Why, oh why, does no one ask the simple question: Where did all the money go to?
Roughly said 100+ on one side means 100- on the other side. So 'follow the money'.
The people having this enormous plus and not spending the money are causing the problems. As long as they hold on to it, no one can balance their books and you see crazy things happen like in Spain and Greece, things being sold for a fraction of the cost.
The people holding on to the money know people are desperate and wait until people do the craziest things to get out of debt. A debt slave works harder than a loan slave.
But that is the poisonous thing of making money with money. Money is being subtracted from the real economy and just floats around never getting back to the real economy and slowly sucking it dry.
But since the people creating/controlling the money also hold the power, they are not being hold responsible. Average bankers even make more money than in 2007.
We live in an age in which people holding the most responsible positions, don't have to take any responsibility and slowly the average person is getting poorer and poorer.
The systems is nothing more than this, it's a big Ponzyscheme, a Steamroller of which no one looks where it is going, but the owner is only letting us focus on the complex machinery steering the machine. In the meantime the machine itself is heading for the cliff and the owner knows very well when yo jump off while we are still studying the machine.
Roughly said 100+ on one side means 100- on the other side. So 'follow the money'.
The people having this enormous plus and not spending the money are causing the problems. As long as they hold on to it, no one can balance their books and you see crazy things happen like in Spain and Greece, things being sold for a fraction of the cost.
The people holding on to the money know people are desperate and wait until people do the craziest things to get out of debt. A debt slave works harder than a loan slave.
But that is the poisonous thing of making money with money. Money is being subtracted from the real economy and just floats around never getting back to the real economy and slowly sucking it dry.
But since the people creating/controlling the money also hold the power, they are not being hold responsible. Average bankers even make more money than in 2007.
We live in an age in which people holding the most responsible positions, don't have to take any responsibility and slowly the average person is getting poorer and poorer.
The systems is nothing more than this, it's a big Ponzyscheme, a Steamroller of which no one looks where it is going, but the owner is only letting us focus on the complex machinery steering the machine. In the meantime the machine itself is heading for the cliff and the owner knows very well when yo jump off while we are still studying the machine.
4
Changing terms of loans to keep people in their homes is a worthwhile endeavor that yields social dividends down the line. Tighter lending standards from now on is how to prevent it happening again. However, the same can not be said of bailing out companies. Wipe out the equity, give a haircut to the debt holders, fire the management, and if there's a viable business left, give them a fresh start. That's the way our capitalist system is supposed to work.
1
There is a simple reason why bad debts are still out there. We bailed out the lenders but not the borrowers. If you bail out the borrower, then the debt is paid and the bad loan goes away. The bank still gets the money and therefore bailed out also. But the borrower is no longer saddled by bad debt.
For the same $2.5 trillion that the Federal Reserve basically handed to the global banks, while basically saying please write off the bad loans and save the economy (which they didn't) the Fed could have actually paid or subsidized all those bad loans and people would have still been in their homes, or not been swamped by medical and student debt.
But what about moral hazard??!!! How can you reward people how took out bad debt? Well if you are not worried about moral hazard for the giant banks (the professionals who were supposed to know what they were doing) then why are you more worried about moral hazard for borrowers (the amateurs, like first time home buyers who were in many cases purposely swindled by the lenders.)
The way the Great Recession was handled is just further proof that all markets and most governments, and especially central banks, are completely under the control of global billionaires, with profits privatized and their losses socialized.
For the same $2.5 trillion that the Federal Reserve basically handed to the global banks, while basically saying please write off the bad loans and save the economy (which they didn't) the Fed could have actually paid or subsidized all those bad loans and people would have still been in their homes, or not been swamped by medical and student debt.
But what about moral hazard??!!! How can you reward people how took out bad debt? Well if you are not worried about moral hazard for the giant banks (the professionals who were supposed to know what they were doing) then why are you more worried about moral hazard for borrowers (the amateurs, like first time home buyers who were in many cases purposely swindled by the lenders.)
The way the Great Recession was handled is just further proof that all markets and most governments, and especially central banks, are completely under the control of global billionaires, with profits privatized and their losses socialized.
3
The widely diverging comments here demonstrate that this column is largely meaningless. Let's see, if borrowers are finding it hard to make enough to service the debt they took on, they slow or stop paying loans. If people slow or stop paying loans, banks slow down their lending, since they find their own capital tied up in loans. Yeah, of course they do. But what is Mr. Eavis saying? Do these banks need to write them down or off? Well that really dries up their capital. Do they need to declare defaults and sue? Well then the borrower goes under, the bank gets pennies on the dollar, and it still takes a hit to capital.
I fail to see what Mr. Eavis thinks should or should have been done. One way or another, an nonperforming loan is a drag on the economy, but a written-off loan is as well.
I fail to see what Mr. Eavis thinks should or should have been done. One way or another, an nonperforming loan is a drag on the economy, but a written-off loan is as well.
1
Connecting dots between China/world financial crises, and the current election:
Young voters know that their families were devastated by a financial crisis caused by companies which should have been held responsible, but instead, rewarded themselves with huge salaries and multi-million dollar bonuses. They know the causes of the financial crisis still haven’t been fixed because the ones with the power, stand to gain from the system failures. They know they’ll pay proportionately more than the richest, who will hire high powered tax lawyers to jump them through loopholes and use
intricate tax shelters rather than pay their fair share.
A lot of people just don’t get it. They think that Bernie Sanders magically came out of nowhere because some people are lazy don’t want to work. But polls show that 85% of young eligible voters do get, that Bernie Sanders is the only guy in the pack, who has actually devoted his decades long career, to trying to change the the system that has failed the vast majority of Americans.
Of course the corporate entity known as the NYT has endorsed corporate candidate Hilary Clinton; a candidate deeply indebted to the system that deregulated the banking system during the Bill Clinton administration.
So, dots connected.
Young voters know that their families were devastated by a financial crisis caused by companies which should have been held responsible, but instead, rewarded themselves with huge salaries and multi-million dollar bonuses. They know the causes of the financial crisis still haven’t been fixed because the ones with the power, stand to gain from the system failures. They know they’ll pay proportionately more than the richest, who will hire high powered tax lawyers to jump them through loopholes and use
intricate tax shelters rather than pay their fair share.
A lot of people just don’t get it. They think that Bernie Sanders magically came out of nowhere because some people are lazy don’t want to work. But polls show that 85% of young eligible voters do get, that Bernie Sanders is the only guy in the pack, who has actually devoted his decades long career, to trying to change the the system that has failed the vast majority of Americans.
Of course the corporate entity known as the NYT has endorsed corporate candidate Hilary Clinton; a candidate deeply indebted to the system that deregulated the banking system during the Bill Clinton administration.
So, dots connected.
1
Yes Hanna, you said it correctly. I am of the generation of Bernie, and he is speaking from a genuine heart. He is the only candidate that is speaking what he has believed all his life, not an advertising campaign package written by the advertising world to mislead the voters. But let's also remember it is not only about electing Bernie, it is about a revolution, we must get off our bums and stand up protest and vote the political paid class of politicians out of office. Then gather and march right up the steps of the capital and demand that government speak for the people and not the corporations and oligarchs.
3
I somehow doubt that any of the bankers responsible for these things are sufferring in any way. Call me cynical, I know.
1
Ever since Milton Friedman created his extreme conservative economic orthodoxy in the 1970`s; as embraced by the Chicago School of Economics and Wall Street; that gave rise to this whole insane rise of deregulated Trickle Down Theory espoused by Ronald Reagan and worshiped by Republicans for the last 35 years; we have seen the inevitable result.Free trade that creates massive wealth for mega-corporations; jobs being shipped to slave labor countries overseas; pollution and climate change by gutting environmental standards by govt`s. turning a blind eye; and finally the redistribution of wealth to the 1%`s with the middle class reduced to the working poor. And people still wonder why Bernie Sanders voice is resonating with millions of those who understand the TRUTH! These toxic loans are just one more example of the mess Obama has been cleaning up for 8 long years.
4
This is the result of the kind of loose monetary policy so many of the writers for NYT (and plenty of others) advocate. The problem is not that they publish economists that advocate this, but that they marginalize, if not vilify, voices of alternate economic policy. For this, NYT's contribution to the coming meltdown should not be understated.
4
There is no more evil on the the planet than the evil of the banksters!
The Democratic capitalism led us to greater income inequality that we have seen and communism or any form of capitalism and the signs indicate that free of bad money is for bussines need a witer and clean and distinguish and good from the bad busines even though we are in principle in 2016
Mr. Eavis and Readers: Three quick points if I may:
1) If troubles do increase in the banking sectors of developing countries and then spread throughout their economies; later, when these international loans must be repaid; these repayments are usually in highly appreciated dollars or euros. The developing countries must agree to such terms to attract this financial capital, again during flush economic times, when their currencies' valuations are higher. Thus, during the initial loan negotiations, large international banks seek to hedge their loan investments by taking devaluations out of play, for their particular loans to these developing countries.
2) In China, Brazil, and Italy, for examples, the financial sector will be disproportionately affected, as noted. Also, in the US, the Great Recession's depth and extended length, evidence the severity of recessions which often originate in the banking sector.
3) The "window of opportunity" to take constructive action to write off bad loans, and begin afresh, seems to have been squandered by delay in Italy. Yet, in Ireland, some delay was effective in extending home loans in a country with a home ownership rate of about 70%, compared to about 65% in the US. The US Fed's difficulties in timing its interest rate policies, continuing to the present, also evidence the complexity of timing markets and the monetary stimuli targeted at them.
[02/04/2016 Th 1:35 p]
1) If troubles do increase in the banking sectors of developing countries and then spread throughout their economies; later, when these international loans must be repaid; these repayments are usually in highly appreciated dollars or euros. The developing countries must agree to such terms to attract this financial capital, again during flush economic times, when their currencies' valuations are higher. Thus, during the initial loan negotiations, large international banks seek to hedge their loan investments by taking devaluations out of play, for their particular loans to these developing countries.
2) In China, Brazil, and Italy, for examples, the financial sector will be disproportionately affected, as noted. Also, in the US, the Great Recession's depth and extended length, evidence the severity of recessions which often originate in the banking sector.
3) The "window of opportunity" to take constructive action to write off bad loans, and begin afresh, seems to have been squandered by delay in Italy. Yet, in Ireland, some delay was effective in extending home loans in a country with a home ownership rate of about 70%, compared to about 65% in the US. The US Fed's difficulties in timing its interest rate policies, continuing to the present, also evidence the complexity of timing markets and the monetary stimuli targeted at them.
[02/04/2016 Th 1:35 p]
We have led the world by setting an example that FED, a semi-government organization, can create credit from thin air and also purchase government bonds with paper money without enough gold to back it up. This pyramid scheme requires inflation to go up. If we can play this kind of games, every government especially the big ones in the world will play for sure. Increasing debt is just one of the by-products of this game.
1
My brother in law is a naturalized US citizen from the south of China. He has several businesses in China (Shenzhen) that were started 20-25 years ago. They are primarily in the machining/ tool making business. He says the current conditions are the worst he has ever seen. He knows many other business owners whose loans are becoming "zombified" - rolled over into new loans that no one - the business, the bank, the government, no one - expects to ever be repaid.
In addition, he owns several real estate properties, and all are underwater - some more than 50%, and the buyers are still not showing up.
So China's huge corporate debt (300% of GDP), growing public debt(nearing 100% of GDP) are piling up right when their economy is slowing dramatically.
If you thought 2008 was bad for the global economy, that will be nothing compared to what China will go through. The longer China refuses to deal with their debt problem, the worse the problem will be.
In addition, he owns several real estate properties, and all are underwater - some more than 50%, and the buyers are still not showing up.
So China's huge corporate debt (300% of GDP), growing public debt(nearing 100% of GDP) are piling up right when their economy is slowing dramatically.
If you thought 2008 was bad for the global economy, that will be nothing compared to what China will go through. The longer China refuses to deal with their debt problem, the worse the problem will be.
2
Now is the time to repeal the 16th Amendment. End the nonsense now. These central planners couldn't plan their way out of open box. These so called "technocrats" supposing to be the smartest people in the room have no solutions and just keep compounding the problem. Stop taxing wages and start taxing spending. Stop giving taxpayers money to corporations who screw it up and demand that we the taxpayer bail them out. This will end badly and those affected the most will be the poor and middle class and this may ending being 1789 all over again.
1
We are studying a system of actions which produces a stream of money through choke points where tolls are charged for every movement. The profit is not in the interest repaid, the base rent of the money, but of the toll exacted on each actual or possible movement of the money, the side bets, the house percentage each time the money or even a marker related to the money transits the chokepoint.
When the markers cannot be traded for other markers or taken away as chips, cash money, then the banking system freezes.
And who shall be required to pay so that the casino can re open? Why those
who did not play.
The money to be made is not in loans, the loans are just a mechanism to create markers, it is the vast trading, the primary betting and all the extrapolated side betting that produces the profit.
So who should be punished? Why the weak of course.
The greatest crime in America is to be poor. Period. All else can be forgiven.
When the markers cannot be traded for other markers or taken away as chips, cash money, then the banking system freezes.
And who shall be required to pay so that the casino can re open? Why those
who did not play.
The money to be made is not in loans, the loans are just a mechanism to create markers, it is the vast trading, the primary betting and all the extrapolated side betting that produces the profit.
So who should be punished? Why the weak of course.
The greatest crime in America is to be poor. Period. All else can be forgiven.
1
The Chinese are a quick study. They're learning both the good, but more of the bad, things from the west, even the propensity to gear up in the name of investments (note how fast margin lending has been expanding among retail investors in their chase of the Chinese stockmarket). While the stockmarket is China is really just a big casino or a game of musical chairs for retail investors, one could arguably be more optimistic about the property market even though those ghost towns (where some of the new developments are hardly lived in as a result of speculation, or that prices are too high for them to be sold), there remains genuine housing needs for vast majority of average Chinese so that if the price is right, all those ghost towns could be taken up in a heartbeat.
More importantly, the Beijing government will not let the economy fail as it can't afford to. If it means printing more RMB, so be it (even if it means more depreciation of the currency). China still has the trump card up its sleeve, which is that RMB is still not traded on open market. That allows some measure of control by Beijing to control its destiny, unlike all those economies noted in the article. Given the very real threat of currency attacks from raiders (case in point, the Soro attack on GBP in decades yonder), and its current much weakened state of affairs, China is not going to rush to flunk open its door.
More importantly, the Beijing government will not let the economy fail as it can't afford to. If it means printing more RMB, so be it (even if it means more depreciation of the currency). China still has the trump card up its sleeve, which is that RMB is still not traded on open market. That allows some measure of control by Beijing to control its destiny, unlike all those economies noted in the article. Given the very real threat of currency attacks from raiders (case in point, the Soro attack on GBP in decades yonder), and its current much weakened state of affairs, China is not going to rush to flunk open its door.
1
Why are so worried about Chinese bad loans? At least those consumer loans were largely spent in China where they benefited those who sold the goods/services to loan holders.
We should be worried far more about the consumer loans in western Europe where the loaned money will never be paid back because it was sent by the borrower to the "poor" relatives elsewhere in the world where it disappears without trace in a big black fiscal hole. Some of it is used to pay smugglers to smuggle the "poor" relatives to the land of "milk and honey".
We should be worried far more about the consumer loans in western Europe where the loaned money will never be paid back because it was sent by the borrower to the "poor" relatives elsewhere in the world where it disappears without trace in a big black fiscal hole. Some of it is used to pay smugglers to smuggle the "poor" relatives to the land of "milk and honey".
This sentence makes no sense to me: "Recognizing losses on bad loans can mean pushing corporate borrowers into bankruptcy and households into foreclosure."
In my book a bank "recognizing a loss" means it takes a charge and writes the bad loan off. Keeping zombie loans on its books and refusing to release from its jaws debtors who can not pay prolongs, forever in many cases, the fantasy that a loss is not a loss and artificially shores up a bank's bottom line -- and its executives' bonuses -- eventually driving its prey into homelessness.
If banks were obligated to prove that loans they hold or sell can and will be repaid, fewer bad loans would be issued and fewer debtors would be ruined.
In my book a bank "recognizing a loss" means it takes a charge and writes the bad loan off. Keeping zombie loans on its books and refusing to release from its jaws debtors who can not pay prolongs, forever in many cases, the fantasy that a loss is not a loss and artificially shores up a bank's bottom line -- and its executives' bonuses -- eventually driving its prey into homelessness.
If banks were obligated to prove that loans they hold or sell can and will be repaid, fewer bad loans would be issued and fewer debtors would be ruined.
20
In the case of China, banks were required to make cheap loans to big, state owned companies, many of which are now zombie enterprises. This isn't the fault of greedy bankers, it's the fault of government regulators who wouldn't allow the bankers to perform due diligence.
So if I take out a mortgage out on a $500k house, pay $50k in down payment and monthly payments, and then lose my job and default - the bank should just let me live in the house they paid $450k for, without any attempt to recoup the loss through resale? As I understand it, foreclosure does in fact "release from its jaws debtors who can not pay" - they just don't get to stay in the house they couldn't pay for.
Sarah:
One would expect that a bank that is not drowning in a sea of fraudulently written bad loans would work constructively with a particular individual who was properly vetted before the loan was issued and is unable temporarily to make their payments.
In the event of an economy-wide melt-down that was not caused by the banks themselves -- a rarity to be sure -- sensible government policy would be, again, to help home owners make their payments until the crisis has been resolved in order to prevent them and their creditors from being crushed by circumstances beyond their control.
One would expect that a bank that is not drowning in a sea of fraudulently written bad loans would work constructively with a particular individual who was properly vetted before the loan was issued and is unable temporarily to make their payments.
In the event of an economy-wide melt-down that was not caused by the banks themselves -- a rarity to be sure -- sensible government policy would be, again, to help home owners make their payments until the crisis has been resolved in order to prevent them and their creditors from being crushed by circumstances beyond their control.
If the world had money based currencies,instead of dishonest fiat currencies,constantly manipulated by central banks,we wouldn't be in this mess.You get what you deserve,in the long run.
4
How exactly would you define "money based currencies"? Do you mean a return to the gold-based system, which was finally abandoned due to its damage to the economy? Do you realize that gold has a "value" that is set artificially - based mostly on speculation and scarcity, both of which can be easily manipulated?
2
So, you would prefer us to overhaul the global society and walk around with vials of seal oil to pay for our rent. Let's do it.
2
Toxic investments are what will bring down the world and the banking system. In the movie A Wonderful Life there was a run on Jimmy Stewart's bank and he explained he did not have the depositors money but had invested it in local factories, businesses and homes. Now if there was a bank run on the major banks a banker would stand there and tell you that he did not have your money but leveraged it thousands of times and bought over 1.5 quadrillion dollars of derivatives. Essentially a side bet with no tangible asset. They own so many there is no one to sell them to and if you have an asset you cannot sell its real value is 0. So when this correction comes the game will be on.
6
The problem is one of balance. In the US there was more focus on foreclosure than in working with the borrowers to ensure repayment and thus for the banks a steady stream of income on a restructured loan. BUT because the banks had made loans whose underlying value was questionable at best, seizing the asset was a more profitable solution. Until banks are required to hold a percentage of the loans and employ sound practices for making these loans the number of 'toxic' loans and the underlying financial stability of the US will continue to be in question.
3
This is totally backward from what Republican economists have been telling us: the big danger was to be all that money America borrowed from China that America can't pay back . . .
1
Then don't we fall in to that pool of bad credit that they shoveled out?
If democratic capitalism has led us to the greatest income inequality we have ever seen, and communist/capitalism (or, whatever form of bastardized capitalism they are practising in China) leads to the same thing, what's the difference between the two economic systems? Our "structure" is just window dressing..
5
It is "false" that democratic capitalism has led us to the greatest income inequality we have ever seen. The war on poverty and the quasi-socialistic entitlement programs of the past few decades has resulted in investment in the lower-classes instead of the middle-classes.
We both have centralized command and control economies. Their economy is controlled by the communist party. Our economy (and the world economy in general) is controlled by a handful of billionaires who own all of the global corporations, have bought our politicians, and control most government policy. We live on a fascist (government controlled by corporations) planet.
If we value humans and democracy then we need to decentralize decision making by puncturing the myth that the "Job Creators" (who keep firing people) have special powers that need to be rewarded with astronomical amounts of money, and the worse myth, that the rest of us are too stupid to understand governance and the economy so we should just let the rich and powerful make our decisions for us.
Join the movement of movements that seeks to empower people to get informed and involved and stay that way. We must create a new paradigm.
If we value humans and democracy then we need to decentralize decision making by puncturing the myth that the "Job Creators" (who keep firing people) have special powers that need to be rewarded with astronomical amounts of money, and the worse myth, that the rest of us are too stupid to understand governance and the economy so we should just let the rich and powerful make our decisions for us.
Join the movement of movements that seeks to empower people to get informed and involved and stay that way. We must create a new paradigm.
The elephant in the room not mentioned in this article is the US government debt, now at over $19 trillion. Does anyone believe this will ever be repaid? Impossible. It can only be rolled over, refinanced by issuing new debt. Until there are no more lenders out there willing to buy that debt. Then, real debacle for the whole world, global depression.
6
Actually,everyone knows it will be devalued.This is the primary incentive for creditors to keep on taking long term loans,knowing they will be able to pay them back in cheaper Dollars.
5
This seems like a good place to point out that the idea that "regular people have to balance their books, so governments should too," is a lot of baloney. Regular people go into debt all of the time, to pay for school, buy a home. buy a car, pay for emergencies like hospital stays, and even buy big TVs.
The only difference between governments and humans is that governments don't have to borrow. They could tax the hell out of the banksters instead of borrowing from them and then all of your predictions of government debt collapse would go away. I vote for that. They have trillions of dollars that are sitting around doing nothing while they wait for the economy to come back. But the economy can't come back with out that cash to create demand. Confiscate their ill gotten booty and hire millions of Americans to rebuild and maintain our infrastructure. Then people will be able to buy stuff and the corporations will have a reason to invest.
The only difference between governments and humans is that governments don't have to borrow. They could tax the hell out of the banksters instead of borrowing from them and then all of your predictions of government debt collapse would go away. I vote for that. They have trillions of dollars that are sitting around doing nothing while they wait for the economy to come back. But the economy can't come back with out that cash to create demand. Confiscate their ill gotten booty and hire millions of Americans to rebuild and maintain our infrastructure. Then people will be able to buy stuff and the corporations will have a reason to invest.
All money is debt based in a FIAT currency, you can't have money without debt. Pay down your debt, money leaves circulation forever, the economy slows.
The article actually hints at this, that the economy can't grow because the banks are shy of making loans in case folks don't repay them. Of course banks don't lend us their money they just create it from thin air, it is only their fraction that they worry about.
The article actually hints at this, that the economy can't grow because the banks are shy of making loans in case folks don't repay them. Of course banks don't lend us their money they just create it from thin air, it is only their fraction that they worry about.
I'm wondering what percentage of the toxic loans were to people in the United States who showed no evidence that they could repay them. The housing bubble occurred pretty soon after 2008. thanks to the wrong-headed leftists in the USA.
4
So all of the mortgage brokers that made loans to these people were abunch of leftists eh?
Any small investors in mutual funds, out there, a little bit worried about the untested bets their managers may have made in China? But, it was supposed to be fast, certain profit, right?
1
There are pretty strict trading and ownership rules of stocks for foreign entities in China. Hence, most fund managers approach the China play by way of proxy, ie. investing in Chinese companies that are listed overseas or their ADR, or they would invest in western companies that have businesses/markets in China. Rarely can they make "fast, certain profit" in China, it never works that way, in case you haven't noticed already.
1
China's problem is hardly unique. Somehow our $2.2tn unsecured, non-performing student loan debt has been omitted. Don't we still have a couple million foreclosures that are hanging in limbo because the system is borked? Have all of our auto manufacturers and banks paid back the billions of bailout dollars? How many of our States are actually solvent and in the black? Why does it cost $5 to buy a box of cereal? Why did I pay the govt $750 of real money for being 'underinsured'?
These are the questions that never get answered.
China? Who cares about China, or India or any of these countries? They can't help themselves, so why does that burden fall to us? These are people who (for the most part) are opposed to our way of life. They only like our money. Don't confuse tolerance with partnership.
These are the questions that never get answered.
China? Who cares about China, or India or any of these countries? They can't help themselves, so why does that burden fall to us? These are people who (for the most part) are opposed to our way of life. They only like our money. Don't confuse tolerance with partnership.
10
Treasury has actually made money from the auto bailouts and banks have paid back to taxpayers, with interests, already. As to the non-performing student loans, the problem is, the underlying collateral (ie. the students themselves) have become non-performing, and a large majority of them overpay for their education, to begin with. Whether that's taxpayer's responsibility too depending on which side of the aisle you're with.
Your comment on "Who cares about China, or India or any of these countries?" that shows how little appreciation you have of how interconnected the real world and economies have become in recent decades. Problems in one country, particularly large economies like US or China, are not just the worries of that country alone. In case you haven't checked your 401k funds, it probably has sizable chunks invested in emerging markets, or in companies whose fortune is highly dependent on those emerging markets. You might not want to have to worry about someone else's problems, but things are really never that clear-cut and simple.
Your comment on "Who cares about China, or India or any of these countries?" that shows how little appreciation you have of how interconnected the real world and economies have become in recent decades. Problems in one country, particularly large economies like US or China, are not just the worries of that country alone. In case you haven't checked your 401k funds, it probably has sizable chunks invested in emerging markets, or in companies whose fortune is highly dependent on those emerging markets. You might not want to have to worry about someone else's problems, but things are really never that clear-cut and simple.
1
Global financial vulnerabilities reflect an economic structure that is rigged for failure - starting with the fact that predominant economic thinking is debt-based. There is 5% money to 95% debt in the world - in the big scheme of things, it doesn't matter how many homeowners default on mortgages.
The current economic paradigm is also growth-based despite the fact that we know there is nothing in natural law or in the human condition that can only grow. Governments, businesses and communities all over the world are making progress in re-orienting economic policy to be values-driven so that economics actually valuate what people value most. When new paradigmatic norms prevail, the data is extraordinary on how social and economic indicators rise.
NYT - Stories that proliferate the myth that economics is about so many owing so few are a primary social mechanism for upholding the 1% split. Please, give us more from outside this deadly box.
The current economic paradigm is also growth-based despite the fact that we know there is nothing in natural law or in the human condition that can only grow. Governments, businesses and communities all over the world are making progress in re-orienting economic policy to be values-driven so that economics actually valuate what people value most. When new paradigmatic norms prevail, the data is extraordinary on how social and economic indicators rise.
NYT - Stories that proliferate the myth that economics is about so many owing so few are a primary social mechanism for upholding the 1% split. Please, give us more from outside this deadly box.
5
I wish you were correct when you say that "Governments, businesses and communities all over the world are making progress in re-orienting economic policy to be values-driven"
Unfortunately the fiat, ie each loan you make lets you borrow more money from the central bank. The Central Bank's Computer creates more money out of bits of electricity (nothing) and the bank gets more money to loan.
It seems to me, that since the loans are made up of imaginary money, then the Central Banks could literally erase the loans to its member banks, who could erase the loans to its customers and the problem would vanish back into bits of electricity.
Unfortunately the fiat, ie each loan you make lets you borrow more money from the central bank. The Central Bank's Computer creates more money out of bits of electricity (nothing) and the bank gets more money to loan.
It seems to me, that since the loans are made up of imaginary money, then the Central Banks could literally erase the loans to its member banks, who could erase the loans to its customers and the problem would vanish back into bits of electricity.
If you step back and give it some more thoughts, you would realize that the "5% money on 95% debt" is really the same kind of loan structure for your mortgage. That's how most people grow the biggest asset that they might ever hold in their lifetime, which is their house.
One has to realize that "debt," in and of itself, is not necessarily a bad thing. If you manage it well, if you don't incur more debt than you can afford to, debt can be one of the most effective way for you to grow your wealth and assets. Naturally if you don't have any collateral to leverage on, or if you live hand-to-mouth to begin with, then you'll be forever tread water in station, which is the precisely the conundrum of the low income strata in society.
One has to realize that "debt," in and of itself, is not necessarily a bad thing. If you manage it well, if you don't incur more debt than you can afford to, debt can be one of the most effective way for you to grow your wealth and assets. Naturally if you don't have any collateral to leverage on, or if you live hand-to-mouth to begin with, then you'll be forever tread water in station, which is the precisely the conundrum of the low income strata in society.
1
It the evidence is mounting that "free trade", multinational corporations, and "globalization" weren't such great ideas, afterall. We need a dose of draconian protectionism and permanently ignoring the Flat World nitwits that caused this...and offer up lame excuses when it fell apart.
5
Take another look at the article, Mike.
The greatest debt problems are in China, which does not participate in free trade. High tariffs help keep foreign goods out of the country, except for commodities, which drives up prices for Chinese consumers. Many of the local state-owned companies are going bankrupt precisely because they can't compete in the global market, thanks to protections polices which keep them inefficient.
If China opened up its markets to globalization, they could strengthen local companies and reduce toxic debt. Globalization is the solution, not the problem.
The greatest debt problems are in China, which does not participate in free trade. High tariffs help keep foreign goods out of the country, except for commodities, which drives up prices for Chinese consumers. Many of the local state-owned companies are going bankrupt precisely because they can't compete in the global market, thanks to protections polices which keep them inefficient.
If China opened up its markets to globalization, they could strengthen local companies and reduce toxic debt. Globalization is the solution, not the problem.
Sorry to break that news to you, but that horse has left the barn long time ago, and no one can roll back the force of globalization anymore these days, not even if the two biggest economies (of US and China) are to join force and close their market door to anyone else for self-preservation. If that is to happen, the EU zone and Japan will tread water, Russia and India and Brazil will break to the surface for some air before going under again, and the rest of the world (Africa, Middle East, the works) will just starve.
1
People on the right like to argue that the fact that China holds something of the order of 1.7 TRILLION dollars in US debt (which is not in danger of becoming nonperforming) is a major problem.
They ignore the issues described here of something of the order of 5TRILLION dollars worth of internal Chinese debt that might be nonperforming
They ignore the reality that if the Chinese were to harm the value of the dollar, which is hard to imagine actually happening, the Chinese would also harm the value of their dollar denominated holdings. Who in their right mind tanks the value of their own financial assets?
Long before the Chinese worry about OUR ability to pay for our debts, they will be much more worried about handling their own debts.
Bottom line: The US economy is not becoming a concern to others. Their economies are a much bigger concern to them, and to us.
They ignore the issues described here of something of the order of 5TRILLION dollars worth of internal Chinese debt that might be nonperforming
They ignore the reality that if the Chinese were to harm the value of the dollar, which is hard to imagine actually happening, the Chinese would also harm the value of their dollar denominated holdings. Who in their right mind tanks the value of their own financial assets?
Long before the Chinese worry about OUR ability to pay for our debts, they will be much more worried about handling their own debts.
Bottom line: The US economy is not becoming a concern to others. Their economies are a much bigger concern to them, and to us.
8
How is this a problem on the "right?" You must have glossed over this sentence:
"Bad debts have been a drag on economic activity ever since the financial crisis of 2008, but in recent months, the threat posed by an overhang of bad loans appears to be rising."
Have you ever heard of TARP II? If you haven't, this should refresh your memory: http://blogs.reuters.com/great-debate/2009/02/12/hold-your-wallet-here-i...
That was all Obama and Pelosi.
It's ok, I know it's hard to admit it when you need help. Instead of looking to blame 1 side, there is plenty of blame to go around to the other side as well. We are all in this together.
"Bad debts have been a drag on economic activity ever since the financial crisis of 2008, but in recent months, the threat posed by an overhang of bad loans appears to be rising."
Have you ever heard of TARP II? If you haven't, this should refresh your memory: http://blogs.reuters.com/great-debate/2009/02/12/hold-your-wallet-here-i...
That was all Obama and Pelosi.
It's ok, I know it's hard to admit it when you need help. Instead of looking to blame 1 side, there is plenty of blame to go around to the other side as well. We are all in this together.
1
How do you differentiate a toxic loan from an outright fraud to obtain money with no intention of paying it back? Seems the BRIC countries have made a cottage industry of malfeasance with no repercussions to the perpetrators as long as said borrowers have greased the right palms.
I don't know what the answer is. Without credit the world economy grinds to a halt but the ease with which questionable loans sail through some channels is mind boggling. Fiscal musical chairs has a bad ending.
I don't know what the answer is. Without credit the world economy grinds to a halt but the ease with which questionable loans sail through some channels is mind boggling. Fiscal musical chairs has a bad ending.
10
In spite of this article, the IMF estimates that only China and Australia of the world's 12 largest economies will move into surplus by 2018. The question I ask and research with articles like this, is what is the reason… the reason for our government to use the media to attack China’s economy?
Looking at debt-to-GDP tells us that total US debt is roughly equivalent to its annual economic output. It is by far the largest economy in the world, and has the largest debt pile. The US currency is not on any gold or silver standard, backed only by its use as the world’s major reserve currency.
In 2014, the US has a total debt pile of almost $17 trillion, expected to rise to almost $23tn by 2020.
One reason for this is governments' inability to move from an annual deficit to a surplus. In other words an inability to live within its means. I don’t see Hillary or Sanders understanding or addressing this issue and it seems the media hides it or misdirects from it in its articles.
Looking at debt-to-GDP tells us that total US debt is roughly equivalent to its annual economic output. It is by far the largest economy in the world, and has the largest debt pile. The US currency is not on any gold or silver standard, backed only by its use as the world’s major reserve currency.
In 2014, the US has a total debt pile of almost $17 trillion, expected to rise to almost $23tn by 2020.
One reason for this is governments' inability to move from an annual deficit to a surplus. In other words an inability to live within its means. I don’t see Hillary or Sanders understanding or addressing this issue and it seems the media hides it or misdirects from it in its articles.
7
My guess is that the IMF believes everything that China tells them.
4
So where would you place Marco Rubio with his planned 16 trillion in debt with most the money going to the 1%?
4
Keith Ferlin, Our economy is doing so well on the surface, because of the strength of the US Petro Dollar. It is my belief that we support Pakistan, invaded Iraq, encouraged Libyan revolution, trained terrorists to invade Syria, Sanctioned Iran and Russia to protect our so-called allies who will ship, pipe and sell oil and gas for US Dollars.
Not one of the presidential candidates is discussing the real cause of economic woes, global warming, viruses, corporations, entitlement, cost of health care, and what is needed to bring not congress together, but the world together for the benefit of all. If we can't do it here at home, than the greedy win and everyone else loses.
Not one of the presidential candidates is discussing the real cause of economic woes, global warming, viruses, corporations, entitlement, cost of health care, and what is needed to bring not congress together, but the world together for the benefit of all. If we can't do it here at home, than the greedy win and everyone else loses.
Hence the name bad loans. If loans had succeeded in producing jobs and growth. Hot money seeks profits the greater the risk the more the reward the problem in places in Brazil and China is the sheer waste. That seems to be the crisis of our times that banks with huge amounts of capital surging around were looking for quick profits or political advantage. Wall Street wanted to change the old plodding nature of finance in the 90s. It got away from keeping money in the bank to cover losses and created novel financial products that blew up in their faces. China has tried to maintain social control by bank rolling companies that have become zombies that seem straight from Japan's lost decade.
4
Just read the first paragraphs from Krugman's opinion piece today. Only a great economist could look at this situation and say that the problem in China is caused by too much saving and limited lending by/to the populace. If there is a twist to be made, it will me made by the great voodoo economists who tell us up is down in Oz.
3
He's right, that's the perversity of our economic system, if nobody is lending the economy is not growing. If you pay down debt, money leaves the system, the economy contracts. All money is debt based, created when you take out a loan or a mortgage. That is why governments love real estate booms, they create loads of new loans and therefore tons of new money enters the system and then gets spent in the stores. check to see the correlation between real estate prices and economic growth in the USA. Economists hope for a moderate amount of inflation that then reduces the value of debt
Don't shoot the messenger. We are doomed to create more and more debt to keep the system working
Don't shoot the messenger. We are doomed to create more and more debt to keep the system working
The sub'prime fiasco in USA brought the world economy to it´s knees. US debt of 16.7x10^12th, and it's ceiling raised by the GOP controlled congress in liu of a coup D'etat to the status quo, it's not considered toxic; yet much of it is owned by foreign investors & goverments like China & Japan, who may choose to redeem all those junk bonds & Bills paying Little ROI all at once. Then what? print more greenbacks w/o being backed by gold or trust?!
3
Yep, the Fed will buy them back. Its called 'quantitative easing'
Here we go again. "Oh, this is just so terrible, the taxpayers have to take over trillions in bad loans. Poor us. Prosperity will return as soon as we get trillions in public money. Waahhh!"
5
The author seems to be clueless about the root cause of these "Toxic Loans": The artificially low interest rates pushed by the Fed and other Central Banks around the globe! It should be obvious, but manipulating rates down only promotes credit growth to fund unproductive investments. It is now time to pay the piper and recognize that central planning does not work!
4
Armando--You had me until you bashed central planning. The mistakes made by the Fed, in this unusual circumstance, are not necessarily a reason to abandon central planning. Maybe we just need different people.
1
Debt fueled growth is an illusion. Unfortunately the
regulators and other finance authorities ignore it
because everybody seem to benefit. Inevitable
adjustment has to take place causing the slow down.
The surprise is that countries don't learn from the
trouble of other countries with high debt-Japan,
Spain, Ireland, USA, Italy,etc. So called emerging markets
are having the same problem. China and Brazil are
mentioned in the article but India too, state banks,
has 14% to 15% non-performing loans according to
The Economist magazine. The constant is the inability
to assess the risk properly and the rush to increase
the profits at any cost which investors demand and
reward with high share prices and the managers earn
big bonuses. So long this mind set run the banks
the problem will persist. Save the editorial, it will be
timely every few years.
regulators and other finance authorities ignore it
because everybody seem to benefit. Inevitable
adjustment has to take place causing the slow down.
The surprise is that countries don't learn from the
trouble of other countries with high debt-Japan,
Spain, Ireland, USA, Italy,etc. So called emerging markets
are having the same problem. China and Brazil are
mentioned in the article but India too, state banks,
has 14% to 15% non-performing loans according to
The Economist magazine. The constant is the inability
to assess the risk properly and the rush to increase
the profits at any cost which investors demand and
reward with high share prices and the managers earn
big bonuses. So long this mind set run the banks
the problem will persist. Save the editorial, it will be
timely every few years.
4
Maybe the debt based system, boom and bust actually works in the favour of the bankers, they create money from debt, don't actually have it to lend, but charge interest on it. They get those bad loans covered by the tax payer, they still made money on them - they might even gain an asset when the customer defaults, and big bonuses all round, who is complaining?
Its a huge ponzi scheme. If the banks were really accountable and are loaning actual money they have had to bank for savers, things would be very different.
Its a huge ponzi scheme. If the banks were really accountable and are loaning actual money they have had to bank for savers, things would be very different.
Aren't bad loans and refusal to write them down what have kept Japan's economy in the doldrums for decades?
Mustn't corporations sometimes write down sizable, bad investments to let those corporations' operations shine thru?
Aren't 'non-recurrent' write-downs what corporations periodically do, so as to go out and with eyes open, assume unwise risks once more?
Haven't Trump's successive bankruptcies effectively done the same? Had he not cleared the books every now and then, he would have stood dead in the water, like Japan.
Mustn't corporations sometimes write down sizable, bad investments to let those corporations' operations shine thru?
Aren't 'non-recurrent' write-downs what corporations periodically do, so as to go out and with eyes open, assume unwise risks once more?
Haven't Trump's successive bankruptcies effectively done the same? Had he not cleared the books every now and then, he would have stood dead in the water, like Japan.
2
Trump only had 4 bankruptcies out of hundreds of successful business deals he made. His success rate is 99% better than any government you can name, and in the upper 1% of individuals. The answer isn't writing off debt, it's doing the right things to avoid it, and create growth. Exactly the opposite of all the liberal policies the USA has adopted over the years. All you need to do is ask yourself what has changed in this country, and you can easily see why we are in this horrendous situation.
There is a hidden crisis in China and it´s about their real estate market. If this explode it will have serious consequences all over the world, particularly in the banks.
4
Remember who and what U.S political party was in office when the deck of cards began to fail on this global financial crisis in 2008.
The gift that gets re-gifted, don't bother to change the wrapping paper.
The gift that gets re-gifted, don't bother to change the wrapping paper.
2
The author & readers should take the time to read Patman's Primer on Money that explains why our money and banking system is corrupt and non Constitutional.
www.devvy.com/pdf/2006_October/Patman_Primer_on_Money.pdf
www.devvy.com/pdf/2006_October/Patman_Primer_on_Money.pdf
2
Unbelievable how few people know how money is created and our current economic debt based system. Its a system where balancing the books is impossible
Obvious solution: nationalize the banks. If Bernie's and Warren's arguments make sense - and they do - then we need to go much further than their tepid plan to "break up the big banks", which will just reproduce the problem again down the line. Banking shouldn't be in the hands of speculators, it should be a public utility, controlled by the public through a democratic process. If this sounds revolutionary, it is and should be. Time to roll back neoliberalism and permanent austerity for ordinary working folks with a little "democratic socialism". Let's put some teeth and bone on Bernie's "political revolution", otherwise it's just an empty slogan. Banking is a good place to start, and then we move on from there to universal health care, child care, affordable housing, expansion of social security - all the things working people need for survival but the market increasingly refuses to provide to anyone outside the top 10% of the population.
24
I hope your kidding..... look around the world where this idea is already in practice.... middle class is poorer... and govt are more corrupt because now they control the money.
Communism and socialism has never worked anywhere... especially where you have so many mixed cultures and a large dependent group.
Grow up
Communism and socialism has never worked anywhere... especially where you have so many mixed cultures and a large dependent group.
Grow up
I think there is no need to nationalize the banks. What the government has to do is to nationalize the deposits and make clear rules about it.
1
Wrong! Stop what caused the giant credit bubble: Artificially low interest rates pushed by the Fed and other Central Banks. Interest rates should be set by the market, not by bureaucrats or Bernie Sanders. More Central Planning will not solve the problems created by Central Planning!
4
The trillions of dollars of bad loans are only the tip of the iceberg. Not mentioned in the article is the $1.2 quadrillion (yes, 1,200 trillion) in credit default swaps purchased to short these loans in the Wall Street casino. It's 2008 on powerful steroids.
6
You should look up the difference between notional and net CDS postions. You might learn something and become a card carrying, educated Republican; we only accept those who understand.
Can we use this error in Chinese policy as an opportunity to pay back some of our debt at a significant discount? Wear is all the discressionary income as a result of lower fuel price going? Can't that be captured with a fuel surcharge tax and the revenue be used for investments in alternative energy, more advanced transportation system and clean manufacturing in this country.
4
“China is the biggest source of worry” – LOL.
“When economies slow, these debts become difficult to pay” – genius ))
If you remember, the debt of USA exceeded $19 trillion (www.usdebtclock.org). Be sure, all of 19 trillion are huge bad loans. The only reason why this debt bubble still had not fallen to pieces yet – is annual conversion of old bonds and treasures into new ones (just emitted) within holders portfolio. This stable demand for new debt papers provided by 3 reasons:
a) Money emission rules: if some country wishes to emit money supply (nominated in local currency), it obliged to have international reserves (nominated in USD).
b) As far as monetary rules exist so many years and most of the world countries are already playing this game, the claim for payment is bad for every debt holder (as a result of dollar fall in case of payment).
c) If some debt holder asked for payment – then he would be declared the enemy of USA, expelled from current financial system, blamed anti-democratic dictator under sanctions etc.etc. Nobody “allowed” having independent local financial system.
Maybe, this is the biggest source of worry…
“When economies slow, these debts become difficult to pay” – genius ))
If you remember, the debt of USA exceeded $19 trillion (www.usdebtclock.org). Be sure, all of 19 trillion are huge bad loans. The only reason why this debt bubble still had not fallen to pieces yet – is annual conversion of old bonds and treasures into new ones (just emitted) within holders portfolio. This stable demand for new debt papers provided by 3 reasons:
a) Money emission rules: if some country wishes to emit money supply (nominated in local currency), it obliged to have international reserves (nominated in USD).
b) As far as monetary rules exist so many years and most of the world countries are already playing this game, the claim for payment is bad for every debt holder (as a result of dollar fall in case of payment).
c) If some debt holder asked for payment – then he would be declared the enemy of USA, expelled from current financial system, blamed anti-democratic dictator under sanctions etc.etc. Nobody “allowed” having independent local financial system.
Maybe, this is the biggest source of worry…
3
But wait, we were told by our benevolent leaders that they fixed this, that it wouldn't happen again if we only entrust them with even more power?! What really happened was the further enabling of the banksters by codifying Too Big To Fail in Dodd-Frank. You notice that the authors of that law were run out of office soon after they issued a get out of jail free card to the banksters?! Maybe if the democrats had used their 'super' majority to address the root causes of the housing/mortgage crisis instead of shoving their disastrous health insurance 'reform' down the throats of an unwilling public we wouldn't be faced with this issue again so soon! Stupid American Voters!
6
An astute article. The actual facts surrounding the global debt market go even deeper in cycles and its one of the many ways that the government and the consumer are tricked into subsidizing bad debt by allowing multiple write offs by corporations.
Take the Dot Com bubble and the credit card debt of the 1990s. Bet you wouldn't think that bad debt knocking around for 30 years has been kept alive on synthetic life support systems and that this 'zombie debt' is being written off by corporation who bought that debt as tenth hand debt from the original issuer, but that's the way it works in the fraud filled shadow world of consumer and corporate debt.
Say that Citibank, or Manufacturer Hanover (remember 'Manny Hanny') extended $5,000 in credit card debt to Bucky Consumer in 1993. Things went poorly for Bucky and he didn't pay. They transferred the 'non-performing loan' in 1995, as it continued to accrue to their 'collections division.' Bucky left town unresponsive. They 'wrote off' the debt in 1998, five years after it had been issued, by which time they reckoned Buck owed them $8,533. You would figure they would be motivated by this point to go to court- but Bucky had bupkis. The collection agency gave Bucky's file to one desperado after another, but none of them could rise a response from Bucky. They write off the bad referral, which they got for pennies on the dollar from the lender at face value. By 'selling the loan' the renewed its validity. Rinse repeat.
Take the Dot Com bubble and the credit card debt of the 1990s. Bet you wouldn't think that bad debt knocking around for 30 years has been kept alive on synthetic life support systems and that this 'zombie debt' is being written off by corporation who bought that debt as tenth hand debt from the original issuer, but that's the way it works in the fraud filled shadow world of consumer and corporate debt.
Say that Citibank, or Manufacturer Hanover (remember 'Manny Hanny') extended $5,000 in credit card debt to Bucky Consumer in 1993. Things went poorly for Bucky and he didn't pay. They transferred the 'non-performing loan' in 1995, as it continued to accrue to their 'collections division.' Bucky left town unresponsive. They 'wrote off' the debt in 1998, five years after it had been issued, by which time they reckoned Buck owed them $8,533. You would figure they would be motivated by this point to go to court- but Bucky had bupkis. The collection agency gave Bucky's file to one desperado after another, but none of them could rise a response from Bucky. They write off the bad referral, which they got for pennies on the dollar from the lender at face value. By 'selling the loan' the renewed its validity. Rinse repeat.
6
Crooks belong in jail..with Madoff...they don't learn by getting a slap on the wrist and bailouts that insure they can continue their corruption. Or, as Jamie Dimon once told Sen. Warren, "Go ahead. Fine me. We can afford it." Sure he can...he has taxpayer bailouts for insurance.
How hideous does it need to get?
How hideous does it need to get?
15
"Wherever governments and central banks unleashed aggressive stimulus policies in recent years, a toxic debt hangover has followed."
Well, duh. Bill Clinton engineered the housing bubble, placing Rahm Emmanual on the board of directors at Freddie Mac. Barak Obama engineered the quantitive-easing crisis, printing money at fantastic rates for seven years to prop up Wall Street valuations. You know it's bad when the loyal-to-a-Bolshevik-fault NYT is preparing you for the heavy sledding ahead.
Well, duh. Bill Clinton engineered the housing bubble, placing Rahm Emmanual on the board of directors at Freddie Mac. Barak Obama engineered the quantitive-easing crisis, printing money at fantastic rates for seven years to prop up Wall Street valuations. You know it's bad when the loyal-to-a-Bolshevik-fault NYT is preparing you for the heavy sledding ahead.
4
Actually, Bush started the qe with tarp.
2
At some point don't governments have to quit trying to solve short term issues by creating long term problems. I've read plenty of analysis of the risks of all this debt, and yet it seems hedge fund managers cannot seem to find the same analysis I find. Or perhaps the well-connected hedge fund managers just assume it is "safe" to invest in high risk debt like Puerto Rico's bonds because they assume that some government entity will bail them out leaving another group of taxpayers to take the loss.
I'm begging you, make the gamblers take their losses even if it creates a short-term hiccup in the economy!
I'm begging you, make the gamblers take their losses even if it creates a short-term hiccup in the economy!
7
Chinese learned of the dynastic cycle thousands of years ago, before other civilizations really got going: a human society is like any living thing, governed by cycles that cannot be undone or avoided. In this day and age, the cycle runs its course more frequently, but the pattern is unchanged. The world encountered "interesting times" with the unwinding and reshuffling of empires in the mid-20th century. We are in interesting times once again.
3
$$$$$$$$$$$ Money makes the world go round...and around... and around... until it all comes crashing down. Money is nothing more than a piece of fanciful paper with a number, any number, printed on it. I hope the overinflated balloon of the US dollar will finally pop.
4
HCC . High Cadre Children. They are instrumental in running and controlling business and banks in China. Little to no transparency and little or no moral compass. Greed again both within China and from the US into China will be bringing us the next collapse of our markets and economy. But, don't fear Trump will solve it all....NOT.
4
Hillary Clinton will solve it. she already told Wall Street
to cut it out.
to cut it out.
2
what happens when you keep kicking the can down the road
5
Get ready for inflation. Yes, inflation. How?
Debt crisis defaults will cause interest rates to reset higher.
Interest on 18T+ US debt -- now manageable at near 0% rates -- explodes higher.
US and other debtor nations print massive amounts of currency to pay interest rather than default.
Debt crisis defaults will cause interest rates to reset higher.
Interest on 18T+ US debt -- now manageable at near 0% rates -- explodes higher.
US and other debtor nations print massive amounts of currency to pay interest rather than default.
2
80% of the real U.S. economy says "NOT MY FRIKIN PROBLEM". And, we mean it this time. You are not going to use my equity to pay off your planed theft of it this time.
2
Like last time, staring into the abyss, you aren't going to have a say. It will come down to a handful of individuals in gov't and 10-15 banking executives taking unilateral action.
4
One thing wrong with Mr. Eaves report is that it implies that economic booms and profligate lending are inevitable concomitants. While that is often true, it does not have to be the case that profligate lending accompanies either economic booms or a central bank's monetary stimulus. The first and best solution to bad loans or other bad credit products (collectively, Bad Loans) is not to make them. The principles for making good loans and not making Bad Loans are the same and work just as well whether interest rates are high or low, whether the economy is booming or not.
The problem with lending during a booming economy and/or periods of central bank monetary stimulus is that lenders suspend the use of sound lending principles and discipline in the pursuit of profits, making profligate loans that later can't be paid back according to their terms. The remedy for that is for lenders to use sound principles of lending to not make Bad Loans. And, if lenders don't have the discipline to do that, then government regulators must be at the ready to forbid lenders from making Bad Loans.
If lenders don't make Bad Loans, either because they lend only according to good lending principles or because regulators make them do so, then nonperforming loans never rise to a level greater than that which a bank can accept and absorb as a normal cost of earning profits on good loans.
So the problem isn't the delay in cleaning up bad loans, but in permitting Bad Loans in the first place.
The problem with lending during a booming economy and/or periods of central bank monetary stimulus is that lenders suspend the use of sound lending principles and discipline in the pursuit of profits, making profligate loans that later can't be paid back according to their terms. The remedy for that is for lenders to use sound principles of lending to not make Bad Loans. And, if lenders don't have the discipline to do that, then government regulators must be at the ready to forbid lenders from making Bad Loans.
If lenders don't make Bad Loans, either because they lend only according to good lending principles or because regulators make them do so, then nonperforming loans never rise to a level greater than that which a bank can accept and absorb as a normal cost of earning profits on good loans.
So the problem isn't the delay in cleaning up bad loans, but in permitting Bad Loans in the first place.
13
But... bad loans have higher yields. Hence the attraction.
This is a rather incomplete view of a festering problem. Somehow despite the length of the article, there is only a passing hint at what should really be front and center - the need for debt restructurings and for the people that lent into malinvestment to feel some pain from their poor judgment. One of the big reasons we are heading full tilt toward another crisis it seems is that we've (or more specifically the Federal Reserve) has chosen to paper over the financial crisis with crooked accounting (mark to fantasy) and the inflation of more bubbles that will themselves need to be resolved. Of course, if you leave out restructurings from the picture, it also helps to leave out the issue of moral hazard. There is so much wrong with this article, it really makes me wonder why it is even showing up on the front page of the NYTimes website. So prominent, yet so misguided. I feel like maybe this is yet another roundabout way to avoid casting blame on neo-liberal economic theory, and thus conveniently provide more cover for your "democratic" candidate of choice.
3
It's okay if our wealth is actually debt. We'll hedge and short the loan industry and clean up while the world burns: something like that. (I'm just a dumb, poor, broke, indebted old English professor with about 100 graduate credits under my belt. What do I know?)
Have another drink! The economy is strong! We're bouncing back and creating jobs, or creating back jobs bouncing, or . . . whatever.
Have another drink! The economy is strong! We're bouncing back and creating jobs, or creating back jobs bouncing, or . . . whatever.
1
The reward system in the financial industry encourages bad lending. There is no real accountability, no punishment for "financial malpractice." Lending is a collective, risky effort, so individual accountability is difficult to measure and enforce. But the same is true of team sports performance, and there are a million statistics that follow individual players to assess their contribution to the outcome. Nothing comparable exists in finance. It is as if batting stance and swagger were the measure of a player's performance.
Financial performance is harder to assess than a sports team member's performance because the results come in with years of delay. But that does not make assessment and accountability impossible to measure. Workers and managers must be held accountable for the financial decisions they make over their careers. They should be fired and sent to prison if they perform badly and criminally.
The lack of accountability is getting worse and worse as derivatives and rapid financial turnover open a bigger and bigger gap between individuals' decisions and how their performance is assessed.
Financial performance is harder to assess than a sports team member's performance because the results come in with years of delay. But that does not make assessment and accountability impossible to measure. Workers and managers must be held accountable for the financial decisions they make over their careers. They should be fired and sent to prison if they perform badly and criminally.
The lack of accountability is getting worse and worse as derivatives and rapid financial turnover open a bigger and bigger gap between individuals' decisions and how their performance is assessed.
2
Isn't selling bad loans what brought about the crisis of 2008, as Italy is proposing? Although certainly there are some who will make money on China's defaulted loans, it seems the world is heading for another market "reset", having not yet recovered from 2008.
I truly wish, without knowledge of how, of if, it could be accomplished, that the world's markets were not so inflated. Running on emotion, adrenalin and hope, stocks are overvalued, bad loans are repackaged as good, and it seems there is no news on whether the credit rating agencies actually cleaned up their act, or are still operating as they were before the 2008 crisis.
Markets must be made to reflect their real value. When the world's investment houses and banks operate on actual numbers, and stay there, the citizens of the world can more solidly plan for their futures, relying on the stability of markets.
Yes, I get that it's a rush to make money. It feels good. At the time of huge earnings, one can do their "happy dance" for having won, having beaten financial death. But how many others die financially in order to create one winner?
I truly wish, without knowledge of how, of if, it could be accomplished, that the world's markets were not so inflated. Running on emotion, adrenalin and hope, stocks are overvalued, bad loans are repackaged as good, and it seems there is no news on whether the credit rating agencies actually cleaned up their act, or are still operating as they were before the 2008 crisis.
Markets must be made to reflect their real value. When the world's investment houses and banks operate on actual numbers, and stay there, the citizens of the world can more solidly plan for their futures, relying on the stability of markets.
Yes, I get that it's a rush to make money. It feels good. At the time of huge earnings, one can do their "happy dance" for having won, having beaten financial death. But how many others die financially in order to create one winner?
1
One can go to the US Federal Reserve and look at excess reserves to get an idea of how wary the US banks are about making new loans.
http://www.federalreserve.gov/releases/h3/current/
As of December 2015, the banks have $2.321 trillion of excess reserves over the required $98 billion required by the Fed.
This is 23.68 times the amount of required reserves.
And the Fed is encouraging the banks to keep excess reserves by paying 0.5% on these excess reserves, so the Fed is giving the US banks a risk free, and voluntary, 0.5% interest rate.
This is a $11.6 billion yearly gift to the banks from the generous Fed.
Perhaps this is chump change to the banks, but they are probably happy to receive it.
This implies the US banks may not find good lending opportunities and/or they are so nervous about their balance sheets that they want to earn 0.5% loaning risk free to a borrower, the Fed, who truly doesn't need it.
Perhaps the excess reserves are indicating the banks and the Fed believe US banks are not in great shape either.
As this unwinds, it helps to remember economist Michael Hudson's statement, "Those who can't pay money back, won't".
http://www.federalreserve.gov/releases/h3/current/
As of December 2015, the banks have $2.321 trillion of excess reserves over the required $98 billion required by the Fed.
This is 23.68 times the amount of required reserves.
And the Fed is encouraging the banks to keep excess reserves by paying 0.5% on these excess reserves, so the Fed is giving the US banks a risk free, and voluntary, 0.5% interest rate.
This is a $11.6 billion yearly gift to the banks from the generous Fed.
Perhaps this is chump change to the banks, but they are probably happy to receive it.
This implies the US banks may not find good lending opportunities and/or they are so nervous about their balance sheets that they want to earn 0.5% loaning risk free to a borrower, the Fed, who truly doesn't need it.
Perhaps the excess reserves are indicating the banks and the Fed believe US banks are not in great shape either.
As this unwinds, it helps to remember economist Michael Hudson's statement, "Those who can't pay money back, won't".
1
Can one assume that a sizable portion of this money has ended up in the pockets of billionaires, oligarchs, and tycoons? One can probably also assume that tax codes around the world will not be changed. Taxes will continue to be on salaries and wages and not on the type of "income" our corporate and financial masters accrue.
5
The accompanying 'photo essay' depicts one shuttered steel factory in China. Anyone remember what Pittsburgh used to be? Not good journalism to fear monger with photos of one minuscule zombie factory in the scheme of Chinese steel production. The point is clear, and true: banks and governments need more discipline, more control, more restraint when doling out the money they take from us taxpayers. You wouldn't keep giving money to your uncle if he kept losing it at the track......what's the difference?
2
There appears to be a casual disparaging of Chinese loans or Chinese banks just because the Chinese government has imposed contractionary measures to cool down select sectors in the economy. In China, people have to come up with more than 25% down to buy a home. Some has to come up with as much as as 50% or even all cash if they are buying homes to " speculate" (i.e. not to live in). There is also a 10% charge for name change of property-- all designed to slow down the increase in real estate prices.
There is no questions some loans in China may be bad loans, but most of those loans are on the books of Chinese banks and never repackaged and resold to other parties. If there are bad loans to Chinese firms that are affecting the quality the international bond market, those loans are made abroad!
There is no questions some loans in China may be bad loans, but most of those loans are on the books of Chinese banks and never repackaged and resold to other parties. If there are bad loans to Chinese firms that are affecting the quality the international bond market, those loans are made abroad!
4
Wherever you see the word "China" in this article, substitute "U.S. Banks."
The illusion of nations is used like a three-card monte scheme. The eye reading the newspaper follows the the "nations" while the credit system operates on an entire different, global basis.
Hail, Vampire Squid!
The global debt would not be labelled "Chinese" if we only settled out the trillions owed by "American" consumers and taxpayers to "Chinese" labor, though the vast, opaque bond markets and currency exchanges.
The ever-growing debt repositioning itself around the world is indeed the same old "vampire squid," the basically Anglo-American banking structure syphoning off labor value through the state-backed exchange currencies and ultimately from the taxpayer and labor base trapped inside each "nation."
This universal debt machine simply continues its monte game by continually switching, relabeled the debt as "housing debt" or "Chinese debt" or "student debt," or whatever. It is all basically a complex version of Roman tax farming, the legal structure that allows favored oligarch to collect from the various labor and tax bases worldwide.
Have you ever watched a three-cared monte game? Whenever someone wins or people get suspicious, suddenly the stooges cry "police!" and everyone runs in a great uproar of confusion. The stooges here are the politicians. And when things get uneasy, the cry is "war!" Get upheaval and confusion, and all the national debts get relabeled.
The illusion of nations is used like a three-card monte scheme. The eye reading the newspaper follows the the "nations" while the credit system operates on an entire different, global basis.
Hail, Vampire Squid!
The global debt would not be labelled "Chinese" if we only settled out the trillions owed by "American" consumers and taxpayers to "Chinese" labor, though the vast, opaque bond markets and currency exchanges.
The ever-growing debt repositioning itself around the world is indeed the same old "vampire squid," the basically Anglo-American banking structure syphoning off labor value through the state-backed exchange currencies and ultimately from the taxpayer and labor base trapped inside each "nation."
This universal debt machine simply continues its monte game by continually switching, relabeled the debt as "housing debt" or "Chinese debt" or "student debt," or whatever. It is all basically a complex version of Roman tax farming, the legal structure that allows favored oligarch to collect from the various labor and tax bases worldwide.
Have you ever watched a three-cared monte game? Whenever someone wins or people get suspicious, suddenly the stooges cry "police!" and everyone runs in a great uproar of confusion. The stooges here are the politicians. And when things get uneasy, the cry is "war!" Get upheaval and confusion, and all the national debts get relabeled.
13
The author seems to think that the only way to get rid of the overhang of debt is to foreclose on properties and force companies and homeowners into bankruptcy. As he points out, that hurts the economy, as well has having severe dislocating effects on many people. The obvious alternative is for the debtholders who made the bad investments to simply write down their debtholdings - ie forgive the portion of the debt that is unpayable. The debtholders end up in the same place, but the negative effects on the debtors and the economy is largely avoided.
4
As I recall it the failure of our system is that the debt writers (lenders) paid scant attention to their borrowers ability to pay and sold off the loans almost as fast as they were writing them. The debt holders "bad investment" was buying worthless paper from corrupt lenders with a seal of approval from rating agencies whose own paychecks depended on the debt writers. If your position is the pain belongs with the debt writer then I agree with you but in that case selling loans that the lender originates should be illegal.
1
Read between the lines. This is what happens under corporatist oligarchy. Neoliberalism (financialization of the productive sector, privatization of profits, socialization of losses, purposely undermining of the public sector) is basically a system based on neo-feudalism; an extractive system that uses the unproductive and parasitical financial sector as tool for the taking of real assets from the population.
Living under a corporatist oligarchy also explains the intellectual violence (or cognitive dissonance assault) an article like this from corporate media perpetrates on readers.
Living under a corporatist oligarchy also explains the intellectual violence (or cognitive dissonance assault) an article like this from corporate media perpetrates on readers.
7
The "folly and greed" of casino capitalism is finally coming home to roost globally. The catabolic nature of the world's financial systems has always been predicated on a "slash and burn" philosophy of unbridled extraction of the planet's natural resources at any price. Edward Abbey, founder of Earth First, summed it up best, "Growth for the sake of growth is the ideology of a cancer sell".
5
Because man is a virus. We are the cancer.
Can someone please explain to me how George W. Bush's popularity ratings continue to rise even as the WORLD suffers from his misdeeds.
>Those toxic loans created on Wall Street and birthed during W.'s Administration have found their way to China.
>The rise of ISIS and their continuing onslaught in the Middle East, a direct result of Bush/Cheney/Neocons senseless invasion of Iraq, dissolution of the Iraq Army, and ultimately the 'Infamous Surge' filling Iraqi prisons with these thousands of prisoners later being freed and becoming the Army of Isis.
The shelf life of memories in this country of ours is shorter than that of canned soup.
>Those toxic loans created on Wall Street and birthed during W.'s Administration have found their way to China.
>The rise of ISIS and their continuing onslaught in the Middle East, a direct result of Bush/Cheney/Neocons senseless invasion of Iraq, dissolution of the Iraq Army, and ultimately the 'Infamous Surge' filling Iraqi prisons with these thousands of prisoners later being freed and becoming the Army of Isis.
The shelf life of memories in this country of ours is shorter than that of canned soup.
8
The principal reason for bad loans is greedy bankers who are happy to gamble OPM (other people's money) to garner a bigger reward for themselves and their banks. When the loans go sour, the economy suffers--in this case the world economy- and everyone is hurt,
Of course, this could only happen when government allows it to.
Greed and power --the twin evils of our world.
Of course, this could only happen when government allows it to.
Greed and power --the twin evils of our world.
6
Toxic loans made to greedy "investment" speculators with untenable interest rates are going to go bad. Big surprise. If a country can't pay their inflated debt "investors" will take over government services instead, privatize them and strip the assets average taxpayers have funded for years. Of course, these same greediest of greedy will ask US to bail them out again with OUR hard-earned taxpayer dollars then turn around and figure out a new way to steal more from US. It is time for governments around the world to tax back the stolen wealth from the top 1% global financial elite and put them out of business. DO NOT BAIL THEM OUT AGAIN. Let unscrupulous people and corporations go bankrupt and take the whole criminal enterprise system down. Lawful, socially conscious players will be just fine.
27
Many of us opposed the last bailouts, and were accused of racism and any numbers of ridiculous charges! Knowing we've been vindicated hasn't made us more sympathetic to those arriving late to the party!
1
The human race (excluding the fossil fuels industry) is improving in its stewardship of the planet for the next generation. The attitude is that we are caretakers of the environment for our children. That same attitude is missing when it comes to economics. Unborn generations don't have a vote and no one is watching out for them.
18
The GOP is pro-life, and pro-war, strange but true.
I like your position of Pre-life.
That seems to be the one thing the GOP doesn't put much thought into.
I like your position of Pre-life.
That seems to be the one thing the GOP doesn't put much thought into.
No, the unborn are busy trying to avoid being victims of the eugenicists practicing mass population control. Your selective concern for the unborn is duly noted.
"From 1933 to 1999, there were very few large bank failures and no financial panics comparable to the Panic of 2008. The law worked exactly as intended. In 1999, Democrats led by President Bill Clinton and Republicans led by Sen. Phil Gramm joined forces to repeal Glass-Steagall at the behest of the big banks."
So much for allowing banks to regulate themselves. So much for allowing politicians power without hindsight.
So much for allowing banks to regulate themselves. So much for allowing politicians power without hindsight.
82
Nothing else needs to be said. Clinton 1 agreed to go along with whatever the financial gurus told him. Clinton 2 will do exactly the same thing. Nothing else needs to be said.
And the Clintons are back it the race. Ross Perot "we are going to hear a huge sucking sound as companies leave the US as a result of NAFTA." That happened and these are the results. We need to take the money out of politics.
1
Well said Mr. Tinucci.- There is plenty of blame to go around for all political parties.
China's debt-to-GDP ratio is low, as is its interest burden. It could easily put up the money to cover the bad debts. So the economics are easy. It's the politics that make it hard.
6
China's debt-to-GDP is 240% ... hardly low. And that's assuming that the GDP number is accurate.
1
Debt to GDP is low? It is 1:2, you call that low?
"Toxic loans' sounds alarming. However, most of the increase came out with unprecedented low interest payment obligations. 'Debt is bad for the economy' is the wrong position at current secular stagnation in the world. Think about, 'How this stagnation happened?'. It all started from austerity mind of the global policy makers, particularly in EU and the US after the 2008 financial crisis. The conservative politicians of the world guarding the wealth of the rich all shouted 'AUSTERITY, otherwise we face uncontrollable inflation!'. As a result, aggregate demand has shrunken markedly due to direct impact on the stressed economy but also indirectly because of 'hysteresis' impact on the potential. This has lead to the global 'GDP gap' now visible in the high level of unemployment in EU, never rising wages in the US, sharp decline of commodity prices and the global slowdown of the economy. Denouncing the Keynesian approach after 2008 financial crisis by the policy makers in the advanced countries is the tragedy of the early 21st century.
6
Why do we all have to pay for bad loan decisions made by banks...again? We didn't make the decisions to loan the money. We don't get any upside (nil interest). If banks are not prepared for some defaults, or can not properly assess their risks, they should not be making these loans.
2
Let's hear it for the failed polices of our last republican president.
The gifts that keep on giving.
The gifts that keep on giving.
9
Let's hear it for Clinton who repealed Glass-Stegal. That's the gift that has caused this.
Read the Babylon Code by Paul MaGuire...
Everything that happens in this world is by design...
But no, you won't read it will you?
Everything that happens in this world is by design...
But no, you won't read it will you?
Articles like this, while informative, and, I suppose, necessary, serve no purpose for the average person other than to add more anxiety to our already anxiety-ridden lives. The forces behind this massive buildup of debt, and the overall house of cards that is the world economy, are something we have absolutely no control over, although the consequences of it will affect us profoundly. On top on that, while educated guesses can be made about how it will all develop, no one can predict it with any kind of certainly. There are simply too many variables. As a result, it's essentially no different than the weather. In the case of this particular forecast, if the impending storm is as bad as it sounds, there might be little we can do to keep it from blowing our houses down. With that thought in mind. I'm going to have a little breakfast, and turn to the sports section.
27
Your sentiments are understandable jr.
But as individuals we do have a choice of where our investments go ( by researching companies with reasonable debt).
We have choices as consumers to purchase goods made here instead of a state-sponsored company in a country with virtually no transparency ( but that would require the abandonment of the short attention span-immediate gratification of the "save money-live better" mentality fostered by one retailer)
We do have some say in our economic lives, but it takes a lot of time and attention, something the hyper-wealthy in the world are betting we won't do.
But as individuals we do have a choice of where our investments go ( by researching companies with reasonable debt).
We have choices as consumers to purchase goods made here instead of a state-sponsored company in a country with virtually no transparency ( but that would require the abandonment of the short attention span-immediate gratification of the "save money-live better" mentality fostered by one retailer)
We do have some say in our economic lives, but it takes a lot of time and attention, something the hyper-wealthy in the world are betting we won't do.
1
Kevin - Of course, on a micro level, we do have some choices. But on the macro level we are at the mercy of myopic, corrupt politicians and rapacious financiers and corporate executives whose actions set the big forces in motion and in general are not designed for the benefit of the common good. You can live your economic life with the utmost responsibility, but if the economy as a whole crashes, it will most likely take you down with it. Best not to worry about it too much.
Did you ever hear of the Great Depression, jr? WE can prevent it if WE move OUR money to safe U.S. Treasury 401K accounts through T Rowe Price and/or into IRA CDs in local banks and credit unions. OUR weekly/monthly deposits in banks and 401K plans fuel the whole thing. Workers are the real stakeholders - not investors. Tax the stolen wealth back.
Could makes 08 look like a blip on the economic map. Potential world wide financial earthquake centered in Beijing. I wonder what the over and under is at Goldman. Cash out and hold on.
3
The last several years the Fed and other countries were drunk with their loans at near zero interest. This under the guise of driving us out of the recession caused by bankers and this country's policies. Countries and business borrowed money and invested it in the stock market, driving the stock market value to untold heights with little regard to value of the company or index.
Just recently Japan lowered their prime to negative interest.
Hold on everyone, China and the European Union is going to drive the world into a depression like era. Paper and coin money will be worthless.
Just recently Japan lowered their prime to negative interest.
Hold on everyone, China and the European Union is going to drive the world into a depression like era. Paper and coin money will be worthless.
4
Just in time to erode the savings of the largest group of pensioners in world history. We'll get to revisit the stories of granny eating one small can of cat food each day.
1
And in another article the NYT will champion another business as usual candidate. We let the banks dictate our politics and our politicians. Remember Elizabeth Warren? Where was the NYT when she was trying to achieve meaningful bank regulation? I voting for Bernie, not business as usual.
47
I nominate Senator Warren to join Bernie's ticket. They WILL gain seats in the House and Senate and keep change headed in the right direction. Vote with each dollar you spend.
1
The "stimulus" actually consists of central banks just printing money and handing it over to the bankers who then have invested $650 Billion down the planet destroying rathole of increased fossil fuel production or more Auto Addiction. Now the fracked shale oil companies receiving so many billions are going bust with a temporarily lower price of oil. US shale oil production now is declining, the only thing preventing the World from going off the Peak Oil cliff. Now fracked gas has also started to decline.
Then there are the subprime Auto loans in the US to keep the Auto/Oil complex running forever.
These investments are just as foolish as the billions which went to subprime housing loans. If they would have gone to Green Transit, insulation to conserve energy, solar, wind and geothermal we would have a longtime payback in a Green transition. Instead of disastrous Climate Change...
But this is what happens when you allow special Corporate interest billionaires to decide policies which impact the whole human race without democratic input.
Then there are the subprime Auto loans in the US to keep the Auto/Oil complex running forever.
These investments are just as foolish as the billions which went to subprime housing loans. If they would have gone to Green Transit, insulation to conserve energy, solar, wind and geothermal we would have a longtime payback in a Green transition. Instead of disastrous Climate Change...
But this is what happens when you allow special Corporate interest billionaires to decide policies which impact the whole human race without democratic input.
30
More Fox News logic. Printing money? Where? The Fed is buying assets with money, not throwing it down a rathole. This " sterilized " intervention does not allow the increased balance sheet of the Fed to " leak" into the broader economy. Indeed, it vectors income to assets and hope of " trickle down" benefit through increased value of assets.
I'm not defending the action but you might want to dig a bit deeper or continue to not believe what is actually going on.
I'm not defending the action but you might want to dig a bit deeper or continue to not believe what is actually going on.
1
I have no doubt that the Federal Reserve bought plenty of worthless mortgage-backed securities as part of "quantitative easing." So another question is, how many public resources will be used to "forgive" private excesses among the powerful?
16
I suggest you look at the amount of money returned treasury from both the GSE's and QE. QE has generated well over 500 billion dollars for the treasury. The GSE's have made well over 300 billion dollars in receivership.
This article seemed to evade aspects of the debt which, through the structure, vector growth to the top of the income earners. Those " worthless" mortgage loans don't exist to the degree you seem to believe.
This article seemed to evade aspects of the debt which, through the structure, vector growth to the top of the income earners. Those " worthless" mortgage loans don't exist to the degree you seem to believe.
1
Clinton will carry us down the same road.She is corrupt and only in
for immediate gains.Obama was a disappointment she's a guaranteed
disaster for the economy as well as everything else.
for immediate gains.Obama was a disappointment she's a guaranteed
disaster for the economy as well as everything else.
17
thanx for that terse chicken little, the sky will fall analysis, but you actually have it backwards. as an able & competent quantity known and respected the world over, the most immediate, beneficial effect clinton will bring to the markets is CERTAINTY.
3
I'm sorry but "corrupt"? Corrupt is Bush2 spilling blood and treasure in Iraq to avenge the Saudi funded 911 attack ... corrupt is Dick Cheney personally profiting from the spilling of blood and treasure while demanding that the CIA "discover" Saddam's WMD and then outing a CIA officer whose husband had the temerity to tell the truth ... corrupt is the Koch and Adelson purchase of the Congressional Republican Party at a deep discount covered by the American taxpayer ... corrupt is the science-denying, race baiting, immigrant bashing, snake-handling, bridge-closing, snake-oil promoting bunch of Rube-Bubblican candidates ... now they ARE corrupt!
4
"Toxic loans around the world" yet not one mention of the US. Surely when doing a world survey a mention could have been put in about US toxic loans, for instance to the oil patch. Or is "the world" short-hand for anywhere but the US?
22
See paragraph four. A looming problem that only a steep rise in oil prices can remedy.
From par. 4 of the article: " In the United States, it took many months for mortgage defaults to fall after the most recent housing bust — and energy companies are struggling to pay off the cheap money that they borrowed to pile into the shale boom."
It would be more useful to others if you would read the article before commenting on what it does or does not address.
It is not just toxic loans that are the problem, but a toxic atmosphere where those who run the banks believe, with some justification, that they can operate with impunity. We will not bring the economy under control until we can bring the banks under control.
73
Break the "too big fail" banks into smaller banks. Problem? They own our Congress, Executive and Judicial government.
6
We need some kind of 'at arms length' legislation stopping the revolving door between Wall Street and Washington. Then there's the super pacs, and congressmen and women indebted to lobbyists.
The Chinese practice neoliberalism differently from those countries who have embraced it in the West. The slide show proves that it does not work there either.
7
China practices neoconservatism. That's where they failed.
The World's Big Short???
33
The factored element of enforcement and how it is performed will spell out quite clearly the near future condition of the global economy. Components of stress
not-- or ignored to be --discussed may enter the play. Uncertainty is cast firm
by existing weak leadership. Solutions exist.
not-- or ignored to be --discussed may enter the play. Uncertainty is cast firm
by existing weak leadership. Solutions exist.
In the face of this global debt how can the Republican party run on a platform of lowering taxes on corporations and the 1% "job creators". How can Trump expect to expel 11 million illegal aliens, build the great wall of Mexico and not raise the national debt? On the other side Bernie Sanders needs to explain how he is going to pay for Universal Healthcare, a massive government jobs program and free college tuition without putting an additional burden on the middle class.
It's time for the media and the public in general press all the candidates to explain in detail how they propose to fix the problems of this country. Yes we can blame Washington for the gridlock, but we have to remember we elected these representatives. We cannot afford another congressional term like the past 6 years or we truely will see the beginning of the end of this great society.
It's time for the media and the public in general press all the candidates to explain in detail how they propose to fix the problems of this country. Yes we can blame Washington for the gridlock, but we have to remember we elected these representatives. We cannot afford another congressional term like the past 6 years or we truely will see the beginning of the end of this great society.
30
You ask how can the the Republican Party run on a platform of lowering taxes on the 1% and offering zero taxes for corporations?
The answer is low information and no information GOP voters who buy the current crop of 2016 GOP presidential snake oil promises, their hatred for the Black (and many GOPers still beleive Kenyan Muslim) family living in the White House, I can go on but you can get that from the 24/7 fox and friends cable channel.
Then they will try voters suppression and gerrymandering.
The answer is low information and no information GOP voters who buy the current crop of 2016 GOP presidential snake oil promises, their hatred for the Black (and many GOPers still beleive Kenyan Muslim) family living in the White House, I can go on but you can get that from the 24/7 fox and friends cable channel.
Then they will try voters suppression and gerrymandering.
12
So, Manderine, do tell how a Sanders supporter is anything but a low information voter addicted to MSNBC if they think $15 trillion will magically appear to fund the Sanders Gravy Train.
Fully agreed. Wake up America! Banish your ill placed hatred of nonwhites. Stirring up the hatred is a gimmick fed to the masses for centuries. The problem is lack of regulations for the banking industry and Wall Street. Merrill Lynch felt free to help themselves to part of my husband's hard earned retirement fund during the 2008 fiasco with no apology. All the while, the CEO was making $90 million a year and snuck away with a $190 million bonus two weeks before the meltdown. Need I say more? Fox news is propaganda, folks. They are lying to you to benefit the 'haves and have mores' as George W. so proudly put it.
2
Predatory lending fueled by blind greed put them, up s_ _ _'s creek without a paddle. Enjoy the swim and watch out for your fellow sharks in the murky waters of the future. When greed leads the way one result follows. One result that brings many consequences.
14
Is there no regulation, or even common sense, in the banking community? Making risky loans and backing them with government bailouts does not seem like a sustainable financial model.
It would be very helpful to the reader if you could explain how to stop these financial shenanigans from happening. Simply writing "Oh well, it's happened again" is not very informative or comforting. How do we put an end to the "privatize profit, socialize loss" business model?
Perhaps Bernie Sanders has a good answer. Break up the failing mega-banks and make them accountable to their investors, and stop their dependence on government welfare.
It would be very helpful to the reader if you could explain how to stop these financial shenanigans from happening. Simply writing "Oh well, it's happened again" is not very informative or comforting. How do we put an end to the "privatize profit, socialize loss" business model?
Perhaps Bernie Sanders has a good answer. Break up the failing mega-banks and make them accountable to their investors, and stop their dependence on government welfare.
125
And how will Bernie the savior find the answer to China's financial sector loan problems?
1
What about investing your dollars, that in their bank, in the stock market, the worlds biggest casino? Why don't we call a spade a spade here? STOP letting them gamble with your money!!!! Glass Steagall did just that. Then Clinton let it pass without vetoing it. Clinton 2 will do anything but aim her sights at the financial industry.
We existed before China's rise, we'll have to do it again. Too bad the business leaders shipped all the jobs overseas. They've eaten the seed corn
Can all debts with interest be repaid?
No.
This is always the fundamental problem with usury. The system only works while total debt grows exponentially to fund the exponentially growing interest owed.
No.
This is always the fundamental problem with usury. The system only works while total debt grows exponentially to fund the exponentially growing interest owed.
8
A type of ponzi on top of ponzi?
1
From an economic perspective, having a global authority over some of these matters makes sense to me: if a trader spills his soda on the trading desk in China, I should not end up with wet feet. There should be a push to promote a global underwriting standard so that those distant from your debts are not affected by your defaults. However, if I am able to perceive a coming debt trough, I should be able to make market moves in sync with that and not end up as the villain in some film prepared by dilettantes.
1
So what happens when the US defaults on its $19 Trillion loan?
6
Ask Ted Cruz one of the republican front runners for president of the U.S.
He lead the Government shut down in 2012 to defund the ACA while holding hostage our debt payment.
The GOP sure knows how to pick winners.
He lead the Government shut down in 2012 to defund the ACA while holding hostage our debt payment.
The GOP sure knows how to pick winners.
13
Why would the US choose to default on a $19t loan? It IS a choice, you realize. The government can print as much money as it wants, whenever it wants.
http://www.slideshare.net/DevinDSmith/modern-money-the-way-a-sovereign-c...
http://www.slideshare.net/DevinDSmith/modern-money-the-way-a-sovereign-c...
I would like to know under what pretext economists worldwide practice that encourages the uncontrolled and unpayable debt junkyard mountains to be created by countless organizations around the world simply so very very few people can become ridiculously wealthy. We are all carrying huge debt levels from layers of public agencies and private firms that no one can ever pay off while profit takers rig the system to enrich themselves. Japan and China have insane levels of public debt and insane levels of private wealth and the US is not far behind. None of this serves the public good. Where is any reparation and correction to this wasteland? Why are the Sanders and Warrens of the world the very few who dare speak what is blatantly obvious: most of us are getting fleeced.
90
When does this way of life become obvious to us as a system? Where we toil all our lives, expend our time in the service of providing yachts for the wealthy? When does it end?
6
Public debt, private wealth. Nice encapsulation of the problem: oligarchs, plutocrats and corporatists have succeeded in using governments to transfer wealth from the middle class to themselves. Government's holding the bag, people are angry at governments, and the fat cats scuttle off to St. Bart's or Monaco, along with their, um, OUR money.
Because, where else did the money come from, but out of working people's pockets? Somebody made that money and paid it to the government in the form of taxes, then it's given away in the form of corporate welfare and tax breaks for "job creators."
Marx was onto something.
Because, where else did the money come from, but out of working people's pockets? Somebody made that money and paid it to the government in the form of taxes, then it's given away in the form of corporate welfare and tax breaks for "job creators."
Marx was onto something.
1
When the USSR collapsed, and China turned to manufacturing and embraced private ownership, Capitalism was crowned the only system left. Well, capitalism run amok leads to greed, avarice, and ruin in the end if left unchecked.
1
China is done. It was great for the few million "tycoons" who mostly got rich exploiting China's poor masses, but it's ending badly for those masses and middle class, and horribly for the half billion who still live on a few dollars a day. The sooner they all get rid of the corrupt kleptocracy in Beijing, the better. It's clear they aren't the competent technocrats they like to be called.
32
It's actually pretty amazing when you stand back and consider how many countries in the Americas, Africa and the Pacific have relied on and benefited from China's growth in the past decade. The environmental scars are dramatic in many places and the bad debt is certainly a hazard. However, it is also true that China's growth has for a decade enabled billions of people worldwide to eat and sleep better than ever before and to grasp something beyond poverty.
Yes, wealth has become concentrated but all boats were lifted in the process. Of course, they are also likely to sink accordingly, but we'll see how far down they go before the cycle starts anew, as it always does.
Yes, wealth has become concentrated but all boats were lifted in the process. Of course, they are also likely to sink accordingly, but we'll see how far down they go before the cycle starts anew, as it always does.
1
Indeed. One has to wonder what the consequences of a revolution (or even a sustained uprising) in China would have on the rest of the world.
1
You mean like the west has never had a stock market or real estate bubble? Yes indeedy, we have set such a great example - so much social equality? The richest few percent having more wealth than the bottom 50% put together, a minimum wage where people need welfare to feed their families, no that could never be compared to how China exploits its working class. Not in a million years in Murica.
But if nobody has money to spend, because they are tied up in loans, prices come down, inflation comes down, and the whole system crashes.
The answer? Don't strive to inflate the dollar. Strive to keep its value steady and consistent. And don't borrow - for anything.