Washington Post Lets Wall Street Worries Dictate Coverage
Dec. 1, 2019 (EIRNS)—On Nov. 30 the Washington Post wrote a major article in its Business section to note that U.S. corporate debt is an immense bubble that could collapse at any time. The piece was notable for the warnings of a couple of well-placed Wall Street financial representatives.
The second lead in its Business section, “Corporate Debt Nears a Record $10 Trillion, and Borrowing Binge Poses New Risks,” was itself uninformative and intended to lull; its key editorial sentences were: “The danger isn’t immediate”; and “This low-quality corporate debt bulge, by itself, is unlikely to cause a recession.... But it could make the next one much worse.” Then there was “The corporate worries darken an otherwise bright economic picture.” Nonetheless it had to reveal the reason for its very prominent appearance: Some financial people are getting very worried.
For one, there was Emre Tiftik, a “debt specialist” at the Institute of International Finance (IIF), which is the global lobby for the biggest City of London- and Wall Street-centered banks. “We are sitting on the top of an unexploded bomb, and we really don’t know what will trigger the explosion,” Tiftik warned. The IIF has called the level of corporate debt worldwide “mind-boggling.” And a senior credit analyst at Investment Managers, the very large investment management company in London, adds, “You can definitely think of an Armageddon scenario.”
Otherwise, the Post repeats facts everyone already knows about the corporate debt menace: that one-step-above-junk BBB bonds are a quarter of the entire U.S. $10 trillion corporate bond market, for example, and with junk, are 40%, including some very big names like Hasbro, Hyundai, Marriott; that these companies borrow to buy their own stock and other “financial engineering,” etc.
The capital’s major daily evidently wanted to warn Washington government circles to “be ready” to bail out a collapsing bubble; but wished to do so without informing general readers, including readers of reprints in other media, of the imminent danger. The Federal Reserve’s interbank market liquidity crisis, the declines in auto, oil, retail, trucking, railroads, capital goods, etc.—all are carefully omitted from the fin-talk.