Marc Faber, publisher of the “Gloom, Boom and Doom” Report, examines China’s economic slowdown and what he sees as an “epic” credit bubble in the nation. Here is a direct video link.
For more important insight on the weight of debt hampering the US corporate sector today see: This is why it’s going to get even tougher.
Rock bottom rates, asset bubbles and capital fleeing Asia, we have seen this movie before. Prices at a “permanently high plateau” anyone?
Our family has been priced out! Has the Bay Area gone crazy? Real estate prices have doubled in the last few years, a tent in the backyard can rent for $900/month, foreign investors are driving up prices, evictions and rent hikes are everywhere, people are commuting longer than ever, the middle class is disappearing, empty investment homes are everywhere, and locals are leaving in record numbers. The worst part? Some people are calling it “progress”. Here is a direct video link.
I would take exception with the real estate agent’s contention near the end of the film that you just need to have a higher IQ and better education today to be able to afford a home. Massive leverage and debt driven asset bubbles typically make participants look brilliant on the way up, and then really dumb on the way down. Stay tuned.
For more perspective on the extent of the most recent tech bubble from an insider see Venture Outlook 2016:
“…looking out into the 2016 horizon, what do I see? Perhaps I would call it “Mourning in VC [Venture Capital]” as in mourning for the days of rational behavior. There is nobody to blame for this abandonment of common sense – it is simply the market being the market and we’re doomed to repeat history. Boom and bust.”
This story has all the usual cast of characters: clients looking for unreasonably high yields from their savings, brokers making big commissions pedaling reckless risk and levered bets, followed by predictable devastating capital loss, shattered dreams and lawsuits…Rinse and repeat. See: New way to bet on oil wipes out billions in investor savings
“For years, brokers have been luring savers like Robinson into drilling partnerships with the promise of fat payouts. With yields on safer investments like government bonds so puny, it wasn’t a hard sell. But now this once hot business, a big source of fees for brokers and banks, is coming to a messy end.
In the past year, investors have lost $20 billion in publicly traded drilling partnerships, or $8 of every $10 they had invested, according to a report prepared by FactSet for The Associated Press. That figure does not include losses from $37 billion of bonds sold by the partnerships in the five years since 2010, many down by half in last 12 months, or losses from bets on private partnerships that don’t trade publicly and are difficult to track.”
