Debt Crisis

A debt crisis occurs when a country is unable to repay its loans. Because it is overarching, a debt crisis is indicative of the overall heath of the national economy, international loans, and budgeting. When a country is faced with a debt crisis, it cannot pay off its financial obligations and must seek out assistance.

The United States faced a debt crisis on the heels of the housing market collapse and overall weakening economy. In December 2007, the U.S. entered into the Great Recession—and it lasted for 18 months. Over that time, the economy ground to a halt; businesses and individuals began to default on loans and banks saw their balance sheets shrink. To stave off further economic shock, banks made it more difficult to borrow, as cutting off liquidity means businesses cannot invest in growth and individuals cannot consumer.

To stave off an all-out economic collapse, the Federal Reserve stepped in with its first of three rounds of quantitative easing in November 2008. Since that time, the Federal Reserve has printed over $3.0 trillion and the U.S. national debt has soared from roughly $9.0 trillion to $18.0 trillion. The U.S. continues to run a budget deficit and does not expect to run a surplus until 2024; this means the U.S. debt crisis will not be under control for another decade.

How Troubles in the Eurozone Will Eventually Affect Your Investments

By Friday, July 5, 2013

I can’t say this often enough: the eurozone debt crisis is here to stay for a long time. The key stock indices might have given investors false hope, but we are still standing at square one of any economic recovery.

Greece, which was at the epicenter of the eurozone debt crisis, may be required to issue Treasury bills to stay solvent. Th… Read More

What the Worst Jobs Report of the Year Means to You

By Friday, July 5, 2013

jobs marketOn the surface, today’s jobs market report looks good…

195,000 jobs were created in the U.S. economy during the month of June, with the “official” unemployment rate for the month sitting at 7.6%, unchanged from May. (Source: Bureau of Labor Statistics, July 5, 2013.)

But look a little closer and this jobs market report is a ca… Read More

Germany to Pull Back on ECB’s “Whatever It Takes” Position?

By Wednesday, June 12, 2013

I can’t stress this enough: troubles in the eurozone are far from over.

First and most important, the strongest nations in the eurozone are experiencing an economic slowdown now too. As I have written before, France and Germany are seeing diminishing demand.

Finland, one of the financially strongest nations in the eurozone, fell … Read More

Number of S&P 500 Companies Reporting Negative Guidance a Red Flag

By Wednesday, June 12, 2013

 Food Stamp Usage RisingStandard & Poor’s, the credit rating agency, believes the likelihood of the U.S. credit rating being downgraded in the near term is less than 33% (one in three) and it has decided to keep its credit rating on the U.S. economy at AA+, slightly lower than the best investment grade. (Source: Standards & Poor’s, June 10, 2013…. Read More

Next Tiny Country in the Eurozone to Bust

By Thursday, April 18, 2013

Eurozone to BustWhile cutting the growth outlook of the global economy, Chief Economist of the International Monetary Fund (IMF) Olivier Blanchard said yesterday, “…the main challenge is very much in Europe.” (Source: “IMF Cuts Global Growth Outlook as Europe Demand Urged,” Bloomberg, April 16, 2013.)

Blanchard showed further conc… Read More