In 2008, the global economy collapsed. But ever since bottoming out in 2009, we’ve been on a gangbusters recovery. Is it all going to come to an end soon? See for yourself.
When the economy was booming, companies are always rushing to go public in order to ca$h in on the abundant monie$ floating around in the pocket$ of investor$. That’s why last year was the biggest year for IPOs since the tech bubble. Now? “The initial public offering market has gone from bad to worse.” Big IPOs are performing relatively poorly; other companies that were contemplating going public are forsaking the idea altogether.
Since the financial crisis, borrowing money has been cheap. Real cheap. So companies have borrowed money. A lot of money. Now, a lot of people hold a lot of bonds, which represents a lot of money owed by a lot of corporations. And corporate earnings are no longer booming. And borrowing costs are going to go up. Corporate debt loads are heavier than they’ve been since just before the financial crisis. That means corporate balance sheets are looking worse and worse—as bad as they have since the recovery began.
In the financial arena, as in most things, poor countries get screwed first, and most, by any trouble. “Emerging markets” are considered riskier investments, prone to more wild price swings, and the same investors that poured money into them—both stocks and bonds—as the US stock market got pricier and pricier are now running to yank that money out. China’s stock market bubble, built on margin debt and dreams, already saw a lot of deflating, making the rest of the world paranoid in its wake. This can lead to dragging economies in those countries, and ultimately a dragging U.S. economy, too, as foreigners are no longer able to buy all of our crapola.
The Fed has done a great job of driving a thundering bull market since the depths of the recession, by flooding the world with cheap money that poured into stocks and bonds and corporate coffers. But bull markets only last so long. For the past two months, the U.S. stock market has been experiencing serious volatility. That means people are scared. A long bull market, scared investors, and shaky corporate balance sheets add up to MORE FEAR. The good advice for you now is: do nothing. Invest normally. Do not try to time the market. Let’s be real, though: even Walmart isn’t doing well any more. That is a dagger directly in America’s black financial heart.
I am not ethically allowed to advise you, the American consumer, to panic. But I will say that, sooner or later, the day will come when you look back upon this eventually-prophetic blog post and wish that you had panicked.
Will that day be tomorrow? I am not ethically allowed to say.