{"id":14653,"date":"2015-11-22T09:09:52","date_gmt":"2015-11-22T14:09:52","guid":{"rendered":"http:\/\/olduvai.ca\/?p=14653"},"modified":"2015-11-22T09:10:21","modified_gmt":"2015-11-22T14:10:21","slug":"the-4-6-trillion-leveraged-loan-market-next-crisis-in-the-making","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=14653","title":{"rendered":"The $4.6 Trillion Leveraged Loan Market\u2014\u2013Next Crisis In The Making"},"content":{"rendered":"<header>\n<h3 class=\"entry-title\"><a href=\"http:\/\/davidstockmanscontracorner.com\/the-4-6-trillion-leveraged-loan-market-next-crisis-in-the-making\/\" target=\"_blank\">The $4.6 Trillion Leveraged Loan Market\u2014\u2013Next Crisis In The Making<\/a><\/h3>\n<p class=\"entry-meta\">Financial crises take about a decade to be born. Having lived through four of them, I see the raw materials\u00a0for a fifth one \u2014 flowing from the collapse of so-called leveraged loans \u2014 debt piled on top of companies with weak credit ratings.<\/p>\n<\/header>\n<div class=\"entry-content\">\n<div class=\"pf-content\">\n<p>Before examining the latest news on leveraged loans, let\u2019s take a quick tour down the memory lane of financial crises I\u2019ve lived through.<\/p>\n<p>My first one was in 1982 \u2014 that\u2019s when banks lent too much money to oil and gas developers in Oklahoma and Texas as well as local real estate developers.<\/p>\n<p>At the suggestion of McKinsey, money-center banks like Chemical Bank thought it would be a great idea to buy a\u00a0piece\u00a0of those loans. It\u2019s all described nicely in a wonderful book \u2014\u00a0<a href=\"http:\/\/www.amazon.com\/Belly-Up-Collapse-Penn-Square\/dp\/0449902056\" target=\"_blank\"><em><u>Belly Up<\/u><\/em><\/a>.<\/p>\n<p>Too bad the price of oil and gas tumbled, leaving lenders in the lurch and causing a spike in bank failures that gave me the chance to spend a balmy summer in\u00a0<a href=\"http:\/\/www.forbes.com\/washington\/\" target=\"_blank\"><u>Washington<\/u><\/a>\u00a0helping the FDIC develop a system to manage the liquidationof those failed banks.<\/p>\n<p>By 1989, it was time for another banking crisis \u2014 this one was pinned to too much lending to commercial real estate developers in New England and junk-bond-backed loans for what used to be known as leveraged buyouts.<\/p>\n<p>The government shut down Bank\u00a0of New England and was threatening my employer, Bank of Boston, with the same. I worked on a government-mandated strategic plan intended to save the bank from a similar fate.<\/p>\n<p>Next up\u2014 the dot-com bust \u2014 which introduced me to the idea that not all bubbles are bad if you can get in when they\u2019re forming and exit before they burst. I invested in six dot-coms and had a mixed record \u2014 the three winners offset the three wipe outs.<\/p>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>The $4.6 Trillion Leveraged Loan Market\u2014\u2013Next Crisis In The Making Financial crises take about a decade to be born. Having lived through four of them, I see the raw materials\u00a0for a fifth one \u2014 flowing from the collapse of so-called leveraged loans \u2014 debt piled on top of companies with weak credit ratings. Before examining [&hellip;]<\/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":[2014,5979,175,195,239,3453,303,312,481,488,10705,1775],"class_list":["post-14653","post","type-post","status-publish","format-standard","hentry","category-economics","tag-banking-crisis","tag-contracorner","tag-credit","tag-debt","tag-economic-crisis","tag-fdic","tag-fed","tag-financial-crisis","tag-leverage","tag-loans","tag-mckinley","tag-oil-price-collapse"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/14653","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=14653"}],"version-history":[{"count":2,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/14653\/revisions"}],"predecessor-version":[{"id":14655,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/14653\/revisions\/14655"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=14653"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=14653"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=14653"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}