Credit Bubble Quotes

Of course I'm troubled by huge consumer debt levels - we've pushed consumer credit very hard in the US. Eventually, if it keeps growing, it will stop growing. As Herb Stein said, "If something cannot go on forever, it will stop." When it stops, it may be unpleasant. Other than Herb Stein's quote, I have no comment. But the things that trouble you are troubling me.

To combat depression by a forced credit expansion is to attempt to cure the evil by the very means which brought it about; because we are suffering from a misdirection of production, we want to create further misdirection -- a procedure which can only lead to a much more severe crisis as soon as the credit expansion comes to an end.

When money is free, the rational lender will keep on lending until there is no one else to lend to.

Bubbles are best identified by credit excesses, not valuation excesses. And there's no bigger credit excess than in China.

The global boom in commodities fueled by a debt-financed infrastructure and real-estate bubble in China is over.

All the risky things that were happening back in ’06 and ‘07 are back again to the same level, if not more. So we are in the beginning of a credit bubble, but just the beginning.

Depression is the aftermath of credit expansion.

Home ownership was the fig leaf for the rise in subprime lending. But that was really about cash-out refinancings, not buying homes.

There is a big problem. The problem is the country borrowed too much. We went on a borrowing binge, there was a housing boom. You want to help people de-leverage and deal with those debts over time.

I don't know what a credit bubble means. I don't even know what a bubble means. These words have become popular. I don't think they have any meaning.

There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.

Britain is a textbook case of how growing inequality leads to economic crisis. The years before the crash were marked by a sharp rise in remortgaging and the growth of 0 percent balance transfer credit cards. By 2008 the UK had the highest ratio of household debt to GDP of any major economy.

We never did these kinds of loans that really started this mess, the subprime loans. We just never got into that business. We were enticed a lot of times to do so by a lot of Wall Street-type players, but I, frankly, never understood some of this stuff.

All of the problems we're facing with debt are manmade problems. We created them. It's called fantasy economics. Fantasy economics only works in a fantasy world. It doesn't work in reality.

Sometimes markets err big time. Markets erred when they gave America Online the currency to buy Time Warner. They erred when they bet against George Soros and for the British pound. And they are erring right now by continuing to float along as if the most significant credit bubble history has ever seen does not exist. Opportunities are rare, and large opportunities on which one can put nearly unlimited capital to work at tremendous potential returns are even more rare. Selectively shorting the most problematic mortgage-backed securities in history today amounts to just such an opportunity.

Credit expansion can bring about a temporary boom. But such a fictitious prosperity must end in a general depression of trade, a slump.

Growth based on debt is unsustainable, artificial.

Let's be honest: It wasn't just the banks who messed up. There were a lot of people who tried to buy assets they couldn't afford. That's a reality.

I don't even know what that means. People who get credit have to get it from somewhere. Does a credit bubble mean that people save too much during that period? I don't know what a credit bubble means. I don't even know what a bubble means. These words have become popular. I don't think they have any meaning.

But 300 million Americans, their lending institutions, their government, their media, all believed that house prices were going to go up consistently. And that got billed into a $20 trillion residential home market. Lending was done based on it, and everybody did a lot of foolish things.