{"id":17795,"date":"2016-02-14T19:47:42","date_gmt":"2016-02-15T00:47:42","guid":{"rendered":"http:\/\/olduvai.ca\/?p=17795"},"modified":"2016-02-14T19:47:42","modified_gmt":"2016-02-15T00:47:42","slug":"a-contagious-crisis-of-confidence-in-corporate-credit","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=17795","title":{"rendered":"A Contagious Crisis Of Confidence In Corporate Credit"},"content":{"rendered":"<h3 class=\"title\"><a href=\"http:\/\/creditbubblebulletin.blogspot.ca\/2016\/02\/weekly-commentary-global-bubble.html\" target=\"_blank\">A Contagious Crisis Of Confidence In Corporate Credit<\/a><\/h3>\n<div class=\"tabs\">\n<div class=\"content\">\n<p>Credit is not innately good or bad. Simplistically, productive Credit is constructive, while non-productive Credit is inevitably problematic.\u00a0<strong>This crucial distinction tends to be masked throughout the boom period.<\/strong>\u00a0Worse yet, a prolonged boom in \u201cproductive\u201d Credit \u2013 surely fueled by some type of underlying monetary disorder &#8211; can prove particularly hazardous (to finance and the real economy).<\/p>\n<p><strong>Fundamentally, Credit is unstable. It is self-reinforcing and prone to excess.<\/strong>\u00a0Credit Bubbles foment destabilizing price distortions, economic maladjustment, wealth redistribution and financial and economic vulnerability.\u00a0<strong>Only through \u201cactivist\u201d government intervention and manipulation will protracted Bubbles reach the point of precarious systemic fragility.\u00a0<\/strong>Government\/central bank monetary issuance coupled with market manipulations and liquidity backstops negates the self-adjusting processes that would typically work to restrain Credit and other financial excess (and shorten the Credit cycle).<\/p>\n<p><strong>A multi-decade experiment in unfettered \u201cmoney\u201d and Credit has encompassed the world<\/strong>. Unique in history, the global financial \u201csystem\u201d has operated with essentially no limitations to either the quantity or quality of Credit instruments issued. Over decades this has nurtured unprecedented Credit excess and attendant economic imbalances on a global scale.\u00a0<strong>This historic experiment climaxed with a seven-year period of massive ($12 TN) global central bank \u201cmoney\u201d creation and market liquidity injections.<\/strong>\u00a0It is central to my thesis that this experiment has failed and the unwind has commenced.<\/p>\n<p><u><em><strong>The U.S. repudiation of the gold standard in 1971 was a critical development. The seventies oil shocks, \u201cstagflation\u201d and the Latin American debt debacle were instrumental. Yet I view the Greenspan Fed\u2019s reaction to the 1987 stock market crash as the defining genesis of today\u2019s fateful global Credit Bubble.<\/strong><\/em><\/u><\/p>\n<p>The Fed\u2019s explicit assurances of marketplace liquidity came at a critical juncture for the evolution to market-based finance.<\/p>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>A Contagious Crisis Of Confidence In Corporate Credit Credit is not innately good or bad. Simplistically, productive Credit is constructive, while non-productive Credit is inevitably problematic.\u00a0This crucial distinction tends to be masked throughout the boom period.\u00a0Worse yet, a prolonged boom in \u201cproductive\u201d Credit \u2013 surely fueled by some type of underlying monetary disorder &#8211; can [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[8692,1719,8517,1626,130,12390,10096,172,7756,12391,305,366,383,1167,12392,1512,1464,501,534,536,4919,4696,668,669,679,3303,1478,10388,12389],"class_list":["post-17795","post","type-post","status-publish","format-standard","hentry","category-economics","tag-asset-backed-securities","tag-bond","tag-carry-trade","tag-cds","tag-china","tag-commercial-paper","tag-commercial-real-estate","tag-cpi","tag-credit-bubble-bulletin","tag-credit-conditions","tag-federal-reserve","tag-global-economy","tag-great-depression","tag-greece","tag-helicopter-ben","tag-ireland","tag-italy","tag-market-crash","tag-monetary-policy","tag-money","tag-nasdaq","tag-portugal","tag-real-estate","tag-reality","tag-reserve-currency","tag-stagflation","tag-yen","tag-yield-curve","tag-z-1"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/17795","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=17795"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/17795\/revisions"}],"predecessor-version":[{"id":17796,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/17795\/revisions\/17796"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=17795"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=17795"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=17795"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}