Default wave tsunami on the horizon: Housing, autos, student loans

America is beset by a severe liquidity drought, primarily do to debt service obligations. Massive capital flows are dedicated to debt service.

Debt bubbles are in full bloom.  And we are on a glide path for massive default waves, disorder in credit markets and financial turmoil.

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Dangerous bubbles: “The Warning Signs Are There

  • Eric Rosengren, the president of the Federal Reserve Bank of Boston, recently made a startling tacit admission. We may be in the midst of yet another real estate bubble. Major financial institutions in this country are in possession of over $14 trillion worth of residential real estate loans. That’s well over $40,000 for every man woman and child in America.
  • Low interest rates have fueled a bubble in subprime auto loans, and that bubble appears to be reaching its limits. There are now over 1 million ordinary and subprime auto loans that are delinquent, a number that hasn’t been this high since 2009.
  • There is now well over a trillion dollars worth of student loan debt in this country; much of it owned by low income families. And there’s little hope that these students will ever see a return on their investment. That’s why at least 27% of student loans are in default. While more than one in four students are in default now, that number was one in nine a decade ago. And if current trends continue, there could be $3.3 trillion of student loan debt by the end of the next decade. Clearly, this isn’t going to go on for much longer.
  • And who could forget the stock market? Despite experiencing low GDP growth every year since the last recession, the stock market continues to break new records. Many of the companies on the stock market (especially tech companies), have a market cap that is between 20 and 100 times their sales or earnings numbers. Some are much higher, despite experiencing slow growth, or even no profits at all.

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America needs robust liquidity at ground level:

The Leviticus 25 Plan 2018 –  $75,000 per U.S. citizen

The Leviticus 25 Plan 2018 (2275)

 

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