Is another global financial crisis on the horizon?

GySgt Wayne A. Ekblad — Thu, 30 Jul 2015 08:20:59 -0400

It's not just Greece, Puerto Rico and China. Debt is piling up around the world — stifling global economic growth and heightening the risk of more defaults and market turmoil..

World leaders are caught in a trap: More debt in the form of government and private spending is needed to stimulate today's sluggish economies. Yet the higher the debt, the greater the danger that a pullback by creditors will trigger another financial crisis like the one in 2008.

"The post-crisis world is a world of high debt, and it doesn't take much. It just takes a bad shock for the debt dynamics to go wrong," warned Olivier Blanchard, the International Monetary Fund's chief economist, as he forecast slower global growth this year, partly because of excessive debt.

"We have to be ready to see other episodes of this kind," he said, referring to the recent Greek default that shut down the country's banks and intensified fears of a Eurozone breakup until a new bailout was negotiated.

Although a new bailout proposal has quieted the Greek drama for the moment, a long-term solution for the euro area is hard to see. Governments have generally pursued one of two strategies since the global financial crisis, though neither has been notably successful.

Europe has largely slashed spending to get a control on government budgets, but the result so far has been minimal growth and high unemployment in Greece and some other countries.

The second approach, adopted by the U.S. and China, pumped hundreds of billions of dollars into all kinds of public projects. But growth in these economies, while better, has hardly been spectacular.

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Meanwhile, central banks around the world have cut interest rates and issued unprecedented amounts of bonds to spur borrowing and spending.

The result is that by the middle of last year, total global debt — government, corporate and household — reached $199 trillion, an increase of $57 trillion from the end of 2007, according to McKinsey Global Institute. That's about $27,500 for every person on the planet.

Read more at ...

http://www.latimes.com/business/la-fi-global-debt-20150729-story.html#page=1

Rising global debt is increasing the risk of another financial crisis

It's not just Greece, Puerto Rico and China. Debt is piling up around the world &mdash; stifling global economic growth and heightening the risk of more defaults and market turmoil.

Response by GySgt Wayne A. Ekblad made Jul 30 at 2015 8:23 AM

GySgt Wayne A. Ekblad — Thu, 30 Jul 2015 08:23:10 -0400

The Fed Is Setting Up the Market for a September Cliffhanger ...

Once again, the fate of the free world seemingly rests on a decision out of the Marriner Eccles building in Washington D.C., where on Sept. 17 Janet Yellen and her cohorts at the Federal Reserve will decide whether to raise interest rates for the first time since 2006.

If they do, the fear in some corners is that they will undo layers upon layers of credit leverage that have supported stocks, the global financial system and the economic recovery over the last seven years.

Read more at ...

http://www.msn.com/en-us/money/economy/the-fed-is-setting-up-the-market-for-a-september-cliffhanger/ar-AAdI1b6

The Fed Is Setting Up the Market for a September Cliffhanger

Once again, the fate of the free world seemingly rests on a decision out of the Marriner Eccles building in Washington D.C., where on Sept. 17 Janet Yellen and her cohorts at the Federal Reserve will decide whether to raise interest rates

Response by MAJ Robert (Bob) Petrarca made Jul 30 at 2015 8:30 AM

MAJ Robert (Bob) Petrarca — Thu, 30 Jul 2015 08:30:25 -0400

Another? No. It's all part of the same ongoing one that's running in circles at 33 1/3 RPM like a bad disco album. New faces, new destinations but all part of the same downward spiral/

Response by SSG John Jensen made Jul 30 at 2015 2:38 PM

SSG John Jensen — Thu, 30 Jul 2015 14:38:30 -0400

the banksters weren't called to account for their actions - too big to fail has gotten bigger - the banksters are doing the same things that they were doing before,it's going to happen again - socialism for corporate failure, free market for the rest of us

Response by SSG Gerhard S. made Oct 19 at 2015 10:39 PM

SSG Gerhard S. — Mon, 19 Oct 2015 22:39:11 -0400

So long as governments continue the foolhardy attempt at managing economies we can expect economic emergencies on a far greater scale than would be possible, or expected under a free economy. This is because when governments try to "cushion" the blow, they only prolong, and intensify the pain when the feces hit the fan.

Response by PO3 Private RallyPoint Member made Oct 20 at 2015 7:15 AM

PO3 Private RallyPoint Member — Tue, 20 Oct 2015 07:15:32 -0400

WE never got out of it ... and it is worsen as we speak ...

Response by LTC John Shaw made Oct 20 at 2015 9:03 AM

LTC John Shaw — Tue, 20 Oct 2015 09:03:34 -0400

GySgt Wayne A. Ekblad With the levels of debt in each 'developed' country we are all a Bug looking for windshield to hit.
http://countryeconomy.com/national-debt

General government gross debt 2015

Government debt is the total financial obligations incurred by the government of a nation. Also is known as public debt, national debt or sovereign debt, and other definition is money owed by a national government. 2015

Response by MSgt Private RallyPoint Member made Oct 20 at 2015 3:57 PM

MSgt Private RallyPoint Member — Tue, 20 Oct 2015 15:57:09 -0400

Without getting into huge macro inter-related issues and micro-transactions, yes there is likely a downturn coming. The market has been behaving similar to how it did in 2007 before the crash in 2008. Those I know who've been in the market for 10+ years believe it's likely to turn bear in the next 6 months. Maybe a year max. it's one reason why you keep hearing about the Fed wanting to raise rates. If the next crash happens and we're at 0% interest there is little to no room for the Fed to try to blunt the impact by lowering rates (unless we go negative like a lot in the EU have, which is bad). It's not likely to be caused by housing this time but there will be some impact there.
If this happens there will be a global impact. The recent bit with China is an example, and that was pretty much just a minor blip. Another example is the recent brief correction the market did in August. Everyone acted like the sky was falling and overall it wasn't that big of a change. Add in a real large correction/bearish downturn and the overall fear and irresponsible media hype and it'll be worse.
IMO the best thing you can do is try to educate yourself some, manage your own portfolio if you can learn enough (recently a lot of managers' direction was to do nothing thus causing people to lose instead of at least going to cash), and if not then if you see real indications of an overall downturn go fully cash.
Also, if it happens, be wary of money stagnating in a bank. I haven't been able to ferret out the details myself but I trust the source(s) I've heard it from. In a recent global financial summit (I think it was the G-20 in Feb 2014) one of the items agreed upon by Central Banks was that in the event of a financial crisis/run on the banks, all money in the bank belongs to the bank. Essentially once you deposit something it is no longer technically yours. This is due to the so-called insurance (FDIC or whatever it is now) only has enough to cover about 25% of all that's been deposited.
I'm not a doomsayer or someone saying you shouldn't use the system, just saying use it wisely. The market cycles about every seven years and since the last big drop was in 2008, do the math. Looking at charts over the years we're also sitting higher than it was for any of the previous large crashes, back to the Great Depression. So yep, all in all we're poised for a downturn. Be ready for it and save/invest accordingly.

Sorry to ramble, it's a touchy point. And the market being so sideways can be a royal pain to manage. :p