'Global financial system is as dangerously stretched today as it was at the peak of the last bub

Quotes: Nine years of emergency money has had a string of perverse effects and lured emerging markets into debt dependency, without addressing the structural causes of the global disorder. "All the market indicators right now look very similar to what we saw before the Lehman crisis, but the lesson has somehow been forgotten," said William White, the Swiss-based head of the OECD's review board and ex-chief economist for the Bank for International Settlements. Professor White said disturbing evidence of credit degradation is emerging almost daily. Professor White said there was an intoxicating optimism at the top of every unstable boom when people convince themselves that risk is fading, bu

We are in biggest private debt bubble in history

Private debt bubbles historically have always resulted in financial crises and major asset price crashes. That is why this issue is very important. In this Youtube clip "Can Australia avoid a financial crisis?" 24/July/2017, Professor Steve Keen explains the relationship between private debt bubbles and crisis. https://www.youtube.com/watch?v=vCFubyGd_R0&t=516s Steve's line of argument is very much along the same line of thinking of the Austrian School of Economics as it relates to debt. This chart below shows a longer-term view of Australian private debt to complete the picture. And from a longer-term global perspective, the following chart of private debt around major economies is really

Implications of huge bond bubble crash - and has it started.

Chris Joye who writes for the AFR and also manages a fixed interest fund, discusses the implications. But first some background. Below is a chart of US government 10 year bond yields since 1900. When bond yields fall, the value of existing bonds rise in value (because the discounted value of the future cash flow from those bonds, rises.) Therefore, since 1981, while bond yields have been falling, bonds have been delivering excellent returns - very high returns compared to long-term average returns. By contrast, when bond yields rise, substantial capital losses can be delivered by bonds. Over the last few years, we saw US bond yields fall to the lowest level seen since 1900. A lot of people

At the end of share market cycle, long-short funds have a role.

Some quotes from this article by Justin Braitling of Watermark Funds Management: "The chart below reveals a sharemarket that is expensive on historic valuation measures." "Another way to consider risk is to think about where we are in the business cycle. You can see in the chart below this cycle is shaping up as one of the longest on record. As shares become more expensive and the business cycle approaches its inevitable conclusion, investors should contemplate how they can avoid these mounting risks. While you may miss out on the final blow-off in shares, by avoiding the next inevitable drawdown you will be miles ahead in the long run. " "In constructing a share portfolio, there are few way

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