It’s now been ten years since the Lehman crash laid the American and world economy low.
Even if the government had acted swiftly and adequately to fix the issues that caused that crash, and even if the current administration were not doing everything it could do undo what meager fixes that had been applied, just by looking at the nature of markets we could know that another crash will happen sooner or later – with many economists claiming that we are already overdue. But, given the undermining of Dodd-Frank and the Consumer Protection Bureau along with the neutering of other regulatory agencies, it seems like the next crash is going to be spectacular.
Investopedia is predicting the key factor that will knock down the next house of cards is personal debt. Quoting Stephanie Pomboy of Macromavens, they say, “Households are borrowing 90 cents for every incremental dollar they spend, up from 40 cents four years ago.” Debt service is also increasing, she notes, which she predicts will completely wipe out any benefit the recent upwardly wealth-distributing tax overhaul might have had. Household debt is now rising as fast as it was in 2007, right before the last devastating crash, and the rising interest rates on credit is now one of the biggest money problems for American consumers.
To make matters worse, just like last time, those who are depending on their portfolios for their retirements are going to be the worst hit during the next crash. Pomboy says there is a current 4 trillion deficit in pension funding, which can only be sustained if stocks continue to hold or rise.
Timing a crash is not possible – and there have been those trumpeting an impending crash for years, which creates a sense of ‘the boy who called wolf.’ The problem with the ’emergency fatigue’ caused by constant doom saying is that the market is being propped by tons of free money thanks to the Fed policies. The situation cannot continue indefinitely, and all the doomsayers need is to be right once.
Of note is that George Soros, famed contrarian investor who made the bulk of his money betting against what others viewed as sound assets, has given permission to his family office to start investing in cryptocurrencies. Now Soros is on record as of January as saying that bitcoin is a bubble. The thing is, it has dropped precipitously since then, and though it could certainly go lower than it is today, it would be strange to just begin taking a large bet against bitcoin today.
Is George getting ready to bet against the broader market, or even world economy, with cryptocurrencies?