ozzy43

Why I'm Keeping an Eye on Corporate Defaults

I think the author is overly optimistic. The 'problem' didn't take 25-30 years - it's taken almost 100. Fiat currency and fractional reserve banking began a lot longer than a couple of decades ago. Since 1913 (and central banking as we know it didn't really come together as a consolidated whole in this country until FDR in the 30s), the dollar has lost 95% of its purchasing power. We grew up in this era, and take it for 'normal' - it's not. Current policies cannot but accelerate that ongoing loss. The difference between 'nominal' and 'real' will inevitably become apparent, and sooner rather than latter, it seems likely.

This is not a recession, cooked government figures notwithstanding. It's a depression. A fundamental restructuring of the economy is underway, masked by government bailouts of zombie companies and cooked up figures for economic indicators on all fronts. But the toxicity remains. The 'real' unemployment rate is north of 15% already - what's the 'real' GDP? The 'real' inflation rate? Who knows? I do know it is far, far worse than these metrics reveal - and that this is not an accident.

So does it really tell us anything to look at corporate defaults when you have so many sectors being artificially propped up by so many market-distorting forces? I don't know, but I think, like so many other metrics that would yield useful information in a free market, the answers from reading such tea leaves are likely to mislead.