Senior bankers are “privately warning” that the record bank lending binge “should not be seen as evidence of an economic recovery.” Instead, they’re fretting about the greatest credit bubble in history.
Many Americans spend every dime they make, and usually way beyond what they make. It’s not because they have confidence in the economy. They don’t! The gap in consumer confidence between these folks and those with higher incomes is at an all-time record!
My convo with a wealth manager at a megabank who’s been at it for 30 years, has seen three crashes while on the job, but unlike others in finance, hasn’t re-forgotten the lessons for the third time.
The smart money had a goal, which it now reached via the “multiplier effect” by which a small number of sales can have extreme consequences in price for the rest.
“Asset prices have reached stunning levels, obviously out of line with ‘fundamentals.’ The “most dangerous” are housing bubbles; when they burst, they “wreck whole economies.”
Whipped into a frenzy by the sweet smell of usury.
Banks are again taking the same risks that triggered the financial crisis, and they’re understating these risks. It wasn’t an edgy blogger that issued this warning but the Office of the Comptroller of the Currency. And it blamed the Fed’s monetary policy.
Ah, the spine-tingling pleasures of having this delicious breed of bonds in your conservative-sounding bond fund.
Now that the Fed is pulling back from its money-printing binge, the IMF, the global bondholder bailout outfit, is starting to panic.
So what happens when these huge and reckless buyers with their nearly endless resources start cutting back after a phenomenal peak? Well, we know what happened in 2008.