Summary: Ripples of Trump's win rock the boats of China's Economy: Living on Borrowed Time Stratfor, 21 November 2016. Forecast Barring a decision to loosen government controls on credit, investment and home purchases, China's housing and construction sectors will slow in 2017. Industries that hold the bulk of China's outstanding corporate debt, including commodities, building … Continue reading Stratfor: China’s Economy is Living on Borrowed Time
Summary: China, like the US, has surprised the bears by the resilience of its economy. Here Strafor examines one source of its economic strength, one that might haunt its future -- massive and imprudent accumulation of debt. China Is Building Its Future on Credit Stratfor, 20 July 2016 Summary As China tries to overcome slowdowns … Continue reading Stratfor: China Is Building Its Future on Credit
Summary: Each presidential campaign season the federal debt becomes an issue, with the debate consisting largely of bogus soundbites. Each election sees that the federal debt has not only grown, but has grown faster than the US economy -- with little to show for it (e.g., our public infrastructure rots). This will not end well … Continue reading Harsh truths about the Federal debt, showing how Left & Right lie to us
Summary: Perhaps the most important frontier in microeconomics is the effect of debt on growth, especially private sector debt (government debt has different dynamics). Many economists have attempted to integrate debt levels into mainstream theory (e.g., Hyman Minsky). While so far unsuccessful, research has produced many useful insights. Here is a new study with a … Continue reading NBER: rapidly rising household debt predicts recessions. See America’s future.
Summary: The effects of debt are among the most widely misunderstood factors of macroeconomics. The almost delusional writings of perma-bears and conservatives have demonized debt, while economists often regard high debt levels with complacency. Yet economists have learned much about dynamics of debt. This post looks at this cutting edge of economic theory, very relevant … Continue reading Fact & myth about the debt supercycle, a story of modern America
Summary: One of the many oddities of this cycle is that many things that were good during the post-WW2 era have become bad in the new era now starting (unrecognizably so, as we remain unaware of our changed circumstances). Like debt. As we see with auto loans, once useful -- now malignant. Our use of … Continue reading Auto loans: once a boon for America, now a bane
Summary: Let's look at the small and large implications of the auto loan boom. It's an example of our inability to learn, resulting in our credit-driven business cycles. Corporations profit from more sales and interest charges. People suffer from excessive debt burdens, and bankruptcies. Governments run deficits from the eventual busts. So it goes cycle … Continue reading Debt unleashed again to ravage America: out of control auto lending