Rising Debt

• Despite the long bull market, more Americans today have more debt than money in the bank than at any point since 1962, according to Deutsche Bank.

• American household savings levels are at levels last seen in December 2007… right before the economy slipped into a recession that spurred the global financial crisis.

• And total U.S. consumer debt – credit cards, auto loans, and student loans – just surged by the most in two years to $3.8 trillion.

• And government debt… is creeping toward a $1 trillion deficit per year. The national debt has topped $20 trillion.

 

If these folks can’t save or make their payments in a strong economy… how will they do it when interest rates go up and the next inevitable recession hits?

The answer is that they won’t.

-Steve Longenecker

Instant Information

“Since the beginning of the 21st century, the amount of information instantly available to us has increased a thousandfold. Looking for answers today has become a challenge not of finding, but of sifting through….  And it’s not just information, per se.  It is the rhetoric of the global Internet-connected chat room where smart people with opinions assemble data, then analyze and interpret them for us.  And here’s another thing: Much of this secondary information is so well – and persuasively –presented that it feels like experience.  When secondary information feels like experience, we often accept it as truth… truth that is equal to the truth we know from experience.” -Mark Ford

Record Debt

“…the world has been binging on debt like never before.

The International Monetary Fund reported last month that total nonfinancial-sector debt has ballooned to an all-time record of $152 trillion… while the global debt-to-GDP ratio has also soared to an all-time high of 225%, up from 200% just 14 years ago.

Worse, we’re seeing record debt at the government level, the corporate level, and the consumer level (via auto and student loans, in particular). The boom in corporate borrowing is especially concerning…

U.S. companies have already borrowed $1.4 trillion this year to date, according to data firm Dealogic. This is on pace to shatter last year’s previous all-time record of $1.5 trillion.

Unfortunately, most are using this money to refinance existing loans… buy back stock and pay dividends… and finance expensive (and often questionable) mergers and acquisitions. This will do little to help the economy. But it greatly increases leverage… and risk.” -Justin Brill

Historical Debt

“Speaking of debt, the International Monetary Fund (“IMF”) reported yesterday that total nonfinancial-sector debt has ballooned to $152 trillion worldwide.  This is the most in history.  The IMF says global debt-to-GDP has also soared to an all-time high of 225%, up from 200% just 14 years ago.” -Justin Brill

Global History

“Today, for the very first time in history, pretty much anyone can have a global impact.” -Steven Kotler