Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Buzz and Banter


Reading through the Federal Reserve's Z1 report issued yesterday, we found some startling statistics (well, startling to some). Non-financial debt grew at an annualized rate of 24% of total Q2 GDP and 12% from Q1 to Q2. This growth was split 24.3% federal government, 11.5% household, 6.4% business, and 12% state and local government. This is the fastest growth in 17 years.

Since this is an annualized number, you can basically take this to mean that all of GDP growth can be attributed to new debt in lieu of savings and existing capital. Total non-financial debt now stands at $21.6 trillion, over 200% of GDP (this number does not even include the huge amounts of off-balance sheet debt).

UBS stated in a summary report that "this pace of debt growth simply cannot be maintained, and therefore, we question the sustainability of the U.S. economy." I hope this makes the risk from rising interest rates clear.
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

Featured Videos