Stan Druckenmiller … when I look at the current picture of expected tax revenues combined with benefits promised to future generations, this is the most unsustainable situation I have seen ever in my career.
The disaster that Druckenmiller sees coming for the United States is all about changing demographics and entitlement spending. They don’t add up to a sustainable situation.
In 1940, entitlement payments, which include everything from disability payments to Social Security to Medicare, amounted to just over 20% of annual government spending in the United States.
Today, entitlement spending has swelled to nearly 70% of the annual federal budget.
Things are about to get a whole lot more complicated. The 20-year baby boom that took place after World War II is now beginning to result in a retiree boom.
Of course the funny thing is that at present, it isn’t like things are just being paid off. In truth our whole nation is a Bubble Nation, fueled by debts we are steadily building up:
New car loans have become the new hot product and Wall Street, not car-loving Americans, is the real market.
The growth of student loan debt has received no shortage of attention from politicians and the media in recent years, making it one of the top economic anxieties in post-mortgage-meltdown America. Behind the front-page investigations and populist political platforms, the numbers are indisputably chilling: student loan balances have surged from less than $18,000 per person to $25,000 per person in the ten years since 2005. But another class of debt is also growing at troubling rates without attracting anywhere near the same level of attention: car loans…
Together, loans for cars and education contributed 90 percent of the growth in consumer debt since the end of 2012. Outstanding auto loans have hit more than a trillion dollars, with an average balance of $12,000 per person (or nearly 8 percent of disposable income), while the dreaded student loans “epidemic” is not far ahead at $1.3 trillion outstanding…
Auto Asset Backed Securities (ABS), securitized bundles of car loans not unlike the mortgage-backed securities at the heart of the 2008 credit crisis, are the hidden driver of the auto debt boom…
In 2015 some 23.5 percent of all new car loans were subprime…
You could trigger a major K-shift just by eliminating the willingness to loan money. You could do it by calling all the debt out there and forcing it to either be paid back, or be defaulted on. You could do it just by letting the demographic monster continue as it will. You could do it by stopping the government from borrowing cash and flooding it into the system. You could do it by triggering shortages in various areas, so people will have to loot and steal to survive. You could do it by collapsing the government and suddenly rendering all those government workers unemployed.
We are probably going to do it by doing all of the above, all at the same time.
Think Darwin quit? Au contraire. He was just taking a little vacation to recharge his batteries, so when the real shit hits the fan, he is ready to rock.
And man, is he going to rock.
Hey AC, here’s some food for thought from the left.
http://www.vox.com/2016/4/21/11451378/smug-american-liberalism
I always find it amusing when the left does and says things that end up reinforcing your outlook.
I’m going to be in the market for a car soon, hopefully I can get the legality like title and registration taken care of (something the auto dealers do for you automatically but they also cost more than private sales I believe). If you were getting an auto loan I wonder how one could take advantage of an oncoming bubble. What would you do if you knew the subprime crisis was coming in 2008?
Some of the predictions in this article sound a bit like early 1980s warnings about “global warming” and “Waterworld! Dennis Hopper riding the Valdez!” etc. Climate fraud people hate making year-specific predictions now, because, after decades of being proved completely wrong by the world continuing, their irrational raving is a scientific (not “tenured” or “salaried,” but “actual”) embarrassment.
It’s possible that you’re correct, and your “Apocalypse” predictions will actually pan out. Assuming they don’t, though, you might want to downplay your specific warnings, lest you provide future r-strategists and their enablers with a track record of the failure of K-strategist predictions.