Debt Is Back, But This Time It’s Corporate

The negative stigma that used to go with excessive debt is gone.

Rigged Game

Companies are floundering in a river of debt of their own creation.

By David Malone and cross-posted from his blog, Golem XIV. 

On Wednesday Feb 7th 2007 HSBC issued a profit warning.  It was the first in its 142 year history. The bank told its share holders it would have to take an unprecedented charge of $10.5 billion because one of its units, its sub prime lender, was in deep trouble. And so began the sub prime crisis.

Today GE issued a profit warning and cut its dividend to share holders from 12 cents to 1 cent. It is only the third time since the Great Depression that GE has reduced its dividend in this way. It told its share holders it would be taking a $22 Billion charge because one of its units, its power unit, is in deep trouble. GE has about $116 billion in debt.

In 2007…

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