Archive for the ‘Debt’ Category

Debt Health

Posted: December 20, 2018 in Debt, Thought for the Day
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“The more debt you have the worse your mental health tends to be. And we don’t know which comes first. Your mental health problems lead to more debt? Or your debt leads to more mental health problems? But we know they play off of each other.” -Amy Morin

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Leveraged Loans defined:

“…arranged by a syndicate of banks, to companies that are heavily indebted or have weak credit ratings.” -IMF

“…are effectively provided to companies already swimming in debt.” -Nomi Prins

“That was all good and well when interest rates were super low, making it easier for companies to borrow oodles of money,”

“This year, leveraged loan issuance reached an annual rate of $745 billion. That’s nearly the same as the prior record of $762 billion in 2007 before the financial crisis and just a bit less than last year’s record of $788 billion globally.”

“For the first time in decades, neither party is even giving lip-service to balancing the Federal budget anymore. They simply don’t care…. The thing that matters to policymakers is how much the debt costs to maintain, not how much it costs to repay. That’s why you haven’t heard anything about it…. This problem will get exponentially worse as interest rates rise. Meanwhile, the government continues to add insult to injury by borrowing even more.” -Justin Brill

“You can almost always get a little boost by spending money you don’t have. But unless you’re investing in something that will make a profit, you’re just wasting time and money… and making the situation worse.” -Bill Bonner

“Washington’s $523 billion in debt service costs this year was the highest on record. That’s more than Belgium’s entire economic output (or GDP) this year.” -Chris Lowe

“This number (10-year treasury note) is probably the most important number in modern capitalism. It tells us the ‘risk-free’ price of money… which is to say, it tells us the cost of borrowing money, or more abstractly, the price of the future.

The more you borrow today, the more time you will have to take away from tomorrow to pay it back. Eventually, you run out of time… and out of luck.

To put that in more concrete (or wood and plastic) terms, the higher your mortgage rate… the longer you have to work to pay for your house.” -Bill Bonner

“The U.S. 10-year bond yield rose to a seven-year high of 3.24% – nearly 2% above its bottom in July 2016.

This 2% increase, imposed on $68 trillion of debt, is equal to an extra $1.3 trillion in interest charges….

To look at it another way, the typical working person who works an average of 33 hours per week earns $26 an hour. His percentage of the total debt is about $500,000.

At today’s interest rate, he will have to work 558 hours – or three and a half weeks (not including taxes) – just to keep up with the interest payments. Clearly, this is impossible…” -Bill Bonner