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‘Listen Up!’ Albert Edwards Wants To Talk To You About Bubbles
Why did markets bounce on Wednesday after initially sinking to day lows when the Fed revealed that despite lackluster incoming inflation data, a December hike is still the expectation?
Simple. Because Janet Yellen made it clear that the committee doesn't intend to stand idly by in the event the bubbles they've spent years inflating burst in dramatic fashion.
"Clearly the reason for the initial selloff in risk assets was the near-term hawkish shift, while the rebound was driven by Janet Yel
I love a bearish narrative as much as the next girl, but that first chart is truly dumb. UK consumer credit absolutely cratered between 2008-2013, so it’s not really a shocker that we are seeing high growth rates now, coming out of the worst crisis in the post-war era. The nominal level of consumer credit is only now back to the level seen just before the crisis. Funnily enough, the FT and Edwards cherry pick the start date of their chart to be around the trough in consumer credit outstanding. Funny that…
Since 2008, gross disposable income – which you should really scale credit oustanding for, because, you know, people do make money to pay off that debt – has grown a cumulative 20% or thereabouts. So, if credit oustandting has net not grown since 2008, or only barely grown, and income has grown 20%, guess what? The ratio of credit to income has gone down! Math is magic.
Indeed, when scaling credit for gross income, we are actually nowhere close to the levels seen before the crisis. That ratio is now growing, but we’re only back to where we were in 2002, well before the pre-crisis excesses were at their worst. But everybody’s favourite perma-bear probably didn’t want to hear that when he went a-huntin’ for charts…
what does it look like if you scale it to median income? with most of the income gains going to the top 5%, and most consumer debt going to the masses, comparing gross debt to gross income can give a benign appearance. income gains vs increase in consumer debt per income decile would be more interesting and allow us to see how many people are experiencing greater affordability.
Albert my good fellow just come out and say it, “We are already dead debt walking”. The fiat bubbles are immense and every semi-intelligent central banker knows it, it’s all the people they supposedly serve that are the dupes who are going to be responsible for their folly. So the question has to be asked, who do they serve?