At last year's World Economic Forum, there was a panel titled "The Next Financial Crisis", and while many different potential causes were considered, the most prominent one is definitely corporate debt, especially emerging market debt that is dollar-denominated. [0]
Much of the concern in markets right now seems to stem from the idea that as the Federal Reserve tightens credit, both through raising interest rates and through unwinding its previous QE programs, there will be a significant impact on companies that have borrowed at lower interest rates. Debt that is going to come due in the next few years is going to have to be refinanced, or is going to default.
If you're a country which borrowed in dollars, the tightening of US monetary policy will often lead to a change in exchange rates that makes it more expensive to pay back debt. Coupled with a global economic slowdown resulting from a trade war, and things start to look nasty wherever you look.
Risk has already come off - I am seeing it in private equity. If you run a startup and burn cash, have your plan B ready to go when the shit hits the fan.
Thinking about this reminded me of the line from the movie "The Big Short" where Michael Burry says one of the indicators of the coming crisis was an increase in the rate of fraud. Juxtapose that with what feels like an uptick in white collar fraud these past couple years. ie: Theranos, Fyre, 1MDB, numerous crypto token related scams.
Plus bad corporate paper is a highly-correlated procyclical problem, which will be extremely not-fun when the economy starts seriously slowing (especially since the government shot their fiscal stimulus arrow with the tax cuts and the Fed is still trying to get enough headroom to not have to worry about the “pushing on a string” problem they encountered in the ‘08 crash). Not going to be a fun year or two ahead.
> Much of the concern in markets right now seems to stem from the idea that as the Federal Reserve tightens credit
This became much less of a concern in late December, when Fed Chair Powell acquiesced to plummeting equities markets and declared a pause on rate hikes, emphasizing the data dependence and lack of a preset course for Fed policy. These statements signaled a shift in tone from the 'dots' published after FOMC, which indicated further hiking and a median expected neutral rate around 3% [0].
> both through raising interest rates
After Powell's comments, expectations for rate hikes have diminished. Looking at 30-Day Fed Funds Futures, you can see that the market is pricing in ~1 more rate hike before the Fed reverses course [1 - chart][2 - source data].
> unwinding its previous QE programs
It remains to be seen how aggressively the Fed will continue unwinding, but I'm curious how much balance sheet the Fed will actually be able to unwind. They've been rolling off ~50B in UST per month [3], starting from ~4.5T. For perspective, the Fed's balance sheet was ~800-900B prior to the GFC. There's reasonable concern that the Fed may not be able to reach pre-QE levels. The money stock appears to exhibit response to the Fed's balance shit reduction [4], which will not help foreign borrowers.
> Debt that is going to come due in the next few years is going to have to be refinanced, or is going to default.
It looks like loans have been refinanced such that the bulk of them mature in 2021 or later [5], giving issuers some breathing room for the time being.
There isn't going to be any more tightening, sorry to say. The yield curve is flat out to 30 years. 5-year breakeven inflation has come down to 1.67%, way below the Fed target. Unless the Democrats rev up government spending again, which they can't until at least 2020, 2.5% is where this cycle peaks. So much for the secular bond bear market: the pattern of ever looser credit cycles remains.
I don't have econonic background but I understood why banks are allowed to print the money and give it to businesses. If amount of money is fixed, then this problem will go away on its own. Human nature is not relible and if allowed humans will overspend and subsequent default.
As Taleb puts it, executives at these companies don't have "skin in the game". Increasing shareholder value short-term is lucrative especially when their own compensations are tied to short-term stock value gain.
Another part is lack of progress in executive education. While engineering as a discipline have constantly improved by introspection. No such thing have happenned in business management area. It's all about maintaining the status quo and appearing in controls even when they are nowhere near it.
This article is a bit misleading. The subprime crisis occurred because of the leverage on packaged debt that was held by big banks. Where by an original loan amount of say $1MM had an outstanding obligation perhaps 100x that.
The issue was that the banks held this debt, which means when there was an issue, they would become insolvent, which would lead to a financial crisis like the great depression, which is why government intervention was needed.
$1.2T of outstanding debt is high, however, not very relevant without knowing who the debt holders are. And as the article states, the primary big banks aren't overly exposed to this debt.
Additionally if the debt isn't leveraged on top of the outstanding loan amounts, again the damage from a potential crisis in this area will be very contained.
As the article states a lot of this exposure sits with private equity funds and hedge funds, which would result in very little impact to the average citizen if there were an issue.
In regards to the Michael Burry comments about fraud, that was specifically related to a bubble. That one of the surest signs of a bubble is out right and rampant fraud. This is critical because when a bubble occurs it means that mass hysteria sets over the general population as neighbors see people "dumber" than them making money. This leads to rampant speculation across the board, which then leads to bad actors committing fraud. They commit fraud because the incentives are high to make a quick buck.
A loosening of debt requirements, while a bad idea, doesn't qualify as fraud. There also isn't general speculation that is associated with a bubble, which was one of the main ingredients for the housing mortgage crash as well.
So while there maybe an issue here if defaults occur those issues will be very contained. There maybe some hit to the general financial markets, but nothing even remotely close to what occurred with the housing crisis.
This is basically the equivalent of saying that any debt that shows loosening guidelines and floating APR is the same thing as the housing crisis, which isn't accurate.
> That one of the surest signs of a bubble is out right and rampant fraud. This is critical because when a bubble occurs it means that mass hysteria sets over the general population as neighbors see people "dumber" than them making money. This leads to rampant speculation across the board, which then leads to bad actors committing fraud. They commit fraud because the incentives are high to make a quick buck.
That reads like a description of SV. Mass hysteria - check (eg. BTC, shitty startups)! "dumber" people making money - check! rampant speculation - check (eg. Uber IPO valuation of 120B, bay area shacks going for millions)! Actors committing fraud - check (eg. Theranos, Zenefits)!
So can we say that SV is in a bubble, maybe confined to the tech sector?
The subprime crisis was precipitated by a lot of people taking out mortgages with either blatantly or coerced false income information in their mortgage applications on homes that had inflated values. Once home prices stopped going up as much and interest rates started increasing, these people were no longer able to make their mortgage payments.
Leveraged loans at 7x ebitda are still less leverage than someone taking out 90% LTV mortgage (90% LTV can be thought of as 9x leverage against your equity). Companies usually also have more flexibility to increase their income, or decrease their expenses compared to an average person. And mortgages have required amortization where as most levered loans to my knowledge are interest only.
All in all, unless a significant % of companies taking out levered loans are submitting fraudulent financial filings, this is nothing like the subprime crisis.
> The subprime crisis was precipitated by a lot of people taking out mortgages with either blatantly or coerced false income information in their mortgage applications on homes that had inflated values.
Whereas what, companies would never utilize non-standard accounting methods or falsified or exaggerated earnings reports or forecasts?
>a lot of people taking out mortgages with either blatantly or coerced false income information
Money flowed freely b/c the mortgages didn't matter. It was the ability to bundle the mortgages and leverage them that fueled low-standards and drove much of the lending frenzy.
>The subprime crisis was precipitated by a lot of people taking out mortgages...these people were no longer able to make their mortgage payments
No. Again, mortgage debt alone was a mere fraction of the problem. Those loans were levered up many multiples through CDOs and other exotic instruments, which was the real problem.
In 2008 there was a lot of effort made to blame poor people/subprime debtors. But, it's been covered ad nauseam since then, so it's kind of surprising to hear someone still making those claims in 2019.
The definition of "EBITDA" keeps getting looser each year, so the true leverage is likely somewhat higher than you'd expect by just looking at the max leverage a credit agreement permits.
Also, most leveraged loans (i.e. institutional term B loans) require de minimis principal repayment in addition to interest (1%/year).
From where I'm from, physical collateral is valued more highly than paper collateral that can go to zero if such a companies earnings per share are already less than 0…
> The subprime crisis was precipitated by a lot of people taking out mortgages with either blatantly or coerced false income information in their mortgage applications on homes that had inflated values.
Yes but this was exacerbated because it wasn't as many people as what you said seems to suggest.
The investment banks were so highly leveraged on the collateralized debt that it only took 7% of the mortgage holders missing payments at once to bring down the whole financial system.
This suggests that the vast majority of people lying can actually be trusted to make payments, and would prefer to not be shut out of the credit system.
A lot of the problem isn't in the debt as such, it is in the collateralization. When you bundle the debt and sell it on in slices with different risk profiles (i.e. separating out who gets paid first (least risky) to last (most risky) then it becomes really hard to understand how risky the debt slices are (which dictates how much they are worth).
People assume that the least risky debt (sometimes called super-senior) is worth its face value. The problem is that when things go wrong, investors lose confidence in the valuation of the debt. And suddenly a bank with say $1T of super-senior debt finds it is only worth $100B on the open market. And that means that the bank doesn't have the assets to back the loans it has made - so has to raise money by selling things. Selling things when you are in trouble is never a good idea, as you are forced to accept a discount. So you now have the market flooding with cheap assets (say securities), which then drops the value of the securities that other banks hold - which gives them problems in backing the loans they have made. Then they have to start selling.
I run a small SAS company and consult for another medium sized O&G company. The amount of debt I am offered to take on every day is staggering. The O&G company recently took a $200k loan with little to no proof of income, collateral, or anything else. I know of some other small companies with MILLIONS in debt and absolutely 0 collateral to back it up. In the event of insolvency the lender will just soak the loss.
I work for a fintech company that is in the business of small/medium business credit and financing, and this is a very surprising thing to hear. My understanding is the majority of our customers are struggling to establish business credit and get decent financing, especially if they haven't been in business long and/or don't have high revenue streams.
Do the companies you mention have decent revenue, even if they also have debt?? Your situation is one many of our customers would love to be in.
The difference is that everybody knows that leveraged loans are risky. The mortgage crisis wasn't triggered by the fact that complex mortgage backed securities were risky, but by the fact that people thought they were pretty much risk free and were blindsided.
Whoever is determining credit worthiness needs to have skin in the game. This is what Dodd-Frank did. It required security bankers retain 5% of the overall risk of the security. Known as the Volcker Rule, it is now being rolled back: https://www.washingtonpost.com/business/economy/trump-signs-...
This is the key phrase in the story: "packaged into securities and sold to investors". This is exactly like the mortgage crisis. Back then banks knew many of the borrowers are not being truthful in their loan applications but lent to them any way (look up "liar loans"). Banks didn't care because they packaged these mortgages into securities and sold them to investors as "mortgage-backed securities", so defaults are someone else's problem. Banks are back at it again.
The FED certainly still remembers the mortgage mess, considering they still hold some $1.6 trillion in mortgage backed securities on their books. One wonders what they will do when the next debt crisis hits. Will they take on another trillion in corporate debt?
Clearly this can't go on forever, but there seems to be little political will to let credit markets normalize.
Have also been reading about this [3-6]. With some believing the economy is slowing[1] (i.e., lower corp profits), and with the Fed believed to be pausing rate hikes[2] (i.e., no interest payment increases), I'm curious to see if this turns into a sizeable problem (i.e., quasi '08 bad)
People have been saying this since 2015. While the conditions for debt refinancing have certainly changed, it's not clear by any means that this is the sort of problem that would cause any sort of cascading recession all at once.
Peter Schiff and Ron Paul have been saying this since 2008. I used to believe them. I stopped when the fed ended QE and started raising rates despite Schiff's predictions.
There's a great saying... economists have predicted the last 7 of 5 recessions.
A more interesting question to ask is why we shifted from the student loan crisis to corporate debt as the very-definite-hiding-in-plain-sight cause of the impending crash.
The current financial system does not price taking care of the environment. Tragedy of the commons, air co2, oceans pollution. Further it is unstable there is always credit booms and busts in cyclical fashion. Further besides thrashing the planet it sends wealth from the middle class up to the top of the pyramid. I am curious why the middle class tolerates it? Could it be that most people do not understand the financial system?
Misleading. They show the amount that debt has increased, but they don't show how corporate assets have increased. If they did, you'd see that the wealth/debt ratio is NOT alarming.
When markets crash they tend to crash fast after seeming to be in a slow motion. I wonder what the kickoff will be?
If it’s this week it will go something like this:
1. People realize that they aren’t getting their tax returns because of the shutdown and it has an outsized effect because consumer savings rates are low. Market wobbles.
2. Treasury issues short term debt at high yields and long term debt at low yield yields Thursday, market crumbles Friday.
3. Fed meets next week to discuss the debt window and if they need to slow down QT or go back to QE. They don’t know. Market goes volatile.
4. Government shutdown ends at first sending stocks up. Then key economic data releases showing consumer spending is going to be weak because real wages were down.
Anyways, it’s more likely we’d have to see a couple of blue chips go bankrupt first like a big state utility company or a classic old American tech company.
For awhile now I've been preaching my prediction which is:
When (not if) the market crashes again, it will happen MUCH faster than previous crashes due to increasing automated trading and general speed of news. Expect a flash crash within minutes instead of days. And, if there is a halt in trading it will crash even faster.
You have to take all these gloom and doom articles with a grain of salt. And take them as a reminder that all economic booms reverse. Yes, some are right. Yet, most are not. Question is which and when? We can't know and won't know until after the next financial disaster happens. Even as we go through one we won't know until months after it starts.
The last recession started at the end of 2007 yet we didn't really start feeling it until well into 2008.
Financial collapses are more like earthquakes. You never know when they will happen. But by the time they happen, it's too late to get ready so you better be ready to avoid a major disaster beforehand.
Who profits off of people worrying about another economic crisis? I'm pretty knowledgeable on my local real estate market, and people are constantly telling me we're in a bubble (we're not) and it's all going to come crashing down this year (it won't). It seems very common these days for people with next to no economic expertise to be certain of a coming crash. I don't think it can be credited to everyone watching the Big Short.
Edit: Explanation because i'm getting downvoted. I live in Utah. Our prices have increased quite a bit in the past couple years. The first bit of increase was justified by the increase in high paying tech jobs, but then sellers got greedy. We're currently in a stalemate where nothing is selling because sellers want unrealistic prices. That's not a bubble, that's a market correction.
[+] [-] arawde|7 years ago|reply
Much of the concern in markets right now seems to stem from the idea that as the Federal Reserve tightens credit, both through raising interest rates and through unwinding its previous QE programs, there will be a significant impact on companies that have borrowed at lower interest rates. Debt that is going to come due in the next few years is going to have to be refinanced, or is going to default.
If you're a country which borrowed in dollars, the tightening of US monetary policy will often lead to a change in exchange rates that makes it more expensive to pay back debt. Coupled with a global economic slowdown resulting from a trade war, and things start to look nasty wherever you look.
[0]: https://www.youtube.com/watch?v=1WOs6S0VrlA
[+] [-] ttul|7 years ago|reply
https://www.slideshare.net/eldon/sequoia-capital-on-startups...
[+] [-] pmorici|7 years ago|reply
[+] [-] HillRat|7 years ago|reply
[+] [-] ellius|7 years ago|reply
https://itunes.apple.com/us/podcast/odd-lots/id1056200096?mt...
[+] [-] seppin|7 years ago|reply
All of Latin America, pretty much
[+] [-] nickles|7 years ago|reply
This became much less of a concern in late December, when Fed Chair Powell acquiesced to plummeting equities markets and declared a pause on rate hikes, emphasizing the data dependence and lack of a preset course for Fed policy. These statements signaled a shift in tone from the 'dots' published after FOMC, which indicated further hiking and a median expected neutral rate around 3% [0].
> both through raising interest rates
After Powell's comments, expectations for rate hikes have diminished. Looking at 30-Day Fed Funds Futures, you can see that the market is pricing in ~1 more rate hike before the Fed reverses course [1 - chart][2 - source data].
> unwinding its previous QE programs
It remains to be seen how aggressively the Fed will continue unwinding, but I'm curious how much balance sheet the Fed will actually be able to unwind. They've been rolling off ~50B in UST per month [3], starting from ~4.5T. For perspective, the Fed's balance sheet was ~800-900B prior to the GFC. There's reasonable concern that the Fed may not be able to reach pre-QE levels. The money stock appears to exhibit response to the Fed's balance shit reduction [4], which will not help foreign borrowers.
> Debt that is going to come due in the next few years is going to have to be refinanced, or is going to default.
It looks like loans have been refinanced such that the bulk of them mature in 2021 or later [5], giving issuers some breathing room for the time being.
[0] https://www.cnbc.com/2018/12/19/fed-dot-plot-december-2018.h...
[1] https://imgur.com/a/43Gt8si
[2] https://www.barchart.com/futures/quotes/ZQ*0/all-futures
[3] https://www.cnbc.com/2018/11/29/the-fed-is-still-tweaking-it...
[4] https://imgur.com/a/RA62s4e
[5] http://www.leveragedloan.com/us-leveraged-loan-maturity-wall...
[+] [-] C1sc0cat|7 years ago|reply
[+] [-] thoughtstheseus|7 years ago|reply
[+] [-] pishpash|7 years ago|reply
[+] [-] drieddust|7 years ago|reply
As Taleb puts it, executives at these companies don't have "skin in the game". Increasing shareholder value short-term is lucrative especially when their own compensations are tied to short-term stock value gain.
Another part is lack of progress in executive education. While engineering as a discipline have constantly improved by introspection. No such thing have happenned in business management area. It's all about maintaining the status quo and appearing in controls even when they are nowhere near it.
[+] [-] raiyu|7 years ago|reply
The issue was that the banks held this debt, which means when there was an issue, they would become insolvent, which would lead to a financial crisis like the great depression, which is why government intervention was needed.
$1.2T of outstanding debt is high, however, not very relevant without knowing who the debt holders are. And as the article states, the primary big banks aren't overly exposed to this debt.
Additionally if the debt isn't leveraged on top of the outstanding loan amounts, again the damage from a potential crisis in this area will be very contained.
As the article states a lot of this exposure sits with private equity funds and hedge funds, which would result in very little impact to the average citizen if there were an issue.
In regards to the Michael Burry comments about fraud, that was specifically related to a bubble. That one of the surest signs of a bubble is out right and rampant fraud. This is critical because when a bubble occurs it means that mass hysteria sets over the general population as neighbors see people "dumber" than them making money. This leads to rampant speculation across the board, which then leads to bad actors committing fraud. They commit fraud because the incentives are high to make a quick buck.
A loosening of debt requirements, while a bad idea, doesn't qualify as fraud. There also isn't general speculation that is associated with a bubble, which was one of the main ingredients for the housing mortgage crash as well.
So while there maybe an issue here if defaults occur those issues will be very contained. There maybe some hit to the general financial markets, but nothing even remotely close to what occurred with the housing crisis.
This is basically the equivalent of saying that any debt that shows loosening guidelines and floating APR is the same thing as the housing crisis, which isn't accurate.
[+] [-] RestlessMind|7 years ago|reply
That reads like a description of SV. Mass hysteria - check (eg. BTC, shitty startups)! "dumber" people making money - check! rampant speculation - check (eg. Uber IPO valuation of 120B, bay area shacks going for millions)! Actors committing fraud - check (eg. Theranos, Zenefits)!
So can we say that SV is in a bubble, maybe confined to the tech sector?
[+] [-] XnoiVeX|7 years ago|reply
[+] [-] heifetz|7 years ago|reply
The subprime crisis was precipitated by a lot of people taking out mortgages with either blatantly or coerced false income information in their mortgage applications on homes that had inflated values. Once home prices stopped going up as much and interest rates started increasing, these people were no longer able to make their mortgage payments.
Leveraged loans at 7x ebitda are still less leverage than someone taking out 90% LTV mortgage (90% LTV can be thought of as 9x leverage against your equity). Companies usually also have more flexibility to increase their income, or decrease their expenses compared to an average person. And mortgages have required amortization where as most levered loans to my knowledge are interest only.
All in all, unless a significant % of companies taking out levered loans are submitting fraudulent financial filings, this is nothing like the subprime crisis.
[+] [-] FireBeyond|7 years ago|reply
Whereas what, companies would never utilize non-standard accounting methods or falsified or exaggerated earnings reports or forecasts?
[+] [-] unclebucknasty|7 years ago|reply
Money flowed freely b/c the mortgages didn't matter. It was the ability to bundle the mortgages and leverage them that fueled low-standards and drove much of the lending frenzy.
>The subprime crisis was precipitated by a lot of people taking out mortgages...these people were no longer able to make their mortgage payments
No. Again, mortgage debt alone was a mere fraction of the problem. Those loans were levered up many multiples through CDOs and other exotic instruments, which was the real problem.
In 2008 there was a lot of effort made to blame poor people/subprime debtors. But, it's been covered ad nauseam since then, so it's kind of surprising to hear someone still making those claims in 2019.
[+] [-] berberous|7 years ago|reply
Also, most leveraged loans (i.e. institutional term B loans) require de minimis principal repayment in addition to interest (1%/year).
[+] [-] cinquemb|7 years ago|reply
From where I'm from, physical collateral is valued more highly than paper collateral that can go to zero if such a companies earnings per share are already less than 0…
[+] [-] jayalpha|7 years ago|reply
It is easy to make fundamental predictions in finance. It is impossible to predict timings.
> Once home prices stopped going up as much and interest rates started increasing, these people were no longer able to make their mortgage payments.
When was the last time you looked at the Case–Shiller index?
[+] [-] inetknght|7 years ago|reply
What actions do companies have available to them which consumers do not with regards to income or expense management??
[+] [-] unknown|7 years ago|reply
[deleted]
[+] [-] gammateam|7 years ago|reply
Yes but this was exacerbated because it wasn't as many people as what you said seems to suggest.
The investment banks were so highly leveraged on the collateralized debt that it only took 7% of the mortgage holders missing payments at once to bring down the whole financial system.
This suggests that the vast majority of people lying can actually be trusted to make payments, and would prefer to not be shut out of the credit system.
[+] [-] steve_gh|7 years ago|reply
People assume that the least risky debt (sometimes called super-senior) is worth its face value. The problem is that when things go wrong, investors lose confidence in the valuation of the debt. And suddenly a bank with say $1T of super-senior debt finds it is only worth $100B on the open market. And that means that the bank doesn't have the assets to back the loans it has made - so has to raise money by selling things. Selling things when you are in trouble is never a good idea, as you are forced to accept a discount. So you now have the market flooding with cheap assets (say securities), which then drops the value of the securities that other banks hold - which gives them problems in backing the loans they have made. Then they have to start selling.
And that's how a financial earthquake begins...
[+] [-] shiftpgdn|7 years ago|reply
[+] [-] elliotec|7 years ago|reply
Do the companies you mention have decent revenue, even if they also have debt?? Your situation is one many of our customers would love to be in.
[+] [-] digitaltrees|7 years ago|reply
[+] [-] hn_throwaway_99|7 years ago|reply
[+] [-] 01100011|7 years ago|reply
[+] [-] travisoneill1|7 years ago|reply
[+] [-] interlocutor|7 years ago|reply
[+] [-] interlocutor|7 years ago|reply
[+] [-] magila|7 years ago|reply
For me the whole situation is really scary.
[+] [-] paxys|7 years ago|reply
[+] [-] rayvy|7 years ago|reply
[1] https://www.cnbc.com/2018/12/10/goldman-sachs-warns-of-a-sha...
[2] https://www.reuters.com/article/uk-global-forex/dollar-falte...
[3] https://www.zerohedge.com/news/2018-10-30/corporate-debt-bub...
[4] https://www.bloomberg.com/news/articles/2018-11-19/corporate...
[5] https://www.forbes.com/sites/jessecolombo/2018/08/29/the-u-s...
[6] https://seekingalpha.com/article/4225847-corporate-bond-mark...
[+] [-] zjaffee|7 years ago|reply
[+] [-] orblivion|7 years ago|reply
[+] [-] jcranmer|7 years ago|reply
A more interesting question to ask is why we shifted from the student loan crisis to corporate debt as the very-definite-hiding-in-plain-sight cause of the impending crash.
[+] [-] sonnyblarney|7 years ago|reply
[+] [-] acd|7 years ago|reply
[+] [-] alexnewman|7 years ago|reply
[+] [-] sdinsn|7 years ago|reply
[+] [-] caublestone|7 years ago|reply
If it’s this week it will go something like this:
1. People realize that they aren’t getting their tax returns because of the shutdown and it has an outsized effect because consumer savings rates are low. Market wobbles.
2. Treasury issues short term debt at high yields and long term debt at low yield yields Thursday, market crumbles Friday.
3. Fed meets next week to discuss the debt window and if they need to slow down QT or go back to QE. They don’t know. Market goes volatile.
4. Government shutdown ends at first sending stocks up. Then key economic data releases showing consumer spending is going to be weak because real wages were down.
Anyways, it’s more likely we’d have to see a couple of blue chips go bankrupt first like a big state utility company or a classic old American tech company.
[+] [-] umeshunni|7 years ago|reply
[+] [-] marcrosoft|7 years ago|reply
When (not if) the market crashes again, it will happen MUCH faster than previous crashes due to increasing automated trading and general speed of news. Expect a flash crash within minutes instead of days. And, if there is a halt in trading it will crash even faster.
[+] [-] WheelsAtLarge|7 years ago|reply
The last recession started at the end of 2007 yet we didn't really start feeling it until well into 2008.
Financial collapses are more like earthquakes. You never know when they will happen. But by the time they happen, it's too late to get ready so you better be ready to avoid a major disaster beforehand.
[+] [-] tcbawo|7 years ago|reply
[+] [-] everybodyknows|7 years ago|reply
https://www.nasdaq.com/investing/glossary/l/leveraged-loan
FT offers a more technical view of the phenomenon. Yesterday:
https://www.ft.com/content/64c9665e-1814-11e9-9e64-d150b3105...
[+] [-] swampthinker|7 years ago|reply
[+] [-] ngngngng|7 years ago|reply
Edit: Explanation because i'm getting downvoted. I live in Utah. Our prices have increased quite a bit in the past couple years. The first bit of increase was justified by the increase in high paying tech jobs, but then sellers got greedy. We're currently in a stalemate where nothing is selling because sellers want unrealistic prices. That's not a bubble, that's a market correction.