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Beware the Debt Cliff

Last year, after the lending window opened again, companies pulled back from the brink of disaster by "refinancing." That doesn't mean that they are solvent, but it did mean that they had successfully "kicked the can" down the road.

The typical refinancing time frame is five years. Taken from last year, that would be 2014. When companies refinanced in 2009, they did so not only with that year's debt, but with this year's and next year's; in many cases, even with 2012 debts.

Many companies will have "light" debt burdens for the next one to three years. But the effect of that was to pile up debts as on a cliff--for 2014.

That is a  year when many NATIONAL bills, e.g. for social securities and pensions, will become worrisome. The piling of up of so much debt, on a cliff, for one year, could make 2014 "the year of reckoning."