The coronavirus is bringing a painful but much-needed end to an era of economic excess
https://www.scmp.com/comment/opinion/ar ... mic-excess
My current “optimistic case” is that the current bear market will ultimately be classified merely in the “moderate” category. In accordance with this particular analysis, this would imply a trough for the current bear market cycle in the range (S&P 500 index) of 2313 to 1955.
My current “base case” scenario (my working hypothesis) is that the current bear market will ultimately fall into the “severe” category. In this particular analysis, this would imply a trough for the current bear market cycle in the range (S&P 500 index) of 1876 to 1463.
As of 2019, global debt surpassed $250 trillion, which is more than 250% of the world’s GDP.
In the United States, the total debt (government, corporate, and household) is around 350% of GDP, which is the same ratio of debt that we had back in 2007, at the start of the previous financial crisis (although during the crisis, it ended up reaching as high as 380%).
These dollar debts suddenly become a lot harder to service thanks to a scarcity of dollars outside of the United States relative to the size of these debts.
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