Etai Friedman: The End of the Debt Supercycle – Colossal Market Crash Ahead!
Etai Friedman has been digging deep into the causes behind the widening of the spread in the credit markets. The 2008 crisis was caused by too much mortgage debt and debt in general and the federal Reserve has propagated even more debt this time. The world is not able to service any more debt.
We have replaced sub prime mortgages with sub prime auto loans, these are being repackaged as debt securities and given AAA ratings. Auto loans are being given out to anyone with a heartbeat, history is repeating itself. We are going to have a full blown deleveraging of the debt bubble similar to the 1920’s
Commodity prices are at 25 year lows and commodity shipping rates and levels are at all time lows. The Chinese government is censoring financial data so that what is coming out is non-sense. They will not admit if they are in a recession. Money moving into gold and gold stocks seeking a safe haven though the current 6 week uptrend is just a blip on the long term charts. This move however looks like the beginning of a long term trend although there may well be a pullback before the uptrend resumes.
Talking points from this week’s interview:
• Auto loan delinquencies skyrocketing
• What is going to be the trigger for this massive deleveraging?
• Deutsche Bank in a similar position to Lehman Brothers in 2007
• Are we in for inflation or deflation?