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Why the Coming Wave of Defaults Will Be Devastating

Why the Coming Wave of Defaults Will Be Devastating Without the stimulus of ever-rising credit, the global economy craters in a self-reinforcing cycle of defaults, deleveraging and collapsing debt-based consumption. In an economy based on borrowing, i.e. credit a.k.a. debt, loan defaults and deleveraging (reducing leverage and debt loads) matter. Consider this chart of total credit […]

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US Commercial Bankruptcies Skyrocket

US Commercial Bankruptcies Skyrocket The “credit cycle” begins to unravel. One of the big indicators of the end of the “credit cycle” is the number of bankruptcies. During good times, so earlier in the credit cycle, companies borrow money. Then, overconfident and lured by low interest rates and overoptimistic rosy-scenario rhetoric emanating from all sides, they […]

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KKR’s Chilling Message about the “End of the Credit Cycle”

KKR’s Chilling Message about the “End of the Credit Cycle” “Opportunities in Distressed Assets” as current investors get crushed After seven years of “emergency” monetary policies that allowed companies to borrow cheaply even if they didn’t have the cash flow to service their debts, other than by borrowing even more, has created the beginnings of […]

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What Deflation Quacks Like

What Deflation Quacks Like As yet another day of headlines shows, see the links and details in today’s Debt Rattle at the Automatic Earth, deflation is visible everywhere, from a 98% drop in EM debt issuance to junk bonds reporting the first loss since 2008 to corporate bonds downgrades to plummeting cattle prices in Kansas to […]

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As Goes The Credit Market, So Goes The World

As Goes The Credit Market, So Goes The World When confidence cracks, we’ll see it there first During the prior economic cycle of 2003-2007, one question I asked again and again was: Is the US running on a business cycle or a credit cycle? That question was prompted by a series of data I have tracked […]

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Who Will Suffer from a Leveraged Credit Shakeout? | Enterprising Investor

Who Will Suffer from a Leveraged Credit Shakeout? | Enterprising Investor. Of all the noteworthy moments from the 2014 CFA Institute Fixed-Income Management Conference, the bombshell may have been the default call from Martin S. Fridson, CFA. Fridson, CIO at Lehmann Livian Fridson Advisors, has been a leading figure in the high-yield bond market since it […]

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