Everything Bubble

"It's clear as a bell to those who pay attention. The mother of all evil is speculation--leveraged debt. Bottom line: it's borrowing to the hilt. And I hate to tell you this, but it's a bankrupt business model. It won't work. It's systemic, malignant...and it's global."
--Gordon Gekko (Wall Street: Money Never Sleeps)

Ten years after the credit market meltdown, Ron Paul observes that we are not better off economically. In fact, we are worse off.

Huh? With all the positive economic headlines popping up daily, and stock markets just a couple of percent off all time highs, how can we be worse off?

The problem is leverage and debt--leverage and debt that are multiples higher than the leverage and debt of 10 years ago that nearly took down the financial system.

Today's leverage and debt were spawned by the most aggressive central bank monetary policies in the history of the world--as well as by government policies of bailing out all nearly all institutions that, thru their reckless borrowing and lending practices, nearly tanked the system last time.

Whereas during the last cycle easy money and credit poured into the real estate market, this time around easy money and credit has poured into everything. Credit cards, student loans, cars, housing (again), stocks, and, of course, government. As RP notes, "Federal debt is over 21 trillion dollars and expanding at tens of thousands of dollars per second."

What we have is an Everything Bubble. The crisis potential of this Everything Bubble, when it pops, promises to dwarf the meltdown of 10 years ago. The more accurate comp will likely be the Great Depression.