Bubble

Trouble

The trouble with inflating asset bubbles is that you have to keep inflating them or they pop.

 Unfortunately for the bubble-blowing central banks, asset bubbles are a double-bind: you cannot inflate assets forever. At some unpredictable point, the risk and moral hazard that are part and parcel of all asset bubbles trigger an avalanche of selling that pops the bubble.

This is another facet of The Fed's Double-Bind: 

if you stop pumping asset bubbles, they pop as participants realize the music has stopped, 

and if you keep pumping them, 

they expand to super-nova size and implode.

Is China's Debt Bubble About To Burst?

DYI:  DYI has stated for over 5 years China is headed for a massive debt crushing deflationary depression.  This illustrates vividly the old saying that markets can and do remain irrational far longer than anyone thought possible.  When?  Obviously no one knows but at their debt levels it will be a Cat 5 hurricane economic force.  Governments prefer to blame others for their mistakes – China is definitely fits this situation as they are beating the war drums with India, Vietnam, Japan, and the good old U.S. of A.  

Canadians Are Borrowing Against Real Estate At The Fastest Pace Ever

DYI:  For those of you who don’t know Canadians are in a debt bubble that has pump up real estate costs to the moon – far greater in scope than the bubble years for the citizens living below the 49^th parallel (United States).  When this all crashes Canada will go into an economic depression.

  

 

DYI