Foreign media reports, even the “God of Stock” Warren Buffett also respected Oaktree Capital Co-Chairman Marks (Howard Marks) warned that in the aftermath of the epidemic, even if the U.S. business recovery smoothly, will still face heavy pressure of debt, because there is no guarantee that the future can return to a profitable state. Even if the eventual success of the turnaround, may still fall into debt difficulties, it is difficult to repay the debt.
Data provider Refinitiv data shows that global corporate debt issuance has jumped to a record high of $5.4 trillion, more than 1/5 higher than in 2019. In addition, companies have also borrowed an additional $350 million by taking advantage of the syndicated loan market. The borrowing spree pushed up debt leverage ratios in a scenario where many companies’ profitability has declined.
The Congressional Budget Office (CBO) has said that the U.S. debt to gross domestic product (GDP) ratio will reach 98% this year and 107% in 2023, a record high, and will continue to rise to 195% in 2050, close to the debt ratios of Japan and Greece. The CBO said that these are increasing the risk of financial crisis, but these risks are not reflected in the financial markets.
Former U.S. Treasury Secretary Larry Summers (Larry Summers) predicted that the economic losses, including loss of life and health losses, the eventual epidemic will bring the United States $ 16 trillion in losses, four times the financial tsunami in 2008, warning that if the federal government’s stimulus measures fail, the U.S. economy will face serious danger.
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