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10-10-2016, 01:16 PM
(This post was last modified: 10-10-2016, 01:19 PM by CY09.
Edit Reason: edits
)
the rise in ST debt was due to bank's agreeing to extend the maturity of their loans (aka rollover). This was to allow Noble time to raise money to repay them.
The problem now is that many industries are in overcapacity, by law of nature, companies are suppose to die, especially the ones which have binged on low interest debts due to cheap liquidity; however banks are so "willing" to help these companies (DBS-Swiber, DBS-Rickmers) to protect their principal. These companies are technically insolvent but banks are just rolling over their debts and not seeking to deleverage them. These countries' national banks are assuming the role of "God" by deciding who lives and dies (case study: Korea Development Bank - Hanjin Shipping).
So the end game is how long can these "Bank Gods" use their power to protect their worshipers of debt
The problem now is that many industries are in overcapacity, by law of nature, companies are suppose to die, especially the ones which have binged on low interest debts due to cheap liquidity; however banks are so "willing" to help these companies (DBS-Swiber, DBS-Rickmers) to protect their principal. These companies are technically insolvent but banks are just rolling over their debts and not seeking to deleverage them. These countries' national banks are assuming the role of "God" by deciding who lives and dies (case study: Korea Development Bank - Hanjin Shipping).
So the end game is how long can these "Bank Gods" use their power to protect their worshipers of debt