Loose monetary policy coupled with flood of  Central Bank’s printing of money could see another bubble.

Given where stocks, bonds, and credit are trading at right now, people start questioning whether there is the risk of a Bubble or Bubbles forming. There are many theories floating around these days over the Blogosphere and the Financial Media. Let us try to evaluate:

Is there are Bubbles forming at this very moment?

YES. But contrary to the “Central Banks Printing Money” argument, irrespective of monetary policy, there is always a risk of Bubbles forming;  it’s just human nature.

We need to put our money somewhere, don’t we? So, we just follow the herd and do what every one else is doing; hence contributing to the Bubble Formation. Knowingly or Unknowingly.

What or Where are these Bubbles forming?

From analysis, The next financial collapse will be caused by a Housing + Credit + Debt Bubble Bursting in the Emerging Market Economies (China, India, Brazil, etc…).

These being Developing Countries, in order to boost their economic output and growth, tend to loosen their credit standards and encourage borrowing and spending.

Combine that with all the freshly printed hot money flooding these Emerging Market, and you have a perfect recipe for DISASTER. Though One could remain born optimist, these Emerging Market Countries have crossed the point and no return, and the only direction they go from here is: DOWN.

Its the cold hard brutal truth. Anyone who thinks that China wont have a hard landing, is kidding themselves and need to rethink their career choice; or better yet, go back to high school and this time, pay attention in your Economics 101 Class.

When will these Bubbles Burst?

It is the million dollar question of course: When will these Bubbles Burst? There is no mathematical formula to predict that, but Let’s say, by Q4 2014, these Emerging Market Countries would have exhausted all their resources and tools to inflate/grow their economy, and they will start their Descent/Chaotic Crash Landing into Depression.