Housing Bubble II – It’s Happening Again

By Andy Sutton & Graham Mehl – Re-Blogged From http://www.Gold-Eagle.com

This will be a bit different article because we are not reporting on something that has already happened; we’re dealing with something that is ongoing and developing. Graham will handle roughly the first half of the article, then Andy will handle the second. Please bear with us as we try to break this editorial into two distinct pieces. You’ll understand as you read it why we chose to handle this in such a fashion.

Since everything in the blogosphere goes by what is officially declared by who, so forth, and so on, ditto, ditto, etc, etc, we are officially declaring there is yet ANOTHER bubble – this one in housing. Again. Perhaps ‘still’ is the proper word rather than ‘again since the first one never really was totally washed out of the system. As an addendum to our very well-received ‘American Economics’ piece, we’ll add a corollary: binges are good, purges are not to be tolerated unless absolutely necessary. If a purge becomes necessary, it will be only enough to give the Proletariat the idea that the problem is actually gone. A purge will never last longer than is absolutely necessary since that might affect consumer spending and the consumetariat’s voracious appetite for debt and financial self-mutilation.

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Government Ramps Up Borrowing As Private Sector Slows

By John Rubino – Re-blogged From http://www.Silver-Phoenix500.com

This morning, US existing home sales plunged and the Chicago Fed’s national activity index turned negative. Both are obvious signs of a slowing economy.

Anticipating this kind of news, Credit Bubble Bulletin’s Doug Noland in his most recent column analyzed the Federal Reserve’s quarterly Z.1 Report for signs of changing financial trends, and found something potentially serious. The following three charts tell the tale:

First, corporate borrowing slowed dramatically in 2015’s fourth quarter…

…while households scaled back their mortgage borrowing:

And guess who stepped in to save the credit bubble? That’s right. Federal government borrowing soared:

Writes Noland: “This more than offset the private-sector slowdown, ensuring that overall Non-Financial Debt growth accelerated to an 8.6% pace in Q4.”

In other words, monetary policy (QE and low/negative interest rates) has stopped working and now we’re reverting to deficit spending to juice the economy. If this is the beginning of a trend, expect to see a torrent of announcements in coming months touting new government programs on infrastructure, health care and/or the military.

It’s as if the people making these decisions have forgotten that 1) the world borrowed $57 trillion post-2008 and got next to nothing for it and 2) the new debt will have to be rolled over at higher rates if interest rates are ever to be normalized, thus decimating government finances.

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A Dangerous Moment For Social Security

By Justin Spittler – Re-Blogged From http://www.Silver-Phoenix500.com

Social Security funds are drying up…will there be any money left when you retire?

Social Security is America’s largest federal program. In 2015, it paid out $870 billion to more than 59 million Americans.

Most Americans see Social Security as a retirement savings program. During your working life, you pay 6.2% of every paycheck to Social Security. In return, the government sends you a check every month after you retire.

However, unlike a retirement plan like a 401(k), the money you pay into Social Security doesn’t land in your own personal account. Instead, it goes into one big pot called the “Social Security Trust Fund.”

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The Cotton Candy Market

By Keith Weiner – Re-Blogged From http://www.Silver-Phoenix500.com

As I have discussed previously…if you borrow cash, then it’s not income. This is why no one in his right mind borrows to buy consumer goods. Those who try cannot sustain it for long.

What if someone else borrows? Suppose someone else—let’s call her Jordyn—buys your house from you, at a higher price than you originally paid for it. You can spend some of the gain.

Of course she is just paying you with her borrowed proceeds, but most people think this is totally different than if you borrow to spend yourself. They feel comfortable spending part of the profit from the sale of a house or other asset.

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Britain’s £173 Billion “Debt Timebomb”

By Mark O’Byrne – Re-Blogged From http://www.Gold-Eale.com

UK households are sitting on a £173 billion debt time bomb after once again being lured into a spending splurge by banks and credit card companies.

The startling rise in debt levels due to people splashing out on new cars, TVs, conservatories, luxury items, consumer goods and home improvements was uncovered in an investigation by Money Mail.

With a rise in interest rates imminent for the first time in more than eight years, fears are growing that many families will be left struggling with repayments.

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