-companies-us-e2c8be18-6786-484e... The economic contraction that we're just starting is going to set off a wave of defaults, and those defaults will beget more defaults.
- taurath 6y ago
  Why won't the fed just pump another $8T into the economy to prop up the assets further?
  - david927 6y ago
    It could... But each dollar they add puts the country's solvency at risk. And it's already deeply at risk. But you're not alone thinking this. I'm deeply concerned at how many people think that the Fed can just "manage" this. I feel like I'm watching generational wealth falter and the spoiled children are reacting to the news with, "My dad will just put it on his card."
    - taurath 6y ago
      I don’t think any country that can print it’s own currency CAN become insolvent, by definition. Our currency could be completely devalued yes, and nobody would put their money in USD anymore, or back loans made in the US, and the resulting economic crash would reshape the world economy towards Europe and China. But not be insolvent.

david927 6y ago

By nine months it will be a debt crisis which has become a liquidity crisis which then forces a fire-sale of assets.

devalgo 6y ago
But most of the debt has been around for years at this point. What in the next 9 months changes that?
- david927 6y ago
  Debt is fine if payments can be made. What's coming is an inability to make payments. Further, credit is tightening, so that, say, companies that have been using credit to stay alive (zombie companies) won't be able to anymore. Up until around 2003, zombie companies were no more than 2 or 3% of total companies, as you would expect. This grew to 5-6% in the 2008 crisis. But that crisis wasn't allowed to resolve naturally, so it's been continuing to grow, and now it's almost at 20% -- of all companies.* https://www.axios.com/zombie-companies-us-e2c8be18-6786-484e-8fbe-4b56cf3800ac.html https://www.axios.com/zombie-companies-us-e2c8be18-6786-484e... The economic contraction that we're just starting is going to set off a wave of defaults, and those defaults will beget more defaults.
taurath 6y ago
Why won't the fed just pump another $8T into the economy to prop up the assets further?
- david927 6y ago
  It could... But each dollar they add puts the country's solvency at risk. And it's already deeply at risk. But you're not alone thinking this. I'm deeply concerned at how many people think that the Fed can just "manage" this. I feel like I'm watching generational wealth falter and the spoiled children are reacting to the news with, "My dad will just put it on his card."
  - taurath 6y ago
    I don’t think any country that can print it’s own currency CAN become insolvent, by definition. Our currency could be completely devalued yes, and nobody would put their money in USD anymore, or back loans made in the US, and the resulting economic crash would reshape the world economy towards Europe and China. But not be insolvent.