it has really only gotten out of hand since 1995, although i date the beginning of the credit bubble back to the early 90's S&L bail-out. as credit bubbles go, it is relatively young actually, however unsurpassed in scope and size by anything seen in history. for instance, household debt stands now at 110% of disposable income (and that includes the statistical outliers like Bill Gates, Larry Ellison, etc.), and debt service at nearly 15% of disposable income, both record highs. non-financial corporate debt is at 46% of GDP, also a historic record of note. at the same time the savings rate has reached a historic low of a negative 2%.
i can't give you an exact date for when the bust might begin - for all i know it has begun already, since junk bond defaults are near a fresh record too (qu.1), and both revolving credit delinquencies and mortgage delinquencies have begun to rise sharply.
as for duration, since this is the most extreme private sector debt mountain ever witnessed, i estimate one decade or more. rather more actually. similar to what happened in Japan, it should be a period encompassing several recessions, interrupted by anemic recoveries. |
