The Bankwatch

Tracking the consumer evolution of financial services

The $3.6 Trillion Leveraged Loan Wall of Debt | MISH’S Global Economic Trend Analysis

I happen to believe in the L shaped recovery theory.  Recovery will be based on a stop in the reduction of growth, and will flatline there.  We will not go back to the GDP $ levels of 2007 ( a return to 2007 would require a V shaped recovery).  This post from Mish summarises why, quite well.

The $3.6 Trillion Leveraged Loan Wall of Debt

However, the clock is ticking on many things at once: Leveraged loans, boomer retirements and subsequent downsizing, Pay Option ARMs recasts, Alt-A recasts, and last but certainly not least, a jobless recovery that ensures massive credit card defaults. Such structural problems in conjunction with changing consumer attitudes towards debt all but guarantee an L-Shaped Recession. The recession will end, but don’t count on a recovery.

Written by Colin Henderson

June 14, 2009 at 21:40

Posted in economy

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