I hate to be an alarmist, but Salon has an article by Bob Hennelly about what could spark the next financial crisis, and growing global debt burdens are the suspected culprits. I was particularly intrigued by how much lower credit rated, high yield corporate debt has grown recently in the U.S. As the article points out, a lot of this burgeoning debt seems predicated on the assumption that interest rates will remain low for a long time to come or that earnings growth will help firms pay their pay out of debt as rates rise. There doesn’t seem to be much evidence that either of those bets is a good one.

One stock in which I have a stake that I’ll be watching carefully: AT&T. The company’s distinguished history and attractive dividend are tempting. But the deal to buy Time Warner and it’s content assets required the company to take on a lot of debt. Hopefully this will pan out better than the AOL-Time Warner merger did.

 

 

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