Read the Beforeitsnews.com story here. Advertise at Before It's News here.
Profile image
By Mac (Reporter)
Contributor profile | More stories
Story Views
Now:
Last hour:
Last 24 hours:
Total:

Low Interest Rates Won’t Solve The Coming Corporate Debt CRISIS

% of readers think this story is Fact. Add your two cents.


The mainstream media has been ignoring the problem of corporate debt in the United States.  While it’s often not thought of, corporate debt can pose a huge problem to the overall economy and lowering interest rates to make borrowing money cheaper won’t solve the crisis.

And low rates won’t solve the coming corporate debt crisis – it will just sustain the number of zombie companies for longer, putting off the reckoning till later, when it will be so much larger. Zombie companies block market niches, kept solvent when economic Darwinism says they should wither and die, opening their market niche to more nimbler new entrants. Blain’s Morning Porridge, submitted by Bill Blain of Shard Capital, via ZeroHedge

So far, the market consensus is that the Fed will eventually ease lower interest rates. But that won’t ease the pain the economy will feel from the corporate debt that’s at unsustainable levels.  It’s how in how the Fed communicates or hints at timing tomorrow that will be most closely analyzed aspect. Expect pages of dot-plot analysis and explanations of whatever he said and meant. Federal Reserve chairman Jerome Powell has already made it crystal clear that the Fed is willing to act to offset slower growth and counter a trade war; “we will act as appropriate to sustain the expansion.”

In a speech delivered on May 20, Powell sounded the alarm about rising levels of business debt, although he dismissed comparisons between the current situation and the conditions in U.S. mortgage markets before the financial crisis.

The swelling corporate debt is definitely bubbling up and could be the catalyst for a global economic meltdown. In fact, U.S. corporations are now more indebted than they were before the Great Recession of a decade ago.  That means their demise will be all the more dramatic.

Views about the risks from rising corporate borrowing “range from ‘This is a return to the subprime-mortgage crisis’ to ‘Nothing to worry about here,’” Powell said. “At the moment, the truth is likely somewhere in the middle,” he added.

“The US corporate credit cycle appears to be at its highest point in recent history,” the International Monetary Fund said in its “Global Financial Stability Report,” released in April. The indicators show corporate debt is skewed toward lower-rated issuers, with leverage being close to cycle highs.

An extended period of easy credit has led to loose lending and investment standards, allowing even companies on a shaky financial footing to pile on debt.

The bastion of authoritarian control on the economy, the International Monetary Fund, has even warned about the problem of mounting corporate debt. 

The IMF has also recently warned governments to reign in their debt before an economic meltdown, as it’s the only chance the world bank and governments have to survive and remain relevant. Because of this, we should all be taking a long hard look at our own financial situation and see where we can make the cuts necessary to begin the epic task of eliminating liabilities, aka, paying off debt. –SHTFPlan

The general public often glazes over corporate and government debt, while focusing on racking up their own. In a normal economy, led by a free market system, this would be less of a concern.  But we have anything but a free and healthy economy. In fact, ours is on life support being propped up only by the central banks, fiat currency, and their unwillingness to pull the plug…just yet…

This article has been contributed by SHTF Plan. Visit www.SHTFplan.com for alternative news, commentary and preparedness info.


Source: https://www.shtfplan.com/headline-news/low-interest-rates-wont-solve-the-coming-corporate-debt-crisis_06182019


Before It’s News® is a community of individuals who report on what’s going on around them, from all around the world.

Anyone can join.
Anyone can contribute.
Anyone can become informed about their world.

"United We Stand" Click Here To Create Your Personal Citizen Journalist Account Today, Be Sure To Invite Your Friends.

Please Help Support BeforeitsNews by trying our Natural Health Products below!


Order by Phone at 888-809-8385 or online at https://mitocopper.com M - F 9am to 5pm EST

Order by Phone at 866-388-7003 or online at https://www.herbanomic.com M - F 9am to 5pm EST

Order by Phone at 866-388-7003 or online at https://www.herbanomics.com M - F 9am to 5pm EST


Humic & Fulvic Trace Minerals Complex - Nature's most important supplement! Vivid Dreams again!

HNEX HydroNano EXtracellular Water - Improve immune system health and reduce inflammation.

Ultimate Clinical Potency Curcumin - Natural pain relief, reduce inflammation and so much more.

MitoCopper - Bioavailable Copper destroys pathogens and gives you more energy. (See Blood Video)

Oxy Powder - Natural Colon Cleanser!  Cleans out toxic buildup with oxygen!

Nascent Iodine - Promotes detoxification, mental focus and thyroid health.

Smart Meter Cover -  Reduces Smart Meter radiation by 96%! (See Video).

Report abuse

    Comments

    Your Comments
    Question   Razz  Sad   Evil  Exclaim  Smile  Redface  Biggrin  Surprised  Eek   Confused   Cool  LOL   Mad   Twisted  Rolleyes   Wink  Idea  Arrow  Neutral  Cry   Mr. Green

    MOST RECENT
    Load more ...

    SignUp

    Login

    Newsletter

    Email this story
    Email this story

    If you really want to ban this commenter, please write down the reason:

    If you really want to disable all recommended stories, click on OK button. After that, you will be redirect to your options page.