Trade war with US could be the tipping point for China’s $14 trillion debt-ridden economy

Trade war with US could be the tipping point for China’s $14 trillion debt-ridden economy

Nearly 20 percent of China's exports go to the U.S.

  • If a trade war ensues with the U.S., China's GDP growth would drop 0.5 percent and could continue to fall as things heat up, the IMF warns.

  • China's debt-to-GDP has ballooned to more than 300 percent from 160 percent a decade ago.

  • Chinese officials now warn of a financial-sector debt bubble that's waiting to burst.

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The Crash Of 1929: "Can It Happen Again?"

The Crash Of 1929: "Can It Happen Again?"

In the 4th of February, we published a blog entry detailing the similarities of the current stock market environment with that before the stock market crash in 1987. On February 5th, the Dow Jones Industrial Average (DJIA) experienced the worst daily point decline of its history. Since then, the stock market has recovered, but are we out of the woods?

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A Decade After The Bubble Burst, House Flipping Is On The Rise

A Decade After The Bubble Burst, House Flipping Is On The Rise

A decade after the U.S. housing bubble burst, house flipping is on the rise again. Defined as reselling a house within a year of purchase, flipping is at an 11-year high in the United States and it’s the subject of dozens of TV shows and weekend workshops promising to teach real estate novices how to make a fortune.

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Big banks have found a new way to stay in the subprime lending business

Big banks have found a new way to stay in the subprime lending business
  • Despite tough new regulations aimed at lowering risk for banks, Wall Street continues to find a way to finance subprime loans.
  • Instead of direct lending, big institutions like Wells Fargo and Citigroup loan money to nonbank institutions — shadow banks — who then deal with higher-risk clients.
  • Banks say this way helps lower their exposure.
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Housing starts fall more than expected in February

Housing starts fall more than expected in February
  • Housing starts declined 7.0 percent to a seasonally adjusted annual rate of 1.236 million units in February.
  • While the volatile multi-family housing segment accounted for the decline in home building last month, the broader housing market appears to be slowing.
  • There is growing optimism that tightening job market conditions will translate into faster wage growth in the second half of this year.
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The mortgage market risk no one’s talking about, plus a proposal to redesign the system

The mortgage market risk no one’s talking about, plus a proposal to redesign the system

Nearly ten years ago, the collapse of the sub-prime mortgage market sent the U.S. economy into a tailspin. As housing prices dropped and unemployment climbed, vulnerable households found themselves unable to refinance the mortgages they borrowed under better economic circumstances. Struggling to meet ever-increasing monthly payments, more and more homeowners defaulted on their mortgages.

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What The Climbing Debt Defaults Really Mean For The Economy

What The Climbing Debt Defaults Really Mean For The Economy

By many measures, the economy looks strong.

The stock market — despite a fairly steepWh correction a week ago — is still well ahead of where it was a year ago and is trending up. Unemployment is at historic lows, wages are rising given the tight labor market and consumer spending has been keeping pace.

Dig in a bit deeper, however, and the numbers become a bit less confidence-inspiring, since the bulk of that consumer spending is being done on credit, as household debt is skyrocketing.

That by itself isn’t worrisome news: Credit can be useful leverage if used correctly. But the data indicates that for an increasing number of users, debt is not being managed correctly. Late payments and out-and-out defaults and charge-offs are on the rise across a few lending segments.

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