Economic news worsens
The Stock Market plunged on Friday to its lowest
point in two years. The fact the economy is not doing well can no longer be
hidden from investors. The truth of the matter is getting out, with what results
we are beginning to see.
Here are some of the more recent numbers on the
economy. Last week, Bank Credit jumped $27.6 billion, up to $290.7 billion for
the year, or 16% annualized—an unsustainable rate of increase, to be sure!
Securities Credit is up $93.6 billion, or 18% annualized. Loans and leases have
expanded at a 19% rate during 2005, and real estate loans have expanded at an
18% rate. This has all the marks of a massive credit bubble—a bubble that
can be traced back to the mid and late nineties. As usual with such entities, in
their later stages they require more and more liquidity, until it becomes
impossible to feed them any longer, their appetite becomes so voracious. That is
the stage we are entering now, the final stage in the credit bubble cycle. This
thing has been lovingly nursed by the High Finance and the Fed. Every effort has
been made to keep it from bursting. Liquidity has been poured into its maw from
every available source. We will soon—perhaps very soon—reach the
point where we can no longer manufacture liquidity fast enough. The end is in
sight.
Posted: Fri - April 15, 2005 at 11:01 PM