{"id":13514,"date":"2015-10-18T18:19:27","date_gmt":"2015-10-18T23:19:27","guid":{"rendered":"http:\/\/olduvai.ca\/?p=13514"},"modified":"2015-10-18T18:19:27","modified_gmt":"2015-10-18T23:19:27","slug":"the-deterioration-of-americas-corporate-balance-sheet","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=13514","title":{"rendered":"The Deterioration of America\u2019s Corporate Balance Sheet"},"content":{"rendered":"
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The Deterioration of America\u2019s Corporate Balance Sheet<\/a><\/h3>\n
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I don\u2019t comment frequently on the state of financial markets these days, but the following article from\u00a0Bloomberg<\/em>\u00a0really grabbed my attention.<\/p>\n

It relates to interest coverage ratios across corporate America, and quite frankly, I was stunned to see how badly balance sheets have deteriorated during the recent\u00a0pitiful cyclical economic rebound which I have dubbed\u00a0the oligarch recovery<\/a><\/strong>.<\/p>\n

From\u00a0Bloomberg<\/em><\/a>:<\/p>\n

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It\u2019s more expensive for even the most creditworthy companies to borrow or refinance even as the Fed has kept its\u00a0benchmark at near-zero the last seven years.\u00a0Companies have loaded up on debt. They owe more in interest than they ever have, while their ability to service what they owe, a metric called interest coverage, is at its lowest since 2009, according to data compiled by Bloomberg.\u00a0<\/strong><\/em><\/p>\n<\/blockquote>\n

Think about how terrifying this is for a moment. 2009 represented\u00a0the nadir of a devastating economic and financial collapse. Earnings had plunged, and as you might expect, interest coverage fell\u00a0into the gutter. This was a cyclical low, and so that sort of thing should be expected.<\/p>\n

See:<\/p>\n

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The reason the current situation\u00a0is so concerning, is because we aren\u2019t in the nadir of an economic cycle at the moment. In contrast, we are constantly told how good things are going for the U.S. economy. All the while, the Fed funds rate is still stuck at near\u00a0zero, with\u00a0clueless central planners completely\u00a0terrified to raise it a mere\u00a025 basis points. Despite all this, the interest coverage ratio is near the 2009 low. Can you imagine what it\u2019s going to look like when the next economic downturn really gets going?<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

The Deterioration of America\u2019s Corporate Balance Sheet I don\u2019t comment frequently on the state of financial markets these days, but the following article from\u00a0Bloomberg\u00a0really grabbed my attention. It relates to interest coverage ratios across corporate America, and quite frankly, I was stunned to see how badly balance sheets have deteriorated during the recent\u00a0pitiful cyclical economic […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[83,9940,195,303,305,916,4285,6174],"class_list":["post-13514","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bloomberg","tag-corporate-balance-sheet","tag-debt","tag-fed","tag-federal-reserve","tag-financial-collapse","tag-liberty-blitzkrieg","tag-michael-krieger"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/13514","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=13514"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/13514\/revisions"}],"predecessor-version":[{"id":13515,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/13514\/revisions\/13515"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=13514"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=13514"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=13514"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}