“NEVER THIS BAD BEFORE!” WSJ: Stock Market Has Never Been So Good When People Have Felt So Bad! Andrew Ross Sorkin Warns ‘Crash Is Coming’

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As the stock market hits record highs, Andrew Ross Sorkin and the WSJ highlight a dangerous disconnect. The American middle class is breaking, and the bubble is nearing its limit.

THEGUARDIAN: WORLD HEADING TOWARD FINANCIAL CRISIS…

Stock Market Has Never Been So Good When People Have Felt So Bad!

Stocks are partying like it’s 1999. Americans haven’t been this gloomy in 70 years.

Americans are in a decidedly bad mood. The stock market is decidedly not.

This isn’t how it usually works. Instead, high stock prices have historically been associated with happy consumers, and vice versa. Here’s a look at what’s going on.

Andrew Ross Sorkin Warns ‘Crash Is Coming’…

USA heading toward national debt crisis?

Is America heading toward a national debt crisis? As an economic adviser to President Biden and an economist active in mainly Democratic policy circles since the late 1980s, I’ve spent most of my career dismissing arguments that any debt-ratio level signifies a “crisis.” I still think that’s true, even as our publicly held debt has reached 100 percent of our GDP. But I also now believe that if you’re not worried about this country’s fiscal outlook, you’re not paying enough attention.
What changed? The national debt held by the public, about $31 trillion, is now the size of the U.S. economy, up from 39 percent of the economy in 2008 and 79 percent in 2019. For most of the country’s history, the fact that the economy’s growth rate surpassed the interest rate on the debt enabled us to keep paying our bills.
But as my colleagues and I show in a policy brief for the Stanford Institute of Economic Policy Research, the fiscal outlook today is much more challenging. We concluded that the combination of higher deficits and climbing interest rates raises the risk that borrowing will become more expensive and will push government debt levels to climb relentlessly. This is a debt spiral.

The math is simple and unforgiving. Say both your annual income and your debt equal $100. Suppose you face a 2 percent interest rate but you get a 4 percent raise. You’ll have no problem paying your creditor their $2 in interest from your $4 in added income. But if you swap those rates around, every year puts you further in the hole.
Events of the past few weeks reveal that the problem of rising interest rates is not theoretical. President Trump’s war in Iran, which is putting upward pressure on inflation, has led lenders to insist on extra compensation—that is, higher interest rates—to offset inflation’s erosion of the value of future payments. Based on the wide gulf between our spending obligations and our expected tax revenues, debt investors also know that the government will have to issue trillions of dollars in debt in the coming years. And with all of that debt flooding the market, the government will have to offer higher rates to keep its creditors in the game.

Treasury rout tests Washington’s tolerance for higher borrowing costs…

New Fed Chair Kevin Warsh suggests he may take an Alan Greenspan-style approach at the central bank

Newly sworn-in Federal Reserve Chair Kevin Warsh offered some telling comments Friday about how he may govern as head of the US central bank.

Warsh harkened back to former Fed Chair Alan Greenspan, the last chair to be sworn in at the White House, and implied that he is setting himself up in Greenspan’s mold.

“I’ve known five of my predecessors in this job, some of them quite well. But Chairman Greenspan was the first to tell me and show me what this role demands,” Warsh said during a ceremony in the East Room. “Like Alan, I intend to fill the role of chairman with energy and purpose, just the way Chairman Greenspan did.”

Greenspan is known for holding rates steady rather than raising them during the internet boom of the 1990s because he saw that inflation was not rising and thus productivity must be increasing, negating the need to raise rates.

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