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The Bond Market Is Expecting a Corporate Default Rate CONSIDERABLY HIGHER than the Great Depression
George Washington’s Blog
Saturday, Nov 22, 2008
Junk bond guru Martin Fridson told Bloomberg on Wednesday:
“Either the [high-yield bond] market is right and expecting a default rate considerably higher than it was in the Great Depression, or we have such profound dislocations and selling pressures going on that it really is creating extraordinary fundamental value.”
In other words, corporate bond yields are in the stratosphere right now. Either investors are overreacting to corporate default risk (thus driving up the yields), or we are in for a very bumpy ride.
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5 Responses to “The Bond Market Is Expecting a Corporate Default Rate CONSIDERABLY HIGHER than the Great Depression”
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November 22nd, 2008 at 9:14 am
LOOK……
the great depresion was 70 years ago…..
they didn’t have credit cards then………………………
there was less people on the earth…….
NOW we have credit cards and more people getting in debt………
the depression will be 70 times worse then the great depression…….
November 22nd, 2008 at 4:11 pm
Not to mention there were no derivatives in 1929. This one might be a million times worse.
Winston84 Reply:
January 26th, 2009 at 2:07 pm
In 1929 there was massive leverage – the ability to ‘buy’ stocks by only putting up 5 cents on the dollar (20::1 leverage), achieving a similar effect we will see today with derivatives. FDR era regulations made the maximum leverage 2::1 for stocks. Maybe if we’re lucky today will only be 1/2 a million times worse as 1929!
November 23rd, 2008 at 12:44 pm
Unless people strike, take to the streets and take on the cops – we’re all going down.
November 23rd, 2008 at 3:27 pm
And not a religious Jew in all the lot of fake Jews, as warned of in the New Testament.