Most importantly, China’s debt binge was taken up in record time; soaring by over 2,000% in the past 18 years. And this earth shattering debt spree wasn’t used to generate productive assets. Rather, it was the non-productive, state-directed variety, which now requires a constant stream of new debt to pay off the maturing debt. Therefore, the schizophrenic communist party is caught between the absolute need to deleverage the economy; and at the same time, trying to maintain the growth mirage with additional stimulus measures.

The Housing Market Crash of 2007 was the worst housing crash in U.S. history. The Housing Market Crash of 2007 was the cause of the financial crisis. This nearly caused the U.S. to experience another depression like the Great Depression. There are a number of things we can look at to determine how the housing bubble occurred and what happened to cause the bubble to collapse.

Finally, once you feel you've got a portfolio that will provide sufficient gains during rising markets and enough protection during routs so you'll be able to hang on until the eventual recovery, stick with that mix, except for occasional rebalancing, regardless of what's going on in the market. The idea is to make sure your portfolio doesn't become too aggressive during market upswings or too conservative when stocks take a hit.
A stock market anomaly, the major market indexes dropped by over 9% (including a roughly 7% decline in a roughly 15-minute span at approximately 2:45 p.m., on May 6, 2010)[68][69] before a partial rebound.[8] Temporarily, $1 trillion in market value disappeared.[70] While stock markets do crash, immediate rebounds are unprecedented. The stocks of eight major companies in the S&P 500 fell to one cent per share for a short time, including Accenture, CenterPoint Energy and Exelon; while other stocks, including Sotheby's, Apple Inc. and Hewlett-Packard, increased in value to over $100,000 in price.[7][71][72] Procter & Gamble in particular dropped nearly 37% before rebounding, within minutes, back to near its original levels. The drop in P&G was broadcast live on CNBC at the time, with commentator Jim Cramer commenting:
DSP Mutual Fund sold Dewan Housing bonds this week to boost its cash holdings before an expected tightening of market liquidity in September, Kalpen Parekh, president of DSP, said in an interview. The firm sold 3 billion rupees ($41.6 million) of the bonds to express “our interest view, not a credit view,” Parekh said. “This has been done across issuers over last few days.”
In a 2011 article that appeared on the Wall Street Journal on the eve of the anniversary of the 2010 "flash crash", it was reported that high-frequency traders were then less active in the stock market. Another article in the journal said trades by high-frequency traders had decreased to 53% of stock-market trading volume, from 61% in 2009.[81] Former Delaware senator Edward E. Kaufman and Michigan senator Carl Levin published a 2011 op-ed in The New York Times a year after the Flash Crash, sharply critical of what they perceived to be the SEC's apparent lack of action to prevent a recurrence.[82]

The critical point where bubbles end happens as investors begin to think that the rally is over. It is when this opinion travels deep into the system and becomes generalized that the system ends up in a crash. The paradox here is that a crash is often (and mistakenly) characterized as “market chaos.” In fact, it is the opposite: a crash reflects a highly ordered market, when everyone does the same thing (i.e. sell). A truly “chaotic” market is one where everyone is doing something different, interactions offset each other and price volatility remains low.


The benchmark S&P BSE Sensex swung from a 1 percent gain to a drop of as much as 3 percent -- its wildest intraday move in more than four years -- before closing with a 0.8 percent loss. Friday’s declines showed that investors remain jittery about Indian financial shares after a recent default by Infrastructure Leasing & Financial Services Ltd. shook confidence in the sector.
The last week of January 2018 and the first week of February 2018, the Dow Jones dropped several hundred points. It looks to close out February 2 down hundreds of points, with other indexes (S&P 500, NASDAQ) to follow. While this may seem like a crisis, it is more than likely to reflect short-term investors taking their profits (in the long run up to this point) and shuffling them to other types of investments to prepare for improved bond yields.
But you should also crunch a few numbers and then do a little soul searching. Estimate how Vanguard's suggested mix would have performed during the late 2007-through-early 2009 slump, when stock prices declined nearly 60% in value and investment-grade bonds gained about 7%. If you think you would cave and begin selling in the face of such a loss, you might want to dial back your target stock position a bit.
AE good tip, and believe me I do Trek where the the Grizzlies Roam. I always carry a big sidearm and considered myself to be rather macho, but after watching serveral videos on bear attacks, I will still carry my gun but Bear Pepper Spray will be my first defense. Bear Spray may also be the best way to go when facing 4 federal agents at your front door, probably more affective and if and when they get you, there will be no murder charge against you. And BTW I just killed a big black bear with my bow. Trekker Out.
I live in a housing bubble market with everyone attempting to buy at sky high prices. I bought 4.5 years ago, and am looking at selling for over a 100% gain in that amount of time. Yes attempting to sit on the sidelines waiting for the market to change may not seem the best, but rather than being intent on jumping back into the poker game because you like the action, take your earnings off the table. Markets can remain irrational for exuberant amounts of time, but you have to weigh it out. At the moment a 30% retrace would mean I lose $140,000 worth of equity currently available. I’ll rather that liquidity in the bank any day over paying the mortgage of an asset still owned by a lender, which to me is a liability.
What is commercial paper ? Commercial paper is a money - market security issued by large corporations to obtain funds to meet short-term debt obligations and is backed only by an issuing bank or company promise to pay the face amount on maturity date specified on the note . Since it is not backed by collateral , only firm with excellent credit ratings from a recognised credit rating agency will be able to sell their commercial papers at reasonable price .Commercial paper is usually sold at a discount from face value , and generally carries lower interest repayment rates than bonds due to shorter maturities of commercial paper .
Or it may not be. Think about it. Doomsayers have pointed to any number of reasons in recent years why they believed the market was headed for a downturn: Standard & Poor's downgrading of U.S. Treasury debt in 2011; the growth-slowdown scare in China that sent stock prices down 12% in the summer of 2015; Brexit and the election of Donald Trump, both of which were supposed to be catalysts for a market rout. But none of these warnings panned out.
But you should also crunch a few numbers and then do a little soul searching. Estimate how Vanguard's suggested mix would have performed during the late 2007-through-early 2009 slump, when stock prices declined nearly 60% in value and investment-grade bonds gained about 7%. If you think you would cave and begin selling in the face of such a loss, you might want to dial back your target stock position a bit.
Housing supply is also an important dynamic to consider when looking at a then-and-now analysis of the housing market. Since mortgages were being given out with little regard to the borrower’s ability to pay back the loan, new home building skyrocketed to meet the new demand. In 2005, new home sales hit a 52 year high with 1.28 million new homes being built. Ten years later, only 500,000 new homes were constructed, dropping 61 percent from the peak ten years prior. An overall lack of inventory continues to be a driver in price appreciation.
“Big surprise and a shock to me. Sitting on strong liquidity position. We have been extremely conservative in maintenance of liquidity. There is no default whatsoever. The repayments are not even due yet. There is ample liquidity lying with us in the system to take care of interest as well as the principle payouts over the next couple of quarters. All this what we are seeing is panic-stricken market reaction. Total liability position till 31 March is just Rs 4,800 crore; obviously there is some amount of CP that is there in the system, but it’s not a very big amount. At the same time there is close to Rs 10,000 crore of liquidity available with us in the system other than collections that we accrue on a monthly basis. Those collections are anywhere between 2500-3000 crore. Not to go on a pledge shares; no loan against shares NPA position is strong; asset quality is top notch,” Kapil Wadhawan, MD, DHFL told CNBC TV 18.
1st, sorry you lost your home. That said, had you read your loan documents you’d have seen the language advising you that loans are bought and sold on the secondary market all the time and the originator did not NEED your permission to do so. The sale of your loan to another bank, investor, Fannie, etc., had no effect on your payment, interest rate, term, etc. So the sale of your loan, regardless of how many times it was repackaged and sold, did not cause you to lose your house. If along the way the new holder of your “note” did not have an auto pay option, that was up to you follow up on and find out exactly HOW/WHERE they wanted you to make your payment. Again, sorry you lost your home, but the sale of mortgage backed securities (your loan) has no effect on the Payor (you) as terms cannot be altered (now THATS something they would need your approval on). The only way an eventual noteholder could foreclose on you is if you failed to make your payments as required…Did you stop making payments for some reason? A lot of good people got hurt in the crisis but there seems to be more to this than a repeated sale of the original note…I’ve been in my present home 26 years, have had several mortgages sold and sold again with no issues…most important thing is to confirm with your present lender that they had, in fact sold your note and the party telling you they now own your note are, in fact, who they say they are. Best of luck.
In 2013, the stock market finally recovered. In the first six months, it gained more points than in any year on record. Stock prices rose faster than earnings, creating an asset bubble. The Dow set over 250 closing records until February 2018. Fears of inflation and higher interest rates almost sent the Dow into a correction. Like many other past stock market crashes, it did not lead to a recession.
6750 ft up on top of a mountain lends some perspective that’s for sure, The quiet is great for the sole. We still have to work during the week. On the weekends we work for ourselves, gathering firewood learning how to grow food etc. Freedom at least for me is eliminating the need for outside inputs. We have just enough solar power to be comfortable running our house. Woodstove for heat, well for our water. Growing some vegetables for food. Every year is easier than the year before.
— The Big Picture is Being Obscured By Short-Term Fears. "Animal Spirits" are ruling the stock market. Millions of investors are afraid that the torrent of cash created by low interest rates, hefty piles of corporate reserves and even more giveaways in the new U.S. tax code won't be enough to juice up a world economy (outside of the developing world) that may be slowing down.

“My view is that the markets are extremely overvalued, and can fall even 2,000 points from here. (Sensex). The Nifty can correct by about 1,000 points. Nothing has changed fundamentally, I mean we have the same macro-economic situation, etc, but when a sell-off happens, nobody can predict. Financials, especially NBFCs are overvalued,” Rajat Sharma, founder, Sana Securities told FE Online.


Solid advice, but investors should broaden their horizons to encompass digital currency, as the fallacy of global fiat currency is insane in the social media world we live in today.  Trust in the government is eroding, as is the reporting needed to only use a dollar denominated unit of measure in a world where block chain and liquid, easy to use Bitcoins are in your digital wallet and you can buy anything from an airline ticket to a car on auction on eBay.
Interesting points. To say a 2 billion dollar a day trade deficit is meaningless might be understating it. Running trade deficits every year is dangerous and leads to the recession you’re fearing. It’s the trade policies that make it happen. The global economy was highly dependent on US willing to run huge trade deficits and Europe and China are undergoing withdrawal problems.
The latest swoon, which knocked the S&P 500 down more than 3 percent Wednesday, signaled to many Wall Street pros that the decline was entering a new, more dangerous phase. There’s growing concern now that this decline is more than a garden variety pullback, or drop of 5 percent to 9.99 percent, and could morph into a drop of 10 percent of more for the broad market.
“Do you remember how fragile the world seemed in 2008 when banks were collapsing and the stock market was in free fall? When you pictured the future, did it seem dark and dangerous? Or did it seem like the good times were just around the corner and the party was about to begin? The fact is, once a bear market ends, the following 12 months can see crucial market gains.”
Deanna, yes I did read and write about it actually. It’s horrible for Californians. Brown’s lack of hope, imagination, and entrepreneurialism reflects what’s happened in the US in the last 30 years. If it doesn’t benefit the multinationals, you’ll see neglect, and “water opportunity” is just scorned. Whoever solves California’s water problem will be a Trillionaire many times over!
No definitive conclusions have been reached on the reasons behind the 1987 Crash. Stocks had been in a multi-year bull run and market P/E ratios in the U.S. were above the post-war average. The S&P 500 was trading at 23 times earnings, a postwar high and well above the average of 14.5 times earnings.[29] Herd behavior and psychological feedback loops play a critical part in all stock market crashes but analysts have also tried to look for external triggering events. Aside from the general worries of stock market overvaluation, blame for the collapse has been apportioned to such factors as program trading, portfolio insurance and derivatives, and prior news of worsening economic indicators (i.e. a large U.S. merchandise trade deficit and a falling U.S. dollar, which seemed to imply future interest rate hikes).[30]
This year’s rate rises however are a bit alarming as this graphic shows — 70% in the last year. When you consider that such rises always accompany recessions, it’s no surprise to see a stock market correction or pullback and even a housing market slide. To investors, this scenario doesn’t look good. It can affect stock prices and discourage investment in new US businesses.
Some of this volatility reflects the uncertainty that switching the White House between two major parties always provides, but it also demonstrates how global markets see a Trump administration as unpredictable, unmoored, and even dangerous. Investors seeking safer investments turned to the stability of bonds, precious metals, and even cash while they wait to see what will come.

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During the 1920s, the U.S. stock market underwent rapid expansion, reaching its peak in August 1929, after a period of wild speculation. By then, production had already declined and unemployment had risen, leaving stocks in great excess of their real value. Among the other causes of the eventual market collapse were low wages, the proliferation of debt, a struggling agricultural sector and an excess of large bank loans that could not be liquidated.
People who were caught in the 2008 crash are spooked that a 2018 bubble will lead to another crash. But that crash was caused by forces that are no longer present. Credit default swaps insured derivatives such as mortgage-backed securities. Hedge fund managers created a huge demand for these supposedly risk-free securities. That created demand for the mortgages that backed them.
— The Big Picture is Being Obscured By Short-Term Fears. "Animal Spirits" are ruling the stock market. Millions of investors are afraid that the torrent of cash created by low interest rates, hefty piles of corporate reserves and even more giveaways in the new U.S. tax code won't be enough to juice up a world economy (outside of the developing world) that may be slowing down.
Some recent peer-reviewed research shows that flash crashes are not isolated occurrences, but have occurred quite often. Gao and Mizrach studied US equities over the period of 1993–2011. They show that breakdowns in market quality (such as flash crashes) have occurred in every year they examined and that, apart from the financial crisis, such problems have declined since the introduction of Reg NMS. They also show that 2010, while infamous for the Flash Crash, was not a year with an inordinate number of breakdowns in market quality.[11]
Research at the Massachusetts Institute of Technology suggests that there is evidence the frequency of stock market crashes follows an inverse cubic power law.[15] This and other studies such as Prof. Didier Sornette's work suggest that stock market crashes are a sign of self-organized criticality in financial markets.[16] In 1963, Mandelbrot proposed that instead of following a strict random walk, stock price variations executed a Lévy flight.[17] A Lévy flight is a random walk that is occasionally disrupted by large movements. In 1995, Rosario Mantegna and Gene Stanley analyzed a million records of the S&P 500 market index, calculating the returns over a five-year period.[18] Researchers continue to study this theory, particularly using computer simulation of crowd behaviour, and the applicability of models to reproduce crash-like phenomena.
After October 29, 1929, stock prices had nowhere to go but up, so there was considerable recovery during succeeding weeks. Overall, however, prices continued to drop as the United States slumped into the Great Depression, and by 1932 stocks were worth only about 20 percent of their value in the summer of 1929. The stock market crash of 1929 was not the sole cause of the Great Depression, but it did act to accelerate the global economic collapse of which it was also a symptom. By 1933, nearly half of America’s banks had failed, and unemployment was approaching 15 million people, or 30 percent of the workforce.
The crash followed an asset bubble. Since 1922, the stock market had gone up by almost 20 percent a year. Everyone invested, thanks to a financial invention called buying "on margin." It allowed people to borrow money from their broker to buy stocks. They only needed to put down 10-20 percent. Investing this way contributed to the irrational exuberance of the Roaring Twenties.
On October 31, Halloween, children and adults alike enjoy playing with the frightful themes of death surrounding the feast’s mixture of Christian All Saints’ Day and Celtic pagan origins. But, in 2017, if you are one of millions of people who have investments, here’s something all too real and scary to rob you of your sleep. This Warren Buffett Indicator predicts a stock market crash in 2018.
The mid-1980s were a time of strong economic optimism. From August 1982 to its peak in August 1987, the Dow Jones Industrial Average (DJIA) grew from 776 to 2722. The rise in market indices for the 19 largest markets in the world averaged 296 percent during this period. The average number of shares traded on the NYSE(New York Stock Exchange) had risen from 65 million shares to 181 million shares.[26]
After a one-day recovery on October 30, where the Dow regained an additional 28.40 points, or 12 percent, to close at 258.47, the market continued to fall, arriving at an interim bottom on November 13, 1929, with the Dow closing at 198.60. The market then recovered for several months, starting on November 14, with the Dow gaining 18.59 points to close at 217.28, and reaching a secondary closing peak (i.e., bear market rally) of 294.07 on April 17, 1930. The following year, the Dow embarked on another, much longer, steady slide from April 1931 to July 8, 1932, when it closed at 41.22—its lowest level of the 20th century, concluding an 89 percent loss rate for all of the market's stocks.
The increase in internet trading also led to the crash of 2000. The internet served an easy access to trading for a lot of traders who lacked the required experience. Their trial and error methods of trading lead to losses in the stock trading market. Another supposed reason is that the research firms had a conflict of interest. The investment bankers had the research firms put not so honest ratings on the stocks, thus leading to an overall loss of wealth in the market.

One of the reasons Warren Buffett’s predictions tend to have more weight is that they’re less based on outright fortune telling and more on a series of clear indicators. In other words, the Warren Buffett Indicator works like a barometer. It does not predict rain, per se, but it does tell you whether you should look for an umbrella in the closet to keep it handy for the next day.

In late 1985 and early 1986, the United States economy shifted from a rapid recovery from the early 1980s recession to a slower expansion, resulting in a brief "soft landing" period as the economy slowed and inflation dropped. The stock market advanced significantly, with the Dow peaking in August 1987 at 2,722 points, or 44% over the previous year's closing of 1,895 points. Further financial uncertainty may have resulted from the collapse of OPEC in early 1986, which led to a crude oil price decrease of more than 50% by mid-1986.[2]

Sixth, Europe, too, will experience slower growth, owing to monetary-policy tightening and trade frictions. Moreover, populist policies in countries such as Italy may lead to an unsustainable debt dynamic within the eurozone. The still-unresolved “doom loop” between governments and banks holding public debt will amplify the existential problems of an incomplete monetary union with inadequate risk-sharing. Under these conditions, another global downturn could prompt Italy and other countries to exit the eurozone altogether.
Is funny, the tropical depression is well away from us but we are getting an extremely wet weather system over the state, they call it an anti-cyclone, whatever that is, all i know is i could use some sunshine, been raining for weeks, only one or two days here and there that didnt rain. Too damn wet, crops rotting in the field, at least the market crops, oh well, such is life as a farmer!
Hi Aaron, so nice to hear from someone from Nebraska. I see how prices are rising fast again this summer. I’m wondering that with few listings, what kind of home would you get if you bought this year? Could you find a real gem? The US economy will grow so prices in Omaha are likely to rise strongly. Soybean prices are way down, there’s a lot of risk for 2018/2019? I suspect rent until you’re sure is the best advice. Good luck with your decision!
The 2000 stock market crash resulted in a loss of almost $8 trillion of wealth. So what must be the reason for the crash? As has been deduced by market experts, the corporate corruption is believed to be a major reason for the crash to occur. Lots of multinational companies had been drawing profits by engaging in illegal means and frauds. The accounts that they maintained had serious loopholes and the debts were not shown. The stock options that the officers took worked towards diluting the companies. Another probable reason for the 2000 stock market crash was the overvaluation of the stocks and the dot-com bubble burst. Even the companies that had absolutely no hope of earning profits and were consistently losing money had a market capitalization of more than a billion dollar. The stock trading was going on the P/E basis.
Thank you Andrea, you’re welcome! Amazing, and a beautfiul area to live. I’d like to drill down into all the LA communities. Incredible that your home appreciated that much over 2 years. Could you get a quote on the rental income upgrade and compare ROI? Are there local restrictions? I think selling is the right move for most, even if you don’t have an idea of where to move to right now. I guess it depends on your financial status and whether you need your jobs and whether you can take a sabbatical. If you hold on for the time it takes to the convert the garage, you could earn another 100k? The demand for rentals is expected to persist. A lot of buyers will like that separate living space even if they don’t rent it out. Are the rentals you could live with reasonably priced in your area of South Bay or will you have to do the long commute?
In 2011 trades by high-frequency traders accounted for 28% of the total volume in the futures markets, which included currencies and commodities, an increase from 22% in 2009. However, the growth of computerized and high-frequency trading in commodities and currencies coincided with a series of "flash crashes" in those markets. The role of human market makers, who match buyers and sellers and provide liquidity to the market, was more and more played by computer programs. If those program traders pulled back from the market, then big "buy" or "sell" orders could have led to sudden, big swings. It would have increased the probability of surprise distortions, as in the equity markets, according to a professional investor.[citation needed] In February 2011, the sugar market took a dive of 6% in just one second. On March 1, 2011, cocoa futures prices dropped 13% in less than a minute on the Intercontinental Exchange. Cocoa plunged $450 to a low of $3,217 a metric ton before rebounding quickly. The U.S. dollar tumbled against the yen on March 16, 2011, falling 5% in minutes, one of its biggest moves ever. According to a former cocoa trader: ' "The electronic platform is too fast; it doesn't slow things down" like humans would. '[81]
Global cues: The subdued Asian markets have also weighed on market sentiment. Brokers said weakness was seen in most Asian markets as high US yield and good economic data led to fear that investors would move to the US, dampened trading sentiments there. Japan's Nikkei was trading 0.46 per cent down at 23,999 as investors took profit from its recent rally to a 27-year high. Meanwhile, Hong Kong's Hang Seng dipped over 1.50 per cent at 26,628.64.
Buffett is being optimistic. In fact, if history can offer any lessons, note that the Dow Jones 100 years ago, in 1917, stood at 1,328 points. That would be less than 20 times the current number. But Buffett probably doesn’t have to worry too much about the events that may or may not occur in the 22nd century. Now, as far as the present is concerned, you can be sure that Buffett chooses his words and predictions more carefully, as it were.

For example, the United States has a set of thresholds in place to guard against crashes. If the Dow Jones Industrial Average (DJIA) falls 2,400 points (threshold 2) before 1:00 p.m., the market will be frozen for an hour. If it falls below 3,600 points (threshold 3), the market closes for the day. Other countries have similar measures in place. The problem with this method today is that if one stock exchange closes, shares can often still be bought or sold in other exchanges, which can cause the preventative measures to backfire.


There are numerous housing crash factors discussed below from geopolitical events to trade related to rising interest rates, the end of stimulus spending, and excessively high home prices.  A trade war with China could be crash factor #1.  Will debt, deficits, and tariff barriers be the issues that start bursting housing bubbles? Will it be political opposition by the democrats and meddling within the US?
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