Friday, November 1, 2019

Commentary: Fears of a financial crisis around corner drive US Fed's rate cuts

The US Fed cut rates for the third time in as many months. This is practically unheard of in a strong economy, says Georgetown University's Andreas Kern.
Read more at https://www.channelnewsasia.com/news/commentary/us-federal-reserve-interest-rate-cut-reasons-crisis-risks-12050810
 (Updated: )



The IMF estimates that half of corporate debt – excluding small businesses – is high risk, or junk rated, which has a much higher chance of default than investment grade debt.

What makes the situation even worse is that US$660 billion of companies’ so-called leveraged debt is held in collateralised loan obligations that have been sold to a variety of investors and financial institutions. 

While this has helped keep rates even lower, a rise in delinquencies and defaults would cause losses in this market as well and a stampede of selling by investors.

---

Posted on :- 30 Nov 2017

Ricky Lim · Singapore
It is thus important to watch out for Trump's "Boom and Bust" budget, fiscal policies (or his "Economic Yo-Yo" policies) - that artificially inflate economic growth (causing a spiking "Boom" for immediate gratification to his voters --- but will cause a sharp correction in the near term causing a sharp downturn correction - a "Bust" --- that will cause US recession --- and have the impact of pulling down the World Economy --- triggering a World Recession --- like in the past.
Like · Reply · 3 mins

Ricky Lim · Singapore
Thus Trump enticing US Congress that has just passed his "Boom and Bust or Yo-Yo" budget policies - must be defeated in the Senate --- and look like it is on the verge of being defeated.

US Senate must stop the irresponsible fiscal budget and pass a responsible budget - for the sake of US and the World that has tight integration with US.
Like · Reply · 1 min

Ricky Lim · Singapore
Ricky Lim ·
Singapore
Ronald Reagan economic policies - start the accumulation of massive debt for US.
"Reagan has tripled the Gross Federal Debt, from $900 billion to $2.7 trillion."

As of July 31 2017, the federal government’s total debt stands at $19.845 trillion. The nation’s debt is now bigger than its gross domestic product, which was an estimated $19.23 trillion.
Net interest payments on the debt are estimated to total $276.2 billion this fiscal year.

This is known as the "Boom and Bust" fiscal policies and financial policies - to reap immediate gratification to please the voters by "inflating economic growth" - but bring economic bust a few years down the road.

The world has experience cyclic "boom and bust" - because of such policies.

Now Trump want to emulate this irresponsible policies - and you say this is good.

Clinton and Obmama --- are the one that have implemented prudent and pragmatic economic policies - not Trump.
Like · Reply · Just now
LikeReply1m

Ricky Lim
Ricky Lim ·
Singapore
Is Trump creating conditions for US to experience another Lehman Brothers collapse in the US financial sector?

The World financial system must be careful in investing in funds coming out from US - or else get caught in the Lehman Brothers 2 saga.
Like · Reply · Just now

Ricky Lim ·
Singapore
Trump drastic cuts in taxes, and boosting rampant spendings - is creating a ballooning fiscal deficit --- and increasing debts for US - and its future generation will have a hard time servicing the debt.

Together with this banking regulation - Trump is creating a condition for financial crisis or meltdown of the past.

Trump don't seems to care about the future - and bend on immeditate gratification.

World Economy and finacial institutions must be careful and watchful of what will come out from Trump financial and fiscal policies --- and not let it drag down in a domino effect of the past.
Like · Reply · Juvst now

Ricky Lim ·
Singapore
Trump don't seems to learn from the lesson of the past - or rather he is indifferent - because it will not affect him now.
The problem will surface later - where he may not even be around - and he couldn't care less.
Like · Reply · Just now

Ricky Lim ·
Singapore
In the past, financial crisis one after another is trigger by such policies - and has recently been ratified and regulation put in place - to prevent such cyclic eruption of financial crisis - after a few years - when it bust after boom.

Now Trump want ot reintroduce this "boom and bust" policies again - and stir the World financial system.
Like · Reply · Just now

ricky l 2 seconds ago
Wonder how can a Country sustain trillion dollars of debt and need to service hundred and billions dollars of debt interest?

Will the Country even able to repay the debt?

Wonder by deregulating the banking sector, will banks and financial institutions again resort to risky investment and put all the investors and depositors money into big risk of default and run-on bank again.
Reply

Ricky Lim ·
Singapore
Trump obviously have forgotten or try to forget the lessons learn from US past finanical crisis :-
(1) US taxpayers money of hundred and hundred billions of dollars are used to prop up US banks and finanical institutions like BOA, JP Morgan, Citibank, AIA, etc - when financial crisis hit from its sub-prime investments in toxic assets. ----- Now Trump want to dismantle the banking regulation - to protect its financial industries.

(2) US Treasury have to borrow trillions of dollars by selling bonds to China, Japan, Saudi - to fund its massive budget deficit. --- Now Trump want to cut its tax in huge percentage, boost its spendings and balloon its debt and widen its budget deficit.

(3) US Treasury have to pump prime its Economy ---- by printing US dollars to repay its debt. ----- Now Trump think that he can do this again if US Economy go into "cyclic boom and bust" cycle --- with Trump risky policies - for immediate gratification but no regards for the future US generations.

--- Can the World not be careful and watchful on what Trump try to do --- and trigger a domino effect on the World financial system in the near future?
Like · Reply · Just now

Ricky Lim ·
Singapore
Analyst have computed that if Trump implement all his economic policies including his wall of America - it will add another $5 trillion debt to the $19.845 trillion in Trump short term in office.

And you say that Trump policies is damn good - or damn goon?

Wait till his children, grandchildren and descendants pay the massive debt accumulated by him for US.
Like · Reply · Just now
LikeReply1m

No comments:

Post a Comment