Sunday, July 31, 2016

Central Bankers Are Driving Us 
All Into The Dirt
Harry Dent points out global corporate debt now sits at a record $51 trillion & is poised to hit $75 trillion by 2020 – just 4 years away. If interest rates rise and the economy slows, it will be very hard for companies to roll these bonds over – & then we get what S&P Global Ratings is calling Crexit .. "The bond markets would dry up for corporate lending, especially higher-yield junk bonds. This would set off a chain of corporate defaults and bankruptcies that would cause central banks to start to lose control of the economy .. When the economy slows and/or interest rates rise, to reflect default risks, then we get a negative spiral of more and more defaults .. So, how did this occur? It’s another product and cost of ZIRP and QE policies that appear to create something for nothing. Corporations lever up at such low rates and use that money to buy back stock and engineer mergers and acquisitions – all just re-arranging the pie, not growing it .. When the economy slows and/or interest rates rise, to reflect default risks, then we get a negative spiral of more and more defaults."
LINK HERE to the essay

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