Aiken, South Carolina
Europe "may not survive 25 years of stagnation," Soros said in the interview with Francine Lacqua.
The following autumn, the rate of mortgage delinquencies had tripled from the year before. By January, '08, it had quadrupled...and by May it had quintupled.
--- Advertisement ---
3 "Rare" Small Caps For Strong Growth Potential
It's tough to find stocks which you could own for years at end...
Stocks which are fundamentally strong with the potential to grow your wealth... and which pay you regular dividends year-after-year as well!
However today, we have 3 'Rare' Dividend paying Small Caps which you could Add to your Portfolio!
These 3 stocks meet all the factors above and more...
In fact, one of these 3 has paid regular dividends for more than 100 years now!
And we've just published full information on these 3 Stocks in our Latest Special Report - Steady Income Smallcaps - II
How can you get Instant Access to this Report?
Just click here for full details...
It was a classic debt deflation. Homeowners had taken on more debt than they could afford. Now, the debt was going bad and investors were getting queasy.
Defaults were bad news to marginal homeowners who lost their houses. They had to move. They were bad news to the people who owned the mortgages too. This mortgage debt had been cleverly sliced and diced and sold all over town. But the sellers seem to have forgotten what was in this sausage; they didn't seem to realize that it was about to make them throw up.
First, Bear Stearns ran running from the room, holding its stomach. Then, it was Lehman Bros. At that point, the Feds came in with every quack cure they could think of. Bailouts, cash for clunkers, ZIRP, QE - one estimate put the total cost at more than $10 trillion, about three times the cost of WWII.
The problem with the cures was always a fundamental one. The crisis was caused by too much debt. And all the feds had to offer was...more debt.
As Bloomberg reported last week, the world's stock of toxic sausages has exploded to $100 trillion:
The jump in debt as measured by the Basel, Switzerland-based BIS in its quarterly review is almost twice the U.S. economy.
Debt is an obligation laid upon the future by the past. The larger it gets, the harder it is for the future to happen. Growth rates slow. This has been demonstrated by several studies, most prominently the one by Rogoff and Reinhart. There were some errors in their math, that critics rejoiced in, but the conclusion was solid: when government debt/GDP increases, growth slows.
That is what has happened in Japan for the last 23 years...and in Europe and America for the last 7. All of these economies are still fighting deleveraging, resisting debt deflation, and pretending that they can continue to add debt forever...and that somehow this will get them out of their debt traps.
But they are doomed. Without growth they can't pay the debt. With so much debt, they can't grow.
Bill Bonner is the President & Founder of Agora Inc, an international publisher of financial and special interest books and newsletters.