The answer is Debt began to implode in 2008. As you can see on this first chart below, debt has been growing constantly since the 1930’s, it got into a parabolic rise in the 1990’s and 2000’s and all these new dollars in terms of IOU’s are what supported the Real Estate Blowoff of ’06, the Tech Bubble ’00, and the Stock Boom in general to ’07.
That Debt/Credit supply reversed in 2008, had a slight bounce during market/economic recovery from 08′. But this trend is exhausted, and the first reversal in the trend in 80 years argues strongly that a big drop in Debt/Credit is occurring and our future is a Deflationary Depression of epic proportions.
What is the major component of the Debit/Credit line above? Mortgages . You can see in the chart below that Mortages actually peaked in 2005, a year before the Real Estate market peaked in the USA. You can also see below that the number of mortgages fell to a new low last year in 2010 when an Economic recovery was supposed to be in motion.
Complacency at an all time low as measured by Junk Bonds precedes an imminent collapse. Junk bonds actually made a new all time high price in April of 2011, taking out the optimism of the high’s in 2005. A new decline has begun, more debt liquidation on the horizon and these trash bonds are about to emulate Greek Bonds.