Tuesday, November 08, 2016

Credit Analyst Guru Doug Noland:
"In The Next Crisis 
The Federal Reserve's Balance Sheet 
Will Hit $10 Trillion"
Transcript/link to interview with Doug Noland who believes we are in for a bigger crash & deeper dislocation when it all comes to an end .. Noland says the current market bubble is a dangerous place to be & there has been a major shift from previous boom bust scenarios, where the impact has been more limited. He also examines how support from central banks has led the markets to ignore the risk - & what happens when that support is taken away .. "This bubble is deeply systemic .. I thought the bubble burst back in the financial crisis .. I thought we were going into another depression. I wrote as much .. I think we're late, but this is a different type of a bubble because it's global. Very different dynamics. The other thing is it's gone to the heart of money and credit. Right now this bubble is being fed by government debt, sovereign debt, and central bank credit. Back when WorldCom debt and Telecom debt was driving the technology bubble, in my mind that can only go on so long. People will have enough of that junk debt and that will end that cycle .. The mortgage finance bubble was a little different. That was more money-like. Moneyness of credit is a term I used during that period. People had insatiable demand for GSE credit, insatiable demand for AAA rated mortgage backed securities. That bubble could go much longer, as it did, go longer, have a much deeper impact on economic structure .. This bubble, again, it's gone to the heart and soul of money and credit. And right now central bankers are basically doing everything to keep it going. So this one, we're what, eight years into it? I think we're really late, but we don't know to what extent central bankers will continue to try to sustain the backdrop."
LINK HERE to the article

No comments: