Juggling Dynamite

Whether they’re aware or not, debt-gorging consumers and businesses have all been banking on the same unreasonable assumption:  that consumption/sales and wages will increase and economic growth continue to expand, without a downturn, indefinitely.  But more than 8 years since the last recession, that bet faces increasingly unfavorable odds.  And having used the extra-long expansion since 2009 to accumulate record debt, rather than pay it down, fall back plans are now generally non-existent.  Not good financial or business planning.  No expansion cycle can last forever, especially one this dependent on adding more debt.  See:  Not a Dot-Com Bubble, Not 2007, But a Nasty Mix of Both.

This chart showing the leverage on corporate balance sheets today, versus the past cycle peaks in 2000 and 2007, is not a picture of strength and resilience.

As the Trump admin opens up the Arctic and Atlanta for further high risk, antiquated and environmentally destructive oil drilling, other parts of the world are showing what intelligent, sustainable, cost-effective, energy production looks like.  See: Record amount of renewable energy capacity added in 2016:

The world added a record amount of renewable energy in 2016 despite a sharp drop in investment, the UN said Thursday, largely due to falling costs of clean energy.

New renewable energy, excluding large hydro projects, added 138.5 gigawatts of power in 2016, up eight percent from the previous year.  The new capacity came despite investment falling to $241.6 billion (227 billion euro), 23 percent lower than the previous year and the lowest since 2013.

“Ever-cheaper clean tech provides a real opportunity for investors to get more for less,” said Erik Solheim, Executive Director of UN Environment. “This is exactly the kind of situation, where the needs of profit and people meet, that will drive the shift to a better world for all.”

Here is a direct link to a video report.  Also watch: German energy transition to renewables.

Nouriel Roubini, chief economist at Roubini Global Economics, comes to us from the Ambrosetti Workshop in Cernobbio, Italy and discusses geopolitical ramifications of U.S. military strikes on Syria. Here is a direct video link.