{"id":45348,"date":"2019-04-13T09:39:31","date_gmt":"2019-04-13T14:39:31","guid":{"rendered":"https:\/\/olduvai.ca\/?p=45348"},"modified":"2019-04-13T09:39:35","modified_gmt":"2019-04-13T14:39:35","slug":"unsolicited-advice-to-fed-chair-powell","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=45348","title":{"rendered":"Unsolicited Advice to Fed Chair Powell"},"content":{"rendered":"\n

Unsolicited Advice to Fed Chair Powell<\/a><\/h3>\n\n\n\n

American businesses over the past decade have taken a most unsettling turn.  According to research from the Securities Industry and Financial Markets Association, as of November 2018, non-financial corporate debt has grown to more than $9.1 trillion<\/a> [ed note: this number refers to securitized debt and business loans, other corporate liabilities would add an additional $11 trillion for a total of $20.5 trillion<\/em>].<\/p>\n\n\n\n

\"\"<\/a><\/figure><\/div>\n\n\n\n

US non-financial corporate debt takes flight \u2013 the post 2008 crisis trajectory is breath-taking, to say the least [PT]<\/p>\n\n\n\n

What is the significance of $9.1 trillion?  And what are its looming repercussions?  Here, for your edification, we\u2019ll take a moment to properly characterize this number.<\/p>\n\n\n\n

For one, non-financial corporate debt of $9.1 trillion is nearly half of real U.S. gross domestic product.  Hence, the realization of profits by private businesses has required a substantial accumulation of debt.  And this debt, like much of today\u2019s outstanding debt, is shaping up to be reckoned with at the worst possible time.<\/p>\n\n\n\n

Remember, when corporate debt is increasing faster than profits, it is like a plucked tomato sitting on a store shelf.  It goes bad with little notice.  Frank Holmes, by way of Forbes<\/a>, offers the grim particulars:<\/p>\n\n\n\n

\"\"<\/a><\/figure><\/div>\n\n\n\n

This by now slightly dated chart shows the upcoming wall of maturities in junk bonds and leveraged loans as of mid 2017 \u2013 n.b., this doesn\u2019t even include BBB-rated liabilities, which represent the by far biggest potential concern (\u201cTitans\u2019 debt\u201d refers to the debt maturity profiles of the companies carrying the largest securitized debt in absolute terms, such as e.g. AT&T). [PT]<\/p>\n\n\n\n

But that is not all\u2026<\/p>\n\n\n\n

Compounding Dishonesty<\/strong><\/p>\n\n\n\n

Whereas $9.1 trillion of non-financial corporate debt is nearly half of real U.S. GDP.  And whereas this $9.1 trillion of non-financial corporate debt is the junkiest corporate debt ever seen.  This $9.1 trillion of non-financial corporate debt is nearly double what it was just moments before the financial system exploded a decade ago.<\/p>\n\n\n\n

 \u2026click on the above link to read the rest of the article\u2026<\/p>\n","protected":false},"excerpt":{"rendered":"

Unsolicited Advice to Fed Chair Powell American businesses over the past decade have taken a most unsettling turn.  According to research from the Securities Industry and Financial Markets Association, as of November 2018, non-financial corporate debt has grown to more than $9.1 trillion [ed note: this number refers to securitized debt and business loans, other corporate liabilities […]<\/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":[5728,122,303],"class_list":["post-45348","post","type-post","status-publish","format-standard","hentry","category-economics","tag-acting-man","tag-central-bank","tag-fed"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/45348","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=45348"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/45348\/revisions"}],"predecessor-version":[{"id":45349,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/45348\/revisions\/45349"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=45348"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=45348"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=45348"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}