4 ms·
Don't forget how ridiculously over-leveraged almost every big company already is. They are saddled with huge debt and many are struggling to pay the interest on
by lubujackson 6y ago
Don't forget how ridiculously over-leveraged almost every big company already is. They are saddled with huge debt and many are struggling to pay the interest on the debt, let alone the principal.
So the Fed can force rates to nothing so companies can get more debt to pay down their existing debt, but the point where they are actually profitable gets further and further away. Meanwhile, they get more and more vulnerable to even the slightest increase in rates.
Everyone can close their eyes and keep driving faster off this cliff for a while, but best case is we become Japan with 100 year mortgages and a market that is flat for the next 30 years because it is half owned by the government.
The real problem is the companies that hit the wall first and go bankrupt suddenly, I think Dave and Busters just announced and October is whispered to be full of incoming bankruptcies. Confidence in stocks won't hold when companies keep randomly dropping 20% in a day.
TINA doesn't consider "not losing money" is a very reasonable alternative that people will eventually realize.