JPMorgan Sounds Alarm On Size Of US Debt, Warns Of Financial Crisis

 

After yesterday Goldman mocked Trump’s budget (ironic as it was Trump’s ex-Goldman Chief Economic Advisor who conceived it) and said it had zero chance of being implemented, today it was JPM’s turn to share some purely philosophical thoughts on the shape of future US income and spending, which as we learned yesterday could balance only if the US grows for 10 years at a 3% growth rate, something it has never done, while slashing nearly $4 trillion in in spending, something else it has never done.

What caught our attention in the note by JPM’s Jesse Edgerton was his discussion on the thorniest issue surrounding the US: its unprecedented debt addition, what America’s debt/GDP will look like over the next 30 years, and whether there is any chance it could decline as conservatives in government hope will happen. Continue reading

The Next Domino Falls As Predicted… Here’s What Comes Next

 

I recently spent several weeks in Italy, taking the pulse of the country. The Italian referendum on December 4 turned out exactly how I predicted it would.

The “No” vote won in a landslide, with 59% of the vote versus 41% for “Yes,” with a 70% turnout.

The pro-EU Prime Minister promptly announced his resignation after the crushing defeat.

A surging populist party waits in the wings. They’re now likely a matter of months away from taking power and then holding a new referendum on whether Italy should dump the euro and go back to the lira.

If that happens, Italians will likely vote to leave. Continue reading

Mass default looms as world sinks beneath a sea of debt

As if the fast degenerating geo-political situation isn’t bad enough, here’s another lorry load of concerns to add to the pile.

The UK and US economies may be on the mend at last, but that’s not the pattern elsewhere. On a global level, growth is being steadily drowned under a rising tide of debt, threatening renewed financial crisis, a continued squeeze to living standards, and eventual mass default.

I exaggerate only a little in depicting this apocalyptic view of the future as the conclusion of the latest “Geneva Report”, an annual assessment informed by a top drawer conference of leading decision makers and economic thinkers of the big challenges facing the global economy.

Aptly titled “Deleveraging? What Deleveraging?”, the report points out that, far from paying down debt since the financial crisis of 2008/9, the world economy as a whole has in fact geared up even further. The raw numbers make explosive reading.

Continue reading