Elliott Wave International
Global Debt Market: Biggest Bubble of All Time?
The Global Debt Market — The Biggest Bubble of All: This One Has Yet to Deflate (Are You Ready?)
History shows that once a financial bubble bursts, it can take a long time to bounce back.
Recent history offers an example: Real estate prices topped in 2006-2007 — then came the worst part of the sub-prime mortgage crisis in 2008.
Yet instead of recovering with the passage of time, real estate prices just keep getting worse:
Home prices dropped for the fifth consecutive month in January, reaching their lowest point since the end of 2002.
– CNNMoney, March 27
As values sink and desperation grows, the number of owners giving their timeshares away for $1 — or less — has doubled in the past year, says Brian Rogers, of Timeshare Users Group, an owner advocacy group. “There’s never been a worst time to try to sell a timeshare,” he says.
– SmartMoney, April 4
Observers have called for a bottom numerous times in the five or so years since the bubble burst.
Again, this is what can happen. Recovery can take far longer than many expect.
Real estate is just one sector of the economy. Let’s consider another sector: Continue reading
How to Handle an Economic Implosion
I came across some research on the subject of worry. Here’s how it was presented:
Things People Worry About:
- things that never happen – 40%
- things which did happen that worrying can’t undo – 30%
- needless health worries – 12%
- petty, miscellaneous worries – 10%
- real, legitimate worries – 8%
Of the legitimate worries, half are problems beyond our personal ability to solve. That leaves 4% in the realm of worries people can do something about.
I thought about our gigantic national debt and weak economy. These seem to fit into both subcategories of “real” worries. You can’t do much as an individual to solve the nation’s debt and economic problems, yet you can prepare for a worsening economic downtrend.
Do we see evidence for an economic turn for the worse? Continue reading
What All Major Depressions Have in Common
Signs of deflation are visible but the public will be fooled
Deflation requires a precondition: a major societal buildup in the extension of credit (and its flip side, the assumption of debt).
– Conquer the Crash, 2nd edition (p. 88)
Has the United States met that precondition?
Well, consider that total credit market debt as a percent of U.S. gross domestic product was
- 280 percent in 1929 at the start of the Great Depression
- 380 percent in 2008
The current build-up of credit goes far beyond major — it’s unprecedented.
It’s been rising steadily for 60 years. The slope literally looks like the side of a steep mountain.
Bank credit and Elliott wave expert Hamilton Bolton studied every major depression in the U.S. In 1957, he made this observation: Continue reading
If the Economy’s “Recovering,” Why is the Largest-Ever U.S. City Bankruptcy on the Horizon?
What’s really going on?
As pundits chatter about an economic recovery, 80 miles east of San Francisco you’ll find a city (pop. 292,000) facing bankruptcy:
Stockton is on the verge of becoming the largest city in the United States to declare bankruptcy…
San Francisco Chronicle (3/4)
Bloomberg reports (2/25) that it costs the city $175,000 just to get a consulting firm’s fiscal evaluation. Management Partners issued a report which said:
…the city took on a large amount of debt in anticipation of ongoing growth that now exceeds the city’s ability to pay.
Compensation packages exceeded sustainable levels and the city assumed a significant liability for improved retiree health coverage without sufficient recurring revenues to cover growing costs…
Stockton also has one of the nation’s highest home foreclosure rates and has been called “Foreclosureville USA.”
And Moody’s just downgraded Stockton’s rating to Ba2, which is two levels below investment grade.
In the same Bloomberg article, the California State Treasurer said “The reputational stain can bleed onto other local issuers and the state, and that can hurt taxpayers in the bond market.” Continue reading
Preparing Your Finances for 2012
Looking ahead to a new year and planning for the future
It’s hard to believe that 2011 has passed so quickly and that 2012 will soon be here. Now is a good time to look back over the past year and assess your finances. Did your choices this year put you in better or worse circumstances? Do you have the information needed to make wise decisions in the next year? Are you prepared to protect your financial future?
The following excerpt from Conquer the Crash explains the importance of preparing and taking action now so that you’ll be ready for what’s ahead. You can read 8 more chapters from Conquer the Crash — 42 pages of critical information, including a list of imperative “dos and don’ts” — Free. Find out how below.
Chapter 14: Making Preparations and Taking Action
The ultimate effect of deflation is to reduce the supply of money and credit. Your goal is to make sure that it doesn’t reduce the supply of your money and credit. The ultimate effect of depression is financial ruin. Your goal is to make sure that it doesn’t ruin you. Continue reading
The Top 10 Market Myths Exposed
The Market Myths Exposed eBook sets the record straight
Not knowing the truth can be hazardous in just about any type of situation, but especially when it comes to your financial future.
To help you decipher market truth from myth, Elliott Wave International put together Market Myths Exposed, a free 33-page eBook that takes the 10 most dangerous investment myths head on and exposes the truth about each in a way every investor can understand. Originally published in 2009, it’s still just as valuable as ever. Get your free eBook here.
Here are the first two myths from Market Myths Exposed: Continue reading
A Not-So-Funny Thing Happened on the Way to the Economic Recovery
By Bob Stokes
“Darkest Days” for the Economy: Behind Us, or Just Ahead?
Economic skies forecast: slowly clearing, heavy rain returning, or cyclone?
Many people still talk about a “recovery,” or at worst only see a possible double-dip recession. But what if the mistake was to think the economy was only in a recession in the first place? It can’t “double-dip” when it never truly recovered:
“The respite following the 2009 stock market low is not a new expansion. It has failed to improve housing sales, barely caused employment to budge, and hasn’t managed — despite the unprecedented manufacture of new Fed money — to get the total supply of credit back above its 2008 high.”
Elliott Wave Theorist, Sept. 2011
Indeed, the Federal Reserve’s quantitative easing measures have failed. Continue reading
America’s First Deflationary Depression: Is a Bigger One Ahead?
Social psychology precipitates economic depressions
Don’t blame Martin Van Buren for America’s first deflationary depression. Social mood rode higher in the saddle than did our 8th President, who only stood 5′ 6″.
Elected in 1836, by the time Van Buren assumed office in March 1837 a speculative bubble had burst and a banking crisis was at hand (sound familiar?) — the national mood had turned south and the “Panic of 1837″ followed. Van Buren was known as “The Little Magician,” but he could not pull an economic recovery out of the hat. He met defeat seeking a second term.
America’s first deflationary depression lasted until 1842. Van Buren blamed over-zealous business practices and a credit bubble (sound familiar 2x?). The panic precipitated bank failures; many speculators who bought land to capitalize on railroad expansion lost everything. The depression worsened as Van Buren continued Andrew Jackson’s economic policies. Businesses failed and unemployment was widespread. There were even “food riots” in several cities. Continue reading
Michael Maloney: “We pay tax for the privilege to have currency”
In this video excerpt from the Casey Summit When Money Dies, Rich Dad advisor Mike Maloney explains how currency is created, “fractional reserve banking,” and why our banking system is a pyramid scam of epic proportions.
