An Irrecoverable Economic DEATH SPIRAL Has Begun. (There Is No Stopping It).

From Greg M

Lions…

In economics and finance, there are four elements which when occurring simultaneously, AS THEY ARE RIGHT NOW, lead to an economic meltdown.

Lets break this down.

1. Small businesses, consumers, and even some governments are now struggling to roll over debt.

Small businesses: Many borrowed heavily during CON-VID, cheap money, easy approvals. Now, as rates are rising after the US Debt Downgrade, those loans must be refinanced at much higher rates. Profit margins are squeezed, cash flow is drying up, and many will not survive unless demand miraculously recovers.

Consumers: Credit card debt is at record highs. With interest rates nearing 20%+ on cards, the cost of minimum payments alone is crushing household budgets. Many are forced to pay off old debt with new debt, a debt spiral that cannot continue forever.

Governments: Nations across the world (Italy, Japan, the U.S.) are rolling over trillions in old debt. They can’t “grow” out of this, the debt is too big. Governments face insane interest costs, eating up their budgets, forcing either cuts or more printing. (We will not see cuts, therefore expect more printing ON AN EPIC SCALE and therefore more rapid currency purchasing power losses).

2. Banks are pulling back lending, credit standards are tightening.

Banks see the risks, the rising defaults, the squeezed margins. So, they’re tightening lending standards, now it’s harder to get approved, more collateral required. For small businesses and households that rely on credit for daily survival, this is a silent killer… no new loans, no way to smooth out cash flow gaps. Auto loans and mortgages are getting tougher, meaning fewer buyers for homes, cars, and everything linked to those purchases.

3. Consumer delinquencies are rising across the board.

Credit cards: Record high balances. Many households are now carrying balances for basic living expenses, not luxury. Delinquencies (30+ days late) are climbing, especially for younger borrowers and lower-income families. When consumers start defaulting, it’s a sign that the system is no longer working for them, and the ripple effect hits everything from retailers to landlords.

4. Commercial real estate loans (CRE) are rolling over at much higher rates, and there’s no buyer for that debt.

CRE = shopping malls, office buildings, warehouses, huge part of the economy, but vulnerable now: CON-VID permanently changed office demand, more remote work, fewer tenants. Malls and retail spaces struggling as e-commerce grows. Commercial property values are dropping fast, but loans must be refinanced anyway. These loans were made at low interest rates (3–4%—sometimes less). Now they must roll over at 6–9% or more. Many landlords can’t cover the new payments with existing rents and no new lenders want that risk.

CRE death spiral: No buyers for this debt, meaning property owners either default or sell at huge losses. This hits regional banks especially hard, (expect waves of failures), they are loaded up with these loans on their balance sheets. (This phenomenon is also the same with the BIG BANKS, who are now operating with BLACK-HOLE balance sheets).

Bottom Line: CRE is the canary in the coal mine, it’s the first domino in a credit crisis because it’s too big to hide. (IMO there is a massive effort under way right now to keep this hidden from the public).

Putting It All Together.

These four “cracks” are not isolated, they ARE the foundation of a much bigger crisis.

Rising costs + no new credit = businesses and families can’t pay.
Defaults start small, then cascade.
Banks pull back even more, credit dries up further.
Stock markets and the overall economy are always the last to catch up, and when they do, it’s already too late.

GM