Stock markets near their highest levels and private equity piled high with cash: there’s a crash coming

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As the FT notes this morning:

Private equity groups are holding more cash for acquisitions than they had at the height of the leveraged buyout boom, in spite of a fall in the volume of deals being done — raising concerns about overcapacity in the industry.

Data compiled by Preqin, the research group, show that the value of unspent commitments to private equity funds, known as “dry powder”, has surged to $789bn this year — an increase of 12 per cent since December 2012, after four years of decline.

This compares with $769bn of unspent cash in 2007.

And then there's the FTSE at near enough record highs:

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And some emerging bank scandals.

Oh, and hedge funds are opening again.

And there's a corporate savings glut as big business has no idea what to do with the money it has accumulated at cost to labour.

I hate to say it, but all that says there has to be a crash on the way. It's either economic or political, or both, but all this is a recipe for unsustainability, not least because all this is happening whilst governments are running massive deficits, people suffer real wage falls and those worst off are becoming the victims of organised state abuse.

All these events are connected. That's why change is inevitable. It's only when and what the trigger is that we need discuss.