“Too much money (or credit) raises prices, lowers yields, forces investors into subprime investments, increases debt and dooms markets to disaster. As ultra-low rates continue, milestones are hit. In 1946, the Union Pacific Railroad was able to borrow at 2.51% – a record low at the time. But it was a solid business. Today’s credit-financed lending bubble finds borrowers with neither tracks nor trains. Rwanda recently borrowed $400 million – an amount equal to 5% of GDP –at less than 7% interest. [LendingClub also has a] great business model, no? You get money from people who are desperate for yield… you lend it to people who are desperate for cash… and you take your fees off the top.”
http://bonnerandpartners.com/three-signs-that-never-fail-to-predict-a-bear-market/
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