As outlined in Mr. Practical on the Yen, Carry Trade, and Credit Expansion I suspect the trigger will either exhaustion or somewhere the eyes are not currently focused.I am not sure what will pop this global credit bubble, but I suspect it will not be higher US interest rates or a rising Yen. More that likely it will be either pure exhaustion, something totally off everyone's radar, or simply the reverse of some scenario that everyone expects.
In 1980 it took $1 of new debt to create $1 of GDP; in 2000 it took $4 and today it takes $7. All of that extra credit is serving no productive means. It is pure speculation and it will be unwound. Nonetheless the sheep are still grazing.
Friday, February 02, 2007
Mish: Central Bankers Cry Wolf
Mike Shedlock in his post today (Feb. 2, 2007) says that all this new borrowing is not having any appreciable effects: