Will the Bubble Burst?

Feb 17, 2020

We are now on the longest stock bubble in history – stocks are up way above the tech boom. GDP was 4% then and 2% now. The difference? The government is STILL printing money and dumping it on the financial institutions in the form of overnight repo lending money – almost all of which is going right back into the stock market thus extending this bubble artificially. Dan Edstrom, former senior securitization analyst for LivingLies.

Dan Edstrom and I go pretty far back with our first contact I think in 2007 which was before the crash. When I started offering services to the public in aid of foreclosure defense, coaching lawyers etc., I was occasionally inundated with more work that I had imagined and it was Dan who stepped up and made good on the offer. HIs insight and extreme persistence paid off in hundreds of cases where homeowners retained the title and possession of their home — sometimes in very favorable confidential settlements.

He wrote to me commenting on my article about offering underwriting services to borrowers who are thinking about taking out a loan. This is what he wrote.

So we had the tech bubble followed by its burst and 9/11, and that followed by the mortgage meltdown where housing prices peaked around 2005-2006, followed by the implosion of hundreds of originators (i.e. straw lenders), followed by the collapse of Lehman brothers and Bear Stearns, and another stock market crash circa 2008-2009.

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Despite Sarbanes-Oxley and other legislation (re: Enron, Tyco, WorldCom et al) No jail, nobody brought up on charges, no financial institutions broken up (even though massive amounts of known felonies). The fines were astronomical, or so it seems, except if actually compared to the earnings (slap on the wrist maybe?)… And then there were the few “bad seeds” who were thrown under the bus and fired. And then we had the bailouts, the largest wall of money in the world thrown at the largest fraud in the world. The result?

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We are now on the longest stock bubble in history – stocks are up way above the tech boom. GDP was 4% then and 2% now. The difference? The government is STILL printing money and dumping it on the financial institutions in the form of overnight repo lending money – almost all of which is going right back into the stock market thus extending this bubble artificially. [And also consider the underwriting issues you reference in your article.]

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And housing? The housing prices in CA are way up over what they were in 2005-2006. Another long bubble. Both housing and the stock market are in an upwards bubble from 2010-2012 or so to today. Looks like they rose together and will probably burst within a short time of each-other.

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So by NOT prosecuting criminals and criminal organizations, and instead flooding them with money, this is a non-stop circus that can only end very badly. And that end is coming very soon. These bubbles will burst and this time it will probably be in unison.

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The government has no answer except to try to print more money and give it away to the big banks and larger than life clowns. Meanwhile, back in the homes of the little people ……… Oh wait, hang on while they are extricated through mass foreclosures so that we can once again save our country ….\

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