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Tag Archives: debt
Why oil under $30 per barrel is a major problem
Why oil under $30 per barrel is a major problem A person often reads that low oil prices–for example, $30 per barrel oil prices–will stimulate the economy, and the economy will soon bounce back. What is wrong with this story? A lot of things, as I see it: Oil producers can’t really produce oil for $30 […]
Defeat is Victory
Defeat is Victory John Holcroft On the wall of George Orwell’s Ministry of Truth from his novel 1984 there were three slogans: WAR IS PEACE FREEDOM IS SLAVERY IGNORANCE IS STRENGTH It occurred to me that these apply just a little bit too well to the way the Washington, DC establishment operates. War certainly is peace: just […]
Why This Slump Has Legs
Why This Slump Has Legs We’ve only really been in two weeks of trading in the new year, things are looking pretty bad to say the least, so predictably the press are asking -and often answering- questions about when the slump will be over. Rebound, recovery, the usual terminology. When will we get back to […]
The Deflation Monster Has Arrived
Lukiyanova Natalia / frenta/Shutterstock The Deflation Monster Has Arrived And it sure looks angry As we’ve been warning for quite a while (too long for my taste): the world’s grand experiment with debt has come to an end. And it’s now unraveling. Just in the two weeks since the start of 2016, the US equity markets are […]
2016 Theme #5: The Systemic Failure of High Finance
2016 Theme #5: The Systemic Failure of High Finance This week I am addressing themes I see playing out in 2016. A number of systemic, structural forces are intersecting in 2016. One is the failure of high finance to fix the global economy’s systemic problems. The operative conceit of the past 7 years has been […]
“Nowhere To Hide” As Baltic ‘Fried’ Index Careens To Fresh Record Low
“Nowhere To Hide” As Baltic ‘Fried’ Index Careens To Fresh Record Low Another day, another fresh all-time record low in The Baltic Dry Index as Deutsche Bank’s “perfect storm” appears ever closer on the horizon. Plunging 4.7% overnight to 445 points, this is 20% lower than the previous record low in 1986 and as one strategist warns, “It’s […]
2016: Oil Limits and the End of the Debt Supercycle
2016: Oil Limits and the End of the Debt Supercycle What is ahead for 2016? Most people don’t realize how tightly the following are linked: Growth in debt Growth in the economy Growth in cheap-to-extract energy supplies Inflation in the cost of producing commodities Growth in asset prices, such as the price of shares of stock […]
Without an Emergency Fund You Are One Missed Paycheck From Disaster
Without an Emergency Fund You Are One Missed Paycheck From Disaster What would it mean to you if you had an unexpected trip to the emergency room? If your car required an expensive repair? What if your income was interrupted for a week, or two weeks, or even longer? Do you have an emergency fund built […]
Down the Ratholes of the Future
Down the Ratholes of the Future The new year now upon us has brought out the usual quota of predictions about what 2016 has in store, and I propose as usual to make my own contribution to that theme. I’ve noted more than once in the past that people who make predictions about the future really […]
2016 Theme #4: The End-Game of Debt-Fueled “Growth”
2016 Theme #4: The End-Game of Debt-Fueled “Growth” This week I am addressing themes I see playing out in 2016. A number of systemic, structural forces are intersecting in 2016. One is the end-game of debt-fueled “growth.” We can summarize the official “solution” to the Global Financial Meltdown of 2008 in one line: borrow and blow […]
Global Corporate Debt is Coming Unglued
Global Corporate Debt is Coming Unglued Default Rate Highest since 2009, US Distress Ratio Soars. Standard & Poor’s slashed the credit ratings of 112 corporations around the globe to default (D) or selective default (SD) in 2015, according to S&P Capital IQ Global Credit. The highest number of global defaults since nightmare-year 2009, when a previously […]
2016 Theme #3: The Rise of Independent (non-state) Crypto-Currencies
2016 Theme #3: The Rise of Independent (non-state) Crypto-Currencies This week I am addressing themes I see playing out in 2016. A number of systemic, structural forces are intersecting in 2016. One is the rise of non-state, non-central-bank-issued crypto-currencies. We all know money is created and distributed by governments and central banks. The reason is simple: […]
The Shale Defaults Begin Here: Banks Quietly Shrink These 25 Companies’ Credit Facilities
The Shale Defaults Begin Here: Banks Quietly Shrink These 25 Companies’ Credit Facilities Everyone knows that at $35/barrel oil, virtually every US shale company is cash flow negative and is therefore burning through cash and other forms of liquidity such as bank revolvers and term loans, just as everyone knows that should oil remain at […]
What Comes After The Commodities Bust?
What Comes After The Commodities Bust? The days of E&P companies using external debt financing to fuel growth have most likely come to a close. The one thing executives should have learned in 2015 is that Wall Street can for long periods of time remain disconnected from fundamentals and can swing to extremes. Another lesson […]
Pretend to the Bitter End
Pretend to the Bitter End Forecast 2016 There’s really one supreme element of this story that you must keep in view at all times: a society (i.e. an economy + a polity = a political economy) based on debt that will never be paid back is certain to crack up. Its institutions will stop functioning. […]
