Radio Shack, the Partridge Family and God – All in Bankruptcy Court
Yes, it’s true…sort of: Radio Shack’s 95-year run has come to an end, David Cassidy of Partridge Family fame has filed BK (not the whole family) and while God isn’t in bankruptcy, one of God’s booksellers, Family Christian LLC, is.
We’ve been writing about the Junk Bond Bubble for some time now. In case you haven’t read our previous work, or seen The Wolf’s thousands of tweets about junk bonds, here’s the synopsis.
Central banks have left rates at 0% for so long, that the traditional discounting mechanisms used in finance have been turned on their heads. All of this monetary expansion is in an effort to combat over capacity (there’s too many burger shops, nail salons and auto dealers for the underlying economy to support) and over-indebtedness (people, corporations and governments).
Junk bond yields look attractive to investors at 6.5% today, when that was what 10-year Treasuries offered in 2007. So, companies have borrowed to the hilt in an attempt to make a buck for themselves. Unfortunately, when the economy slows even a little, coupon payments get missed and defaults start to happen. Follow along on our Junk Bond Bubble Dosimeter.
The time zone we reference on our charts is Pacific Standard Time. Therefore, the U.S. cash market opens at 6:30 AM PST and closes at 1:00 PM PST.