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Josh Sigurdson talks with author and economic analyst John Sneisen about Moody’s most recent warning as the credit rating agency claims there is likely a large wave of junk bond defaults ahead.
We have seen the level of global non-financial companies rated as speculative or junk rise 58% since 2009, the largest proportion in history! We’ve also seen a 49% increase in debt for U.S. companies as well as the rise of share buybacks which are becoming more prevalent and more risky by the day.
Moody’s warnings should not be taken in stride. The agency only issues warnings when they absolutely have to and cannot put off the bad market sentiment any longer. They can only cover up so long until it becomes obvious. For their own good, they have to look like a serious credit rating agency when the markets tank, so they can say “I told you so.”
According to Moody’s, the low interest rates and obsession with yield has lead to companies issuing mounds of debt that in comparison offer low levels of protection for investors. They warn that when economic conditions worsen, the outlook won’t be so benign.
We haven’t seen this level of concern since 2008, and there’s a reason for that. Nothing has changed since 2008. Well, actually scratch that… things have gotten WORSE since 2008. We never saw a recovery, we simply saw perpetuation. Putting off the crisis a bit longer, leading to far more pressure build-up and centralization run amok. Now, when it comes down, it’ll come down that much harder and it’ll be as if no one ever learned.
If we want to stop the circular havoc, we as individuals need to support the individual’s demand of their currency, the free market. Not bank and government centralization leading to massive downfalls. How many times do we need to go through this.
Of course the fundamentals are off the table due to the level of manipulation in the monetary system as well as the markets, so we cannot put a date on the crash, but we know it has to happen inevitably and so we must prepare and understand the repeated problems.
Self sustainability and individual responsibility are simply the most necessary ways to protect ourselves against this market and monetary calamity. Individuals must do their own due diligence and come out of this problem, strong and independent.
Stay tuned for more from WAM!
Video edited by Josh Sigurdson
Graphics by Bryan Foerster and Josh Sigurdson
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