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Chart from the article shows debt growing by 3.5% since turn of the century. Considering rates going to near zero if anything that is a low growth rate. Sorry,

Chart from the article shows debt growing by 3.5% since turn of the century. Considering rates going to near zero if anything that is a low growth rate. Sorry, but coming off the summers doomsday hype this reads like a mole hill.

reportgunner 7y ago
You mean the chart that goes from 4.5% to 9.95% ? That's the debt doubling in 20 years isn't it? The small bump in the middle is the economical crisis, you see how debts were not paid ?
- Danieru 7y ago
  You appear to be misreading the chart, it is 4.5T to 9.95T. "T for trillion dollars" not "t for percentage". Considering 20 years of inflation yes, a doubling in twenty years of a nominal cash record is trivial. GDP in real terms (inflation adjusted) doubled in the same timeframe. In other words: debt as percentage of GDP has done down. Also of note you claim "you see how debts were not paid" pointing to a point in the graph where debts _were being paid_, that is why the curve does down. When debts are repaid faster than issued then total debt reclines. To recap: everything you wrote was either factually wrong or a mis-understanding how to read a single variable graph. Please put more thought when attempting to nerd-snipe. There is no doomsday debt bubble, not based on these numbers.
  - reportgunner 7y ago
    I might have, but nevertheless I was reacting to Chart from the article shows debt growing by 3.5% since turn of the century. You appear to be misreading the chart, it is 4.5T to 9.95T How did you conclude that it grew 3.5% when it's now doubled ?
    - Danieru 7y ago
      Simple, 3.5% yearly for 20 years is near double. Also note how "growing" in English is a present tense verb. In English this implies a continuous motion. Were you trying the classic "pretend to mis-read then express outrage at your own misunderstanding" brand of nerd-sniping?
      - adrianN 7y ago
        Please try to be nicer. As per the guidelines: > Be kind. Don't be snarky. Comments should get more thoughtful and substantive, not less, as a topic gets more divisive. Have curious conversation; don't cross-examine. and > Please respond to the strongest plausible interpretation of what someone says, not a weaker one that's easier to criticize. Assume good faith.
        Danieru 7y ago
        You are right I am sorry. My replies have been in annoyance. Several times these past few months my posts have been replied with low-effort "gotchas" and I am a bit low on low on patience for the nerd-sniping.
        reportgunner 7y ago
        Let me apologize for my comments, I should have paid more attention to both the article and your comment. Now I see that we basically agree about the numbers, we just have a different opinion on the fact. They were not made in ill will, I was just trying to make a discussion. I agree that I could have toned it down on the loaded questions, I was a bit undercaffeinated this morning.
        Danieru 7y ago
        I happily accept your apology. Thank you for trying to open a discussion with me, I live talking about economics and finance. Let's start fresh and get to that discussion we both want. No problem of course if you disagree with me. To open the discussion my opinion is that this article is overstating the case for concern in corporate debt. The growth since 2000 is not significantly above a trend line which one might expect in a loow interest rate environment. For my part I did sell most of my stocks in the past few months and moved my families money into a form of real estate like real asset. I do think the markets are bubbly but journalists have been trying to pin a possible catalyst for a popping of said bubble. Corporate debt I argue would not be that cause. In fact one of the common complaints of the clo market is how junk bond issuing companies are able to reduce the number of covinents. This is both a testament to the strength of demand, but would also make it harder for the market to price correct, aka pop. I will offer up that the most likely cause of any popping would logically be China. Yet of course China's strong capital controls allow them great freedom in issuing stimulus without tanking trade balance. What would you like to discuss?
deleted 7y ago
[deleted]
formercoder 7y ago
Looking at absolute levels of debt is useless clickbait, one should look at trends in debt / ebitda.
- ummonk 7y ago
  EBITDA is cyclical though. Debt / revenues would be a better measure.
  - formercoder 7y ago
    Revenue is cyclical too, I’d look at headroom for downturns in debt/ebitda especially where firms start to slip into junk bond territory.
- XnoiVeX 7y ago
  Excellent analysis by Deloitte. https://www2.deloitte.com/us/en/insights/economy/issues-by-the-numbers/rising-corporate-debt-levels.html https://www2.deloitte.com/us/en/insights/economy/issues-by-t...
  - ummonk 7y ago
    I wonder how much of the rise in percent of debt that was poor quality was fueled by investors seeking higher bond yields in a low yield environment...

reportgunner 7y ago

You mean the chart that goes from 4.5% to 9.95% ? That's the debt doubling in 20 years isn't it? The small bump in the middle is the economical crisis, you see how debts were not paid ?

Danieru 7y ago
You appear to be misreading the chart, it is 4.5T to 9.95T. "T for trillion dollars" not "t for percentage". Considering 20 years of inflation yes, a doubling in twenty years of a nominal cash record is trivial. GDP in real terms (inflation adjusted) doubled in the same timeframe. In other words: debt as percentage of GDP has done down. Also of note you claim "you see how debts were not paid" pointing to a point in the graph where debts _were being paid_, that is why the curve does down. When debts are repaid faster than issued then total debt reclines. To recap: everything you wrote was either factually wrong or a mis-understanding how to read a single variable graph. Please put more thought when attempting to nerd-snipe. There is no doomsday debt bubble, not based on these numbers.
- reportgunner 7y ago
  I might have, but nevertheless I was reacting to Chart from the article shows debt growing by 3.5% since turn of the century. You appear to be misreading the chart, it is 4.5T to 9.95T How did you conclude that it grew 3.5% when it's now doubled ?
  - Danieru 7y ago
    Simple, 3.5% yearly for 20 years is near double. Also note how "growing" in English is a present tense verb. In English this implies a continuous motion. Were you trying the classic "pretend to mis-read then express outrage at your own misunderstanding" brand of nerd-sniping?
    - adrianN 7y ago
      Please try to be nicer. As per the guidelines: > Be kind. Don't be snarky. Comments should get more thoughtful and substantive, not less, as a topic gets more divisive. Have curious conversation; don't cross-examine. and > Please respond to the strongest plausible interpretation of what someone says, not a weaker one that's easier to criticize. Assume good faith.
      - Danieru 7y ago
        You are right I am sorry. My replies have been in annoyance. Several times these past few months my posts have been replied with low-effort "gotchas" and I am a bit low on low on patience for the nerd-sniping.
        reportgunner 7y ago
        Let me apologize for my comments, I should have paid more attention to both the article and your comment. Now I see that we basically agree about the numbers, we just have a different opinion on the fact. They were not made in ill will, I was just trying to make a discussion. I agree that I could have toned it down on the loaded questions, I was a bit undercaffeinated this morning.
        Danieru 7y ago
        I happily accept your apology. Thank you for trying to open a discussion with me, I live talking about economics and finance. Let's start fresh and get to that discussion we both want. No problem of course if you disagree with me. To open the discussion my opinion is that this article is overstating the case for concern in corporate debt. The growth since 2000 is not significantly above a trend line which one might expect in a loow interest rate environment. For my part I did sell most of my stocks in the past few months and moved my families money into a form of real estate like real asset. I do think the markets are bubbly but journalists have been trying to pin a possible catalyst for a popping of said bubble. Corporate debt I argue would not be that cause. In fact one of the common complaints of the clo market is how junk bond issuing companies are able to reduce the number of covinents. This is both a testament to the strength of demand, but would also make it harder for the market to price correct, aka pop. I will offer up that the most likely cause of any popping would logically be China. Yet of course China's strong capital controls allow them great freedom in issuing stimulus without tanking trade balance. What would you like to discuss?

deleted 7y ago

[deleted]

formercoder 7y ago

Looking at absolute levels of debt is useless clickbait, one should look at trends in debt / ebitda.

ummonk 7y ago
EBITDA is cyclical though. Debt / revenues would be a better measure.
- formercoder 7y ago
  Revenue is cyclical too, I’d look at headroom for downturns in debt/ebitda especially where firms start to slip into junk bond territory.
XnoiVeX 7y ago
Excellent analysis by Deloitte. https://www2.deloitte.com/us/en/insights/economy/issues-by-the-numbers/rising-corporate-debt-levels.html https://www2.deloitte.com/us/en/insights/economy/issues-by-t...
- ummonk 7y ago
  I wonder how much of the rise in percent of debt that was poor quality was fueled by investors seeking higher bond yields in a low yield environment...