From the article:
Tice worries about credit growth at all levels. The U.S.’s $70 billion current account deficit, he argues, suggests the country can’t afford its standard of living without borrowing from abroad. “I believe that the credit expansion will end in tears,” he says.
In particular, Tice warns about real estate debt. He points to sagging property values in San Diego, Las Vegas and Miami. Stripped of their ability to flip, homeowners in those markets are thus likely to get stuck paying off mortgages based on inflated home prices.
Tice's view is considered the "contrarian" view to the idea that we are entering another bull market. An example of the opposite view is at an NPR story here.
The problem with the NPR report is that it doesn't tell the whole story. (Imagine that, a news report that doesn't tell the whole story!) Because of the falling home prices, there are many people who will not be able to refinance due to the fact that they no longer qualify because of a lack of equity -- or even negative equity.
Then there will be those who will want to sell in order to relocate for employment purposes, who won't be able to sell without a substantial loss.
Then there will be those who will be able to refinance, but who will have to pay the prepayment penalty -- some of whom will probably have to take money out of savings or retirement to finance the refinance.
These situations will have repurcussions several years down the road. Americans are not saving enough. What are they going to rely on when they reach retirement age? Social Security will not be enough. Many companies are getting sold and the retirement funds raided. Other companies are bankrupting their obligations for pensions and health care. How are the injured workers who were counting on their pensions going to made whole? (Hint: don't count on the Pension Benefit Guaranty Corporation (PBGC). Here is a news article that points out part of the problem. From the article:
The pension problem has caused PBGC itself to be underfunded. After assuming the UAL plans, it will owe about $62.3 billion in promised benefits to more than 1.1 million people, including more than 500,000 current retirees, but its assets are only $39 billion.
It is possible we won't see a severe impact immediately, but what are we going to do when the baby boomers start to retire and don't have enough retirement savings?