Former Fed Chair Yellen says excessive corporate debt could prolong a downturn

CNBC/Thomas Franck

“’I think a lot of the underwriting of that debt is weak. I think investors hold it in packages like the subprime packages … the same thing has happened. It’s called CLOs, or collateralized loan obligations,’ she added.”

USAGOLD note:  Sounds ominous. . . . .Former Fed chair Yellen warns the situation could lead to “lots of bankruptcies in the non-financial corporate sector.”  Few outside Wall Street ever even heard of CLOs. Now CNBC says the CLO problem could “spook” investors who recall the origins of the last crisis. With these revelations from Janet Yellen, the quiet problem of corporate debt will move to center stage.

Repost from 12-11-2018

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