There is risk that the FIRE economy will resume. Remember that we’re in the middle of bizzaro world here as far as finance and credit origination go.
Although we have the same issues as we had in the 1930s, this isn’t the 1930s and the United States is clearly the “world leader” this time around.
From Doug’s most recent missive:
“But has The Jolt incited ample momentum within the private-sector Credit system and throughout the economy to now enable a successful “hand-off” from massive public-sector stimulus to a self-sufficient private-sector Credit up-cycle? Examining recent corporate debt issuance, stock prices, M&A, and global risk asset prices generally, there is a case to be made for a sustainable expansion cycle. On the other side of the ledger, moribund housing and mortgage Credit, along with vulnerabilities in municipal finance, point to ongoing system Credit stagnation. Total bank Credit contracted during the quarter, and most likely total mortgage debt posted little or no growth. And in the midst of booming debt issuance, it is worth nothing that, at $46.4bn, first quarter muni debt sales were only about half the year ago level and the lowest amount since Q1 2000 (Thomson Reuters).”