Wednesday, September 14, 2016

Get Ready for a New Crisis… 
In Corporate Debt
"As the quantity of debt increases, the quality decreases. That’s what’s happening with corporate debt now. You’ll recall that, since the financial crisis, corporations have been big borrowers. According to analysts at Goldman Sachs, corporate America has more than doubled its debt since the collapse of Lehman Brothers .. And that’s a big problem… Here’s Michael Lewitt, editor of The Credit Strategist newsletter: ‘As of the end of August, 113 companies had defaulted on their debt in 2016, already matching the total number of defaults from 2015. The year-to-date default count was also 57% higher than a year earlier .. In case anyone is paying attention (it appears they are not), the last time defaults were this high was in 2009 when 208 companies failed during the financial crisis.’ Yes, get ready for a new credit crisis — this time centred on corporate debt. .. ‘But wait,’ you say, ‘the feds can print money. They can make sure we never again suffer a credit crisis. Right?’ .. Alas, no. They can’t create real money. They can only issue more tickets for seats that don’t exist. That is, they can only make the underlying problem worse, by lending more money to more people who can’t pay it back."
- Bill Bonner
LINK HERE to the essay

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