Bear markets are invariably preceded by excess in the economy — over investment,
high levels of debt growth, high levels of inflation and tight monetary conditions — and excess in the share market in the form of overvaluation and investor euphoria.
Not exact matches
As a perverse reward for its rapid
growth and heavy infrastructure investment, China is starting to face some
of the trials
of mature economies: a stagnant workforce, a real estate bubble, and
high local government
debt levels.
Paul Bloxham
of HSBC also says that
higher debt levels are unlikely to constrain the Australian economy's
growth.
After both previous major crises — when private and public
debt levels were relatively
high — slower
debt growth, selective
debt re-structuring and a long period
of reflation have been the solution.
So, in summary these are some
of the themes we might expect to see in the next chapter — the impact
of technology and the
growth of Asia; the normalisation
of monetary conditions; the effects
of higher levels of household
debt; and the capability
of our workforce and businesses to be flexible, innovative and adaptable.
When
debt levels are low, reforms aimed at improving productivity, if they are correctly designed and implemented, can result in the
higher productivity and GDP
growth that could, in principle, allow a country to «grow» its way out
of debt.
When
growth is most needed, when a country is suffering from excessively
high levels of debt, it is hard to find many cases in which the aggressive implementation
of reforms led to
growth rates fast enough for the debtor to grow its way out
of debt.
The combination
of very
high levels of debt and excess manufacturing capacity can lock an economy into a self - reinforcing deflationary process in which
growth stagnates and
debt rises faster than
debt servicing capacity.
«However, historically
high levels of household
debt and low wage
growth will offset some
of the positive impact
of recent strong employment data, so consumers are likely to remain cautious.»
The inefficiency
of the state sector explains slow
growth and
high levels of debt in China.
The PBO identified four key downside risks to the private sector forecast: global
growth, especially in the U.S. could be slower than anticipated; the appreciation
of the Canadian dollar could adversely affect exports; sovereign
debt issues in Europe could restrain recovery there and put upward pressure on global interest rates; and the
high level of household
debt in Canada could restrain domestic demand.
Credit is growing more slowly than it has in the past but not because the financial system has become more efficient but simply because
debt levels have become too
high, causing regulators to force down the
growth in credit without seriously improving the efficiency
of the financial sector.
Moreover, the common belief that corporate - profit
growth justifies
high corporate -
debt levels neglects the role
debt - funded buybacks have played in creating the illusion
of corporate health (WILTW February 22, 2018).
The drivers
of this low
growth environment stem from four secular headwinds — aging demographics, depressed productivity,
high global
debt levels and incessant deflation deriving from globalization.
Our gross
debt is already forecast to peak above 90 %
of GDP, a
level above which the evidence suggests
higher debt tends to reduce
growth.
But the Korea Automobile Importers and Distributors Assn. projects 10 %
growth by the imports, noting this is conservative and takes into account
high levels of consumer
debt and consumer doubts about the economy.
The same report adds that
high levels of student
debt are stunting the financial
growth of millions, causing them to delay home ownership, marriage, and even having kids.
With the
growth of education costs and the
level of student loan
debt taken on, it's no wonder that people with the lowest incomes are finding it tougher to shoulder the burden
of student loans, making it less likely they will be able to use education as a way to lift themselves into a
higher income earning bracket.
If this all happens, private investment jumps back to historical
levels or
higher, GDP can grow at more than 2 % real / 4 % nominal as credit drives
higher growth, unemployment will come down, incomes go up as the pie increases and we start growing out
of our
debt problem.
Minimum future annualized revenue
growth of 15 % organically, low or declining
debt level and improving margins with business models can reach
high profitability and Return on Equity * in time
Just because the stock market as a whole is overvalued and
high debt levels will make
growth difficult and surprises more likely to be negative than positive, it doesn't mean that there aren't plenty
of stocks that are undervalued and where intrinsic value is, in fact, growing.
Credit
growth on that scale is not easy to achieve, especially given stagnant wages, the already
high level of private sector
debt and, now, increasing interest rates.
As an introduction, Colon cited the current conditions in the equine veterinary field:
high levels of educational
debt, untenable
debt - to - income ratios and an equine industry with little to no
growth.
With
Debt Rescue ready to expand and venture onto new, wider paths, Roets said Kleoss Capital approached
Debt Rescue as they viewed the company at the pinnacle
of their field and under the impression that the company offered a
high level of potential in regard to
growth.
KPMG anticipate continued
growth in the open - ended and
debt funds due to their stable yield, diversification, and
higher levels of liquidity for open - ended funds, said Phil Marra, national real estate funds leader.