Beware The Credit Event!

This week on Off The Cuff Michael Gayed, CFA, and I discussed his views on the markets, the economy, and where they are headed.

Michael thinks there’s a “credit event” coming that will shake it all up.

What’s a credit event?

That’s a “Lehman moment” or a string of bank failures that cascade to other institutions weakening or even destroying them.

It’s when someone can’t pay their debts back and that sets off a wide range of downstream and related events.

It might come from China, it might come out of left field, but sooner or later there will be other victims of the Fed’s rate-hiking campaign.

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This is a companion discussion topic for the original entry at

So Disappointed!

Dang, Iceland looks just like Chris’ office in Massachusetts. Where are the reindeer and the northern lights? I for one feel really cheated…


Yeah, and where’s Bjork?


it’s a psy op, classic distraction move. All the three letter agencies are roaming the geisers to see what Chris is cooking while he is chilling in his basement.


Brilliant takes on portfolio diversification, and I enjoyed listening to his perspective on all of the talking points!


Power Device Ad

Power saving ad - total bunk? Or legitimate discovery?

Nobody Special Finance

Speaking of credit events, do you remember Magnetar from CDO funding in the GFC? Well they are back and funneling money to Nvidia, it would seem. Check out Nobody Special Finance’s Coreweave videos.


Keep Fighting Or Surender?

I am 100% convinced that we are in a housing bubble that dwarfs what we saw in 2008. I hate that I recently bought a house because I am sure that the “value” of it will go down.
I surrendered and bought the house because I needed a home for my family. I think that I paid about 25% more for it than it will be worth in inflation adjusted terms once the correction is over. What is worst is that the mortgage is 7%.
The price that I paid is 2.5 times my annual earnings and I put 20% down. Unfortunately for most people, being right matters less than timing. I am hoping that I can refinance eventually at half the rate that I am currently paying but part of me thinks the ultra low rates of 2021 are gone and won’t return for a few generations.
This is my only debt and I will hopefully be able to capitalize on great opportunities that I think are coming our way.
I have no idea how the USG will react to their precarious situation of debt and tax revenue. If I were forced to make a bet, I would simply make this wager. I do think Social Security is going to be “reformed”. The reform will not cut benefits. I think the reform will remove the social security cap and the tax will apply to everyone. Corporations, trusts, individuals, etc will pay the 6.2%/12.4% rate. The benefits will be capped using the existing cap on taxes. The cap will continue to be adjusted up every year.
This reform will reduce the risk of a back lash to the politicians because very few of us can actually hit that cap and thus will not affect most tax payers. The removal of the SS tax cap will greatly add revenue to the Treasury. This will give the USG breathing room to make a plan to reduce spending and increase tax revenue.
The one mystery to me is how we are going to handle states like California and Illinois. My personal opinion is we need to pass a law with a new bankruptcy chapter for states to use. I do not think it is morally right that the more fiscal responsible states be asked to pay for the irresponsible states via a Federal bailout. The private sector employees have had pensions taken or had benefits greatly reduced. There is no reason not to expect the same from the public sector workers. I bet this will be the source of the biggest political fighting in the future.

Viewpoints Were Too Close Together

A good interview features two people whose views and knowledge overlaps: it’s not too far apart or almost identical. Too far apart and they’re just debating; when it overlaps it becomes something of an echo chamber with few new insights. Both CM and Mr. Gayed have good points of view but I think they were too closely overlapping to make for a really insightful discussion.