Thursday, March 3, 2016

Bill Gross must be reading my blog on weekends.

Bill Gross is out today saying that the banks are "permanently damaged" because the decades long growth of credit has peaked.  His expectation is that bank profits will fall back to look more like a utility company.  In other words, the go-go days of Wall St finance are likely over and we should look to a return to the days of the glassy eyed 1950's banker going forward.  Good credit is going to matter once again.  Savings are going to matter once again.  I wrote about many of these things over the past several years in posts like this one which contained the chart below. 

That post was penned in 2013.  I wrote, "The global economy is rapidly approaching a major turning point.  I don't know if it will be a mania collapse or if this is just wave 5 of 1 coming to an end, but by around 2016 I expect a major change of the global credit markets to be sinking in...".  That was a very good post IMO and everyone should take a few minutes to be sure they have read it.

Fast forward to today.  The chart has continued upwards as expected but we should be very near peak credit at this point according to my updated wave count below.  When credit dies, the economic Ponzi will begin to collapse.  Greenspan might wonder how things have bubbled up like they have for as long as they have but my models say that he won't have to wait much longer.

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