Well, This Years Recovereh Has Another 4 Months Max To Run.

[Guest KingCharles1st]

I don't see it m'self- how about you?

Edited June 22, 2009 by KingCharles1st

[interestrateripoff]

The policy makers have nothing left, if this "recovery" isn't sustainable we are going to be in huge trouble.

Printing money is not the answer.

[buyinginafewyears]

Inflation up, up and away before long. That should do it.

[Guest KingCharles1st]

I think I saw a snippet about debt servicing being a huge part of companies outgoings right now. having been there- all I can say is "good luck" to people in that particular situation. And as less new high value orders arrive on the books, the debt grows and grows and gets more difficult to pay back. Until----- *POP*

[interestrateripoff]

I think I saw a snippet about debt servicing being a huge part of companies outgoings right now. having been there- all I can say is "good luck" to people in that particular situation. And as less new high value orders arrive on the books, the debt grows and grows and gets more difficult to pay back. Until----- *POP*

You can cut staff, you can cut over capacity the one thing you can't easily cut is the debt.

This is going to be one tough lesson learned for all of these fad CEO's whose companies fail due to over expansion funded by debt.

Although probably the CEO's won't be that bothered as they'll have huge personal wealth gained from the over expansion period, so these people in fact will have learnt nothing.

[Alan B'Stard MP]

Printing money is not the answer.

What is?

[CokeSnortingTory]

Tesco's is the one I'm looking at. £9.4 billion in debt, and the outlook on its bonds has been graded "negative".

It's the RBS of the groceries sector.

[swissy_fit]

Tesco's is the one I'm looking at. £9.4 billion in debt, and the outlook on its bonds has been graded "negative".

It's the RBS of the groceries sector.

Really?

Got any more details?

It makes very big profits, with real things not financial smoke and mirrors. Surely if it didn't pay a dividend for a while it could pay down loads of debt.

9.4bn is a lot though.

[Shamrock]

Really?

Got any more details?

It makes very big profits, with real things not financial smoke and mirrors. Surely if it didn't pay a dividend for a while it could pay down loads of debt.

9.4bn is a lot though.

Tesco's debt-fueled growth sparks investor backlash

Bloomberg / London June 22, 2009, 0:19 IST

Tesco Plc’s decade of international expansion has pushed debt ratios at the UK’s largest retailer to record levels, endangering the company’s credit rating and sparking a backlash from fund managers and bondholders.

Bradley Mitchell, who helps oversee about $62 billion at Royal London Asset Management, said he stopped holding Tesco shares for the first time in 20 years in October as the stock didn’t adequately reflect the risks faced by the supermarket operator. Cheshunt, England-based Tesco has net debt of £9.6 billion ($15.6 billion) and this week sold £431 million of mortgage-backed bonds secured on commercial property.

“Tesco never get to the point where they generate cash,†said Mitchell. “At the end of every year, they have more debt than they did at the start because there’s always new markets to invest in. I used to be a big fan, but there is a lot to be concerned about.â€

More here:

http://www.business-standard.com/india/new...acklash/361743/

Edited June 22, 2009 by Shamrock

[Meerkat]

What is?

As per Interestrateripoff's footer: REPAYMENT. And massive writeoffs of malinvestments where it's impossible (=collapse in M4) - either directly or indirectly by capitalisation of bank loans, i.e. debt conversion into equity as Roubini said the other day on CNN. Fat chance the borrowers will escape this credit bust at the expense of savers, relatively. Everyone might suffer to some extent (taxes....), but surely those with debt hallucinations will have the biggest hangover once the party is truly over?

[DabHand]

Really?

Got any more details?

It makes very big profits, with real things not financial smoke and mirrors. Surely if it didn't pay a dividend for a while it could pay down loads of debt.

9.4bn is a lot though.

Share price crashes, plenty of debt piled up against that share price comes knocking as they were the asset against which that borrowing occurred in the first place. Spiral up then spiral down - all roads lead to the 'no free lunch' kaboom conclusion on the Ponzi Express. Welcome aboard!

[swissy_fit]

Share price crashes, plenty of debt piled up against that share price comes knocking as they were the asset against which that borrowing occurred in the first place. Spiral up then spiral down - all roads lead to the 'no free lunch' kaboom conclusion on the Ponzi Express. Welcome aboard!

Hmm, how will a share price crash stop them making profits?

It can stop them expanding, that I can see. Probably a good thing for now.

Stop paying dividends, pay down the debt, whining shareholders will be rewarded in time with greater capital value. Job done.

I can't see the connection between Tescos and RBS(mentioned by another poster). Tescos stores and stock will not suddenly be revealed to be worthless, this is what happened to RBS.

[CokeSnortingTory]

Hmm, how will a share price crash stop them making profits?

It can stop them expanding, that I can see. Probably a good thing for now.

Stop paying dividends, pay down the debt, whining shareholders will be rewarded in time with greater capital value. Job done.

I can't see the connection between Tescos and RBS(mentioned by another poster). Tescos stores and stock will not suddenly be revealed to be worthless, this is what happened to RBS.

Can they fund their current operations from their profits?

If not, they will need to roll over their loans. If the share price has collapsed, what collateral will they have to attract further capital?

[General Melchett]

What is?

42

Time may have run out now anyway, so all this may be moot (the markets had a pounding today - if it carries on tomorrow who knows where it will end).