Annualized GDP Growth Of 1%; Annualized US Debt Growth of 21%
My Comment. Time For a Massive Write down of consumer and government debt.
The Problem In A Nutshell: Annualized GDP Growth Of 1%; Annualized US Debt Growth of 21%
http://www.zerohedge.com/news/problem-nutshell-annualized-gdp-growth-1-annualized-us-debt-growth-21
While economists may waste lots of hot air debating this, that and the other about the future growth trajectory of the US economy, in the aftermath of Goldman’s cut of US GDP to just a 1.1% annualized rate of growth. And with the fiscal cliff, debt ceiling, Europe, China, and a plethora of other unknowns up ahead, this number will certainly decline further. Now here lies the rub: as the chart below shows total US marketable debt has doubled in the past 4 years, or an annualized growth rate of just above 21%. And as Zero Hedge has shown before, total US Debt/GDP is on the verge of crossing 102%, the highest since WWII. Simply said, the divergence between the two data series will only accelerate as every incremental dollar of debt generates ever less bank for the GDP buck. And that, from a “sustainability” perspective, is what the problem is in a nutshell.
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NYSE Margin Debt At Highest Since July Means Threat Of Margin Calls High
As so often happens, every time there is a ramp in the stock market, especially one which is not accompanied by retail buying, those who are buying, are forced to do so on increasingly more margin, as there is only so much cash in the market without booking actual profits. Sure enough, as of the end of February, margin debt was $289 billion, the highest since July 2011, while Net Free Credit (Free Credit Cash plus Credit balances in margin accounts less Margin Debt) of negative $33 billion (meaning investors have negative net worth) was the lowest also since July. What does this mean? Simply said, that if the cross asset rout continues, which means bonds yesterday, and stocks and commodities today, the margin calls will once again resume, as they used to in the fall of 2011, leading to a toxic liquidation spiral, pushing prices even lower. So in keeping with the times, and sticking heads in the sand, watch out for that 3pm call from your repo desk. Best idea would be to just let it go through to voicemail.
http://www.zerohedge.com/news/nyse-margin-debt-highest-july-means-threat-margin-calls-high
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