Surely it ends when the corporate Credit Default Swap (CDS) rate rises, and credit rating drops, so the interest rate paid by the company rises when they have t

Surely it ends when the corporate Credit Default Swap (CDS) rate rises, and credit rating drops, so the interest rate paid by the company rises when they have to refinance their bonds. Eventually, interest on bonds exceeds cashflow, and they have to borrow more to pay interest (Ponzi phase). At the margin, the lowest investment-grade BBB company drops one notch and becomes High Yield 'junk'. Then insurance companies and pension funds with fiduciary obligations must divest themselves of the bonds, so they sell and force the yield (interest rate) even higher. Companies have borrowed too much to perpetuate buybacks, jack up the share price, and reward executives with profits on share options. Half of all bonds are at BBB, just one downgrade from junk [1]. This situation is highly unstable, just one snowflake will create an avalanche of downgrades, and a true Black Swan will bankrupt many companies [2]. These companies have run off the cliff, and if they look down into the abyss, they will fall (e.g. GE [3], IBM). As with sub-prime mortgages, CDOs and MBSs during the Great Financial Crisis, pulling the trigger depends on the ratings agencies. Last time they were asleep, or perhaps complicit (euphemism for corrupt). Let's see what they do this time. [1] https://www.marketwatch.com/story/half-of-investment-grade-bonds-are-only-one-step-away-from-junk-status-2019-01-07 https://www.marketwatch.com/story/half-of-investment-grade-b... [2] https://www.zerohedge.com/news/2019-03-05/bis-warns-market-crash-risk-looming-fire-sales-over-mass-bbb-downgrades https://www.zerohedge.com/news/2019-03-05/bis-warns-market-c... [3] https://www.zerohedge.com/news/2018-11-13/collapse-has-begun-ge-now-trading-junk https://www.zerohedge.com/news/2018-11-13/collapse-has-begun...