The Next Major Financial Crisis Will Occur Within The Next 4 Years.
Why should that happen?
Because what was warned in 2005-06-07, is happening again, just a lot worse.
By Søren Nielsen May 31.05.2017
You'll see overwhelming evidence that stocks, bonds, and real estate could be in biggest bubbles of all time.
I think that there is something very big and something very dangerous happening and it comes ad us very fast, right now, that's why I write this document, so as many people as possible, will be prepared as possible.
For the first time in history, there has been an all-round bubble. Back in 2000 it was stocks and in 2008 it was stocks and real estate, and this time it is stocks-real estats and bonds, and they are all in some of the biggest bubbles of all times, and when they burst, it will be devastating, but it don`t have to be devastating for you. So this is how to survive the next 4 years.
Back in 2005, there were certain indicatons that I was wacthing that were telling me that, that there was going to be a stocks market crash and a real estate crash and.
So I started warning people, so they had time to be prepared. I warned them throughout 2005 - 06 - 07, well, all the same signs and some new, that i`ve been watching are flashing red again, and that tells me, it's time to be prepared for the next big event and the way they`re flashing, it seems that there`s going to be lees time, this time it`s not 3 year`s to get prepared, it`s going to be happening pretty soon and this like i said this is the first that there`s an everything bubble.
We are going to be covering the stocks market bubble - the real estats market bubble - the credit / debt bubble which is the bonds bubble we`re going to be covering technological risks and geopolitical risks, but most importantly how to get prepared, so let`s get into the evidence right now and take a look at it.
Stock Market.
Let`s start with the stock market portion of the bubble. I`m going to present a few charts here, but they`re fairly easy to understand so stick with me. This is data compiled by Dr. Robert Shiller of Yale University and he`s gone all the way back to the 1880`s and compiled, what is called " The price earnings" he`s recreated the S&P 500 by putting together the 500 largest companies in the United States at the time going all the way back into the 1880`s and the price of a stock versus how much the company is earning is a very good measure of whether a stock is overvalued or undervalued and if it`s priced down at four or five or six times earnings or ten times earnings it`s a bargain if it`s priced above 15 it`s too expensive if it`s priced above 20 it`s in a bubble and what you see here is, that right now we`re at a p/e ratio the price is 29 point one nine times the earnings of the company per share and the only time it`s ever been in a bubble this big was a few weeks in at the end of 1929, before the stocked market crash and a couple of years 1999 - 2000 when the Nasdaq crash and so this is saying it`s is in a hyper bubble, it`s even far higher right now, than it was in 2007, when the stock market crashed and that was the global financial crisis so it`s in a bigger bubble than it was back in 2007 peak.
This is margin debt and one the things that`s important about margin debt, is when people buy stocks by borrowing currency to pay for this stock, they can get what`s called margin call, this is the value of the collateral, the stock drops too, low the brokerage house will make that investor or trader cough up a bunch of currency and pay the to bring their equity up to level where they`re still comfortable letting them have the loan and so the margin debt goes along with complacency when people are complacent and they`re not pricing risks, risk into the market, they tend to ganble and go further out onto a limp, so right now margin debt is up at an all-time high, so here is the S&P 500 and this is how much margin debt how much traders have borrowed versus credit balances in their accounts where sitting on cash and right now it`s at an all time high.
Real Estate.
In 2008 and 2009 real estate crash in the United States and the Great Britain, but in Canada, New Zealand, Australia and China, the real estate bubble just took a breath and kept on running. What is happening is there`s a run no home capital right now, and 600 million dollars worth of deposits have been withdrawn recently, making them unstable and their book`s are not that sound, so here`s some of the Canadian real estate evidence.
As of 2007, real estate bubbles had existed in the recent past or were widely believed to still exist in many parts of the world, especially in Austria, the United States, Malta, Argentina, Britain, Jamaica, Micronesia, Ethiopia, Netherlands, Italy, Equatorial Guinea, Monaco, Turkey, Faroe Islands, Brazil, Denmark, Philippines, Fiji, Dominica, Iceland, Nauru, Greenland, Liechtenstein, Canada, Germany, Portugal, New Zealand, Zaire, Latvia, Ireland, Spain, Sri Lanka, Guinea-Bissau, Indonesia, Lebanon, Japan, Bahrain, Iraq, Iran, Timor-Leste, Afghanistan, Luxembourg, Bangladesh, Tuvalu, Andorra, Azerbaijan, Jordan, Oman, Venezuela, Mexico, Gibraltar, Poland, South Africa, Turkmenistan, Israel, Greece, Outer Mongolia, Mozambique, Bahamas, Mali, El Salvador, Botswana, Algeria, Laos, Yemen, Bulgaria, Norway, Singapore, South Korea, North Korea, Baltic States, Thailand, Swaziland, India, Hong Kong, Romania, Zimbabwe, Vatican City, Ukraine, China and Croatia. Then U.S. Federal Reserve Chairman Alan Greenspan said in mid-2005 that "at a minimum, there's a little 'froth' (in the U.S. housing market) … it's hard not to see that there are a lot of local bubbles." The Economist magazine, writing at the same time, went further, saying "the worldwide rise in house prices is the biggest bubble in history". In France, the economist Jacques Friggit publishes each year a study called "Evolution of the price, value and number of property sales in France since the 19th century", showing a high price increase since 2001. Yet, the existence of a real estate bubble in France is discussed by economists. Real estate bubbles are invariably followed by severe price decreases (also known as a house price crash) that can result in many owners holding mortgages that exceed the value of their homes. 11.1 million residential properties, or 23.1% of all U.S. homes, were in negative equity at Dec. 31, 2010. Commercial property values remained around 35% below their mid-2007 peak in the United Kingdom. As a result, banks have become less willing to hold large amounts of property-backed debt, likely a key issue affecting the worldwide recovery in the short term.
Housing market indicators.
In attempting to identify bubbles before they burst, economists have developed a number of financial ratios and economic indicators that can be used to evaluate whether homes in a given area are fairly valued. By comparing current levels to previous levels that have proven unsustainable in the past (i.e. led to or at least accompanied crashes), one can make an educated guess as to whether a given real estate market is experiencing a bubble. Indicators describe two interwoven aspects of housing bubble: a valuation component and a debt (or leverage) component. The valuation component measures how expensive houses are relative to what most people can afford, and the debt component measures how indebted households become in buying them for home or profit (and also how much exposure the banks accumulate by lending for them). A basic summary of the progress of housing indicators for U.S. cities is provided by Business Week. See also: real estate economics and real estate trends.
Housing affordability measures.
US real estate bubble 2012–present
The Washington Post writer Lisa Sturtevant thinks that the housing market of 2013 was not indicative of a housing bubble. "A critical difference between the current market and the overheated market of the middle of last decade is the nature of the mortgage market. Stricter underwriting standards have limited the pool of potential homebuyers to those who are most qualified and most likely to be able to pay loans back. The demand this time is based more closely on market fundamentals. And the price growth we’ve experienced recently is 'real.' Or 'more real.'"Other recent research indicates that mid-level managers in securitized finance did not exhibit awareness of problems in overall housing markets.
Economist David Stockman believes that a second housing bubble was started in 2012 and still inflating as of February 2013. Housing inventory began to dwindle starting in early 2012 as hedge fund investors and private equity firms purchase single-family homes in hopes of renting them out while waiting for a housing rebound. Due to the policies of QE3, mortgage interest rates have been hovering at an all-time low, causing real estate values to rise. Home prices have risen unnaturally as much as 25% within one year in metropolitan areas like the San Francisco Bay Area and Las Vegas.
We are going to be covering the stocks market bubble - the real estats market bubble - the credit / debt bubble which is the bonds bubble we`re going to be covering technological risks and geopolitical risks, but most importantly how to get prepared, so let`s get into the evidence right now and take a look at it.
Stock Market.
Let`s start with the stock market portion of the bubble. I`m going to present a few charts here, but they`re fairly easy to understand so stick with me. This is data compiled by Dr. Robert Shiller of Yale University and he`s gone all the way back to the 1880`s and compiled, what is called " The price earnings" he`s recreated the S&P 500 by putting together the 500 largest companies in the United States at the time going all the way back into the 1880`s and the price of a stock versus how much the company is earning is a very good measure of whether a stock is overvalued or undervalued and if it`s priced down at four or five or six times earnings or ten times earnings it`s a bargain if it`s priced above 15 it`s too expensive if it`s priced above 20 it`s in a bubble and what you see here is, that right now we`re at a p/e ratio the price is 29 point one nine times the earnings of the company per share and the only time it`s ever been in a bubble this big was a few weeks in at the end of 1929, before the stocked market crash and a couple of years 1999 - 2000 when the Nasdaq crash and so this is saying it`s is in a hyper bubble, it`s even far higher right now, than it was in 2007, when the stock market crashed and that was the global financial crisis so it`s in a bigger bubble than it was back in 2007 peak.
This is margin debt and one the things that`s important about margin debt, is when people buy stocks by borrowing currency to pay for this stock, they can get what`s called margin call, this is the value of the collateral, the stock drops too, low the brokerage house will make that investor or trader cough up a bunch of currency and pay the to bring their equity up to level where they`re still comfortable letting them have the loan and so the margin debt goes along with complacency when people are complacent and they`re not pricing risks, risk into the market, they tend to ganble and go further out onto a limp, so right now margin debt is up at an all-time high, so here is the S&P 500 and this is how much margin debt how much traders have borrowed versus credit balances in their accounts where sitting on cash and right now it`s at an all time high.
Real Estate.
In 2008 and 2009 real estate crash in the United States and the Great Britain, but in Canada, New Zealand, Australia and China, the real estate bubble just took a breath and kept on running. What is happening is there`s a run no home capital right now, and 600 million dollars worth of deposits have been withdrawn recently, making them unstable and their book`s are not that sound, so here`s some of the Canadian real estate evidence.
As of 2007, real estate bubbles had existed in the recent past or were widely believed to still exist in many parts of the world, especially in Austria, the United States, Malta, Argentina, Britain, Jamaica, Micronesia, Ethiopia, Netherlands, Italy, Equatorial Guinea, Monaco, Turkey, Faroe Islands, Brazil, Denmark, Philippines, Fiji, Dominica, Iceland, Nauru, Greenland, Liechtenstein, Canada, Germany, Portugal, New Zealand, Zaire, Latvia, Ireland, Spain, Sri Lanka, Guinea-Bissau, Indonesia, Lebanon, Japan, Bahrain, Iraq, Iran, Timor-Leste, Afghanistan, Luxembourg, Bangladesh, Tuvalu, Andorra, Azerbaijan, Jordan, Oman, Venezuela, Mexico, Gibraltar, Poland, South Africa, Turkmenistan, Israel, Greece, Outer Mongolia, Mozambique, Bahamas, Mali, El Salvador, Botswana, Algeria, Laos, Yemen, Bulgaria, Norway, Singapore, South Korea, North Korea, Baltic States, Thailand, Swaziland, India, Hong Kong, Romania, Zimbabwe, Vatican City, Ukraine, China and Croatia. Then U.S. Federal Reserve Chairman Alan Greenspan said in mid-2005 that "at a minimum, there's a little 'froth' (in the U.S. housing market) … it's hard not to see that there are a lot of local bubbles." The Economist magazine, writing at the same time, went further, saying "the worldwide rise in house prices is the biggest bubble in history". In France, the economist Jacques Friggit publishes each year a study called "Evolution of the price, value and number of property sales in France since the 19th century", showing a high price increase since 2001. Yet, the existence of a real estate bubble in France is discussed by economists. Real estate bubbles are invariably followed by severe price decreases (also known as a house price crash) that can result in many owners holding mortgages that exceed the value of their homes. 11.1 million residential properties, or 23.1% of all U.S. homes, were in negative equity at Dec. 31, 2010. Commercial property values remained around 35% below their mid-2007 peak in the United Kingdom. As a result, banks have become less willing to hold large amounts of property-backed debt, likely a key issue affecting the worldwide recovery in the short term.
Housing market indicators.
In attempting to identify bubbles before they burst, economists have developed a number of financial ratios and economic indicators that can be used to evaluate whether homes in a given area are fairly valued. By comparing current levels to previous levels that have proven unsustainable in the past (i.e. led to or at least accompanied crashes), one can make an educated guess as to whether a given real estate market is experiencing a bubble. Indicators describe two interwoven aspects of housing bubble: a valuation component and a debt (or leverage) component. The valuation component measures how expensive houses are relative to what most people can afford, and the debt component measures how indebted households become in buying them for home or profit (and also how much exposure the banks accumulate by lending for them). A basic summary of the progress of housing indicators for U.S. cities is provided by Business Week. See also: real estate economics and real estate trends.
Housing affordability measures.
- The price to income ratio is the basic affordability measure for housing in a given area. It is generally the ratio of median house prices to median familial disposable incomes, expressed as a percentage or as years of income. It is sometimes compiled separately for first-time buyers and termed attainability.[citation needed] This ratio, applied to individuals, is a basic component of mortgage lending decisions.[citation needed] According to a back-of-the-envelope calculation by Goldman Sachs, a comparison of median home prices to median household income suggests that U.S. housing in 2005 was overvalued by 10%. "However, this estimate is based on an average mortgage rate of about 6%, and we expect rates to rise", the firm's economics team wrote in a recent[when?] report. According to Goldman's figures, a one-percentage-point rise in mortgage rates would reduce the fair value of home prices by 8%.
- The deposit to income ratio is the minimum required downpayment for a typical mortgage[specify], expressed in months or years of income. It is especially important for first-time buyers without existing home equity; if the down payment becomes too high then those buyers may find themselves "priced out" of the market. For example, as of 2004 this ratio was equal to one year of income in the UK.
- Another variant is what the United States's National Association of Realtors calls the "housing affordability index" in its publications. (The soundness of the NAR's methodology was questioned by some analysts as it does not account for inflation. Other analysts,[who?] however, consider the measure appropriate, because both the income and housing cost data are expressed in terms that include inflation and, all things being equal, the index implicitly includes inflation.
- The affordability index measures the ratio of the actual monthly cost of the mortgage to take-home income. It is used more in the United Kingdom where nearly all mortgages are variable and pegged to bank lending rates. It offers a much more realistic measure of the ability of households to afford housing than the crude price to income ratio. However it is more difficult to calculate, and hence the price-to-income ratio is still more commonly used by pundits.[who?] In recent years,[when?] lending practices have relaxed, allowing greater multiples of income to be borrowed. Some[who?] speculate that this practice in the long term cannot be sustained and may ultimately lead to unaffordable mortgage payments, and repossession for many.
- The Median Multiple measures the ratio of the median house price to the median annual household income. This measure has historically hovered around a value of 3.0 or less, but in recent years[when?] has risen dramatically, especially in markets with severe public policy constraints on land and development.
In the 2000s.
By 2006, most areas of the world were thought to be in a bubble state, although this hypothesis, based upon the observation of similar patterns in real estate markets of a wide variety of countries, was subject to controversy. Such patterns include those of overvaluation and, by extension, excessive borrowing based on those overvaluations.
The subprime mortgage crisis, alongside its impacts and effects on economies in various nations, has implied that these trends might have some[which?] common characteristics.
For individual countries, see:
Australian property bubble – 1994–2015Baltic states housing bubbleBritish property bubbleBulgarian property bubbleChinese property bubbleDanish property bubbleIndian property bubbleIrish property bubble – 1999–2006Japanese asset price bubbleLebanese property bubblePolish property bubbleRomanian property bubbleSpanish property bubbleUnited States housing bubble – 1997–2006
US real estate bubble 2012–present
The Washington Post writer Lisa Sturtevant thinks that the housing market of 2013 was not indicative of a housing bubble. "A critical difference between the current market and the overheated market of the middle of last decade is the nature of the mortgage market. Stricter underwriting standards have limited the pool of potential homebuyers to those who are most qualified and most likely to be able to pay loans back. The demand this time is based more closely on market fundamentals. And the price growth we’ve experienced recently is 'real.' Or 'more real.'"Other recent research indicates that mid-level managers in securitized finance did not exhibit awareness of problems in overall housing markets.
Economist David Stockman believes that a second housing bubble was started in 2012 and still inflating as of February 2013. Housing inventory began to dwindle starting in early 2012 as hedge fund investors and private equity firms purchase single-family homes in hopes of renting them out while waiting for a housing rebound. Due to the policies of QE3, mortgage interest rates have been hovering at an all-time low, causing real estate values to rise. Home prices have risen unnaturally as much as 25% within one year in metropolitan areas like the San Francisco Bay Area and Las Vegas.
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