<story><title>A $9T corporate debt bomb is &apos;bubbling&apos; in the US economy</title><url>https://www.cnbc.com/2018/11/21/theres-a-9-trillion-corporate-debt-bomb-bubbling-in-the-us-economy.html</url></story><parent_chain></parent_chain><comment><author>apo</author><text>&lt;i&gt;Over the past decade, companies have taken advantage of low rates both to grow their businesses and reward shareholders.&lt;p&gt;Total corporate debt has swelled from nearly $4.9 trillion in 2007 as the Great Recession was just starting to break out to nearly $9.1 trillion halfway through 2018, quietly surging 86 percent, according to Securities Industry and Financial Markets Association data. Other than a few hiccups and some fairly substantial turbulence in the energy sector in late-2015 and 2016, the market has performed well.&lt;/i&gt;&lt;p&gt;&amp;quot;Reward shareholders&amp;quot; is code for stock buybacks - the practice of a company using ultra-low interest financing to buy its own stock on margin. It&amp;#x27;s an unsustainable way to manipulate  the price&amp;#x2F;earnings ratio, and thereby make a company look like a better buy than it is.&lt;p&gt;Buybacks in turn have been a major source of funding for the stock market&amp;#x27;s unprecedented run:&lt;p&gt;&lt;a href=&quot;https:&amp;#x2F;&amp;#x2F;seekingalpha.com&amp;#x2F;article&amp;#x2F;4156578-buyback-bubble-will-end-badly&quot; rel=&quot;nofollow&quot;&gt;https:&amp;#x2F;&amp;#x2F;seekingalpha.com&amp;#x2F;article&amp;#x2F;4156578-buyback-bubble-will...&lt;/a&gt;&lt;p&gt;I suspect those looking for a soft landing here haven&amp;#x27;t considered the reversible nature of this debt-fueled stock market rally. Nor have they considered the amplifying effect of debt on the upside and downside.</text></comment>
<story><title>A $9T corporate debt bomb is &apos;bubbling&apos; in the US economy</title><url>https://www.cnbc.com/2018/11/21/theres-a-9-trillion-corporate-debt-bomb-bubbling-in-the-us-economy.html</url></story><parent_chain></parent_chain><comment><author>mathattack</author><text>The market cap from US companies has grown from 19 to 32 trillion in the same period.  [0]&lt;p&gt;It’s not accurate to look at single variables in isolation.  Problems happen when the aggregate debt in an economy exceed the assets behind them, or the capacity to pay them down. [1] If we are there it’s because of govt and consumer (mortgage) debt.  On the corporate side I think it’s just balance sheet efficiency.  (Can write off debt payments)&lt;p&gt;[0] &lt;a href=&quot;https:&amp;#x2F;&amp;#x2F;data.worldbank.org&amp;#x2F;indicator&amp;#x2F;CM.MKT.LCAP.CD?start=2007&quot; rel=&quot;nofollow&quot;&gt;https:&amp;#x2F;&amp;#x2F;data.worldbank.org&amp;#x2F;indicator&amp;#x2F;CM.MKT.LCAP.CD?start=20...&lt;/a&gt;&lt;p&gt;[1] &lt;a href=&quot;https:&amp;#x2F;&amp;#x2F;en.m.wikipedia.org&amp;#x2F;wiki&amp;#x2F;Minsky_moment&quot; rel=&quot;nofollow&quot;&gt;https:&amp;#x2F;&amp;#x2F;en.m.wikipedia.org&amp;#x2F;wiki&amp;#x2F;Minsky_moment&lt;/a&gt;</text></comment>