Commodity Trade Mantra

Posts Tagged ‘Loan Defaults’

Why the Coming Wave of Defaults Will Be Devastating

In an economy based on borrowing, loan defaults & deleveraging matter. Defaults mean loans & bonds won’t be paid back. The owners of the bonds & debt (mortgages, auto loans, etc.) will have to absorb massive losses. Having unleashed tens of trillions of dollars in new credit since 2008, the central banks have simply increased the likelihood & scale of the coming default conflagration.

Money Creation: The Road to Hyperinflation

With banks willing to lend money and customers increasingly willing to borrow, bank credit can be expected to gradually increase in a self sustaining, inflationary spiral. With asset prices being gradually inflated, more investors are inclined to borrow at low interest rates to share the bonanza – An outcome, the central banks look for.

China On The Verge Of First Corporate Bond Default Once More

In China, where corporate bankruptcies are taboo, a default would immediately reprice the entire bond market lower and have adverse follow through consequences to all other financial products. And so in the past two months, China was forced to bail out two Trusts with exposure to the coal industry.

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