2:05 -- When a) the premium paid by CORPORATE borrowers above expected inflation rates is near record LOWS and b) interest rates paid by CONSUMERS for homes, car loans and credit cards is near record HIGHS, those two facts reflect systemic corruption and abuse of pricing power in the economy. Loans made to BUSINESSES should reflect the risk that CONSUMERS won't be able to afford products being made. If consumers are paying for groceries via revolving cards with 19-22% interest, even that borrowing will slow, slowing the entire economy. Yet these giant businesses trade at 20 to 35 P/E ratios? Insanity. Especially when most of these software firms have zero historical experience managing high levels of debt to develop the managerial discipline required to carefully control cash flows.
Gee - total borrowing this year - 29 trillion. The US has to refinance 9 trillion and place a new 2 trillion - so 11 trillion, so 38% of the world's new debt is going to one borrower - that's not good
AND, as someone coming from a household that has been out of work for 8 months, I find the AI overhyped and not ready to live up to the outsized promises made for its technology. Now, these 9 companies have let go of large portions of their income-producing workforce and are relying on AI to make the decisions that real people used to make. It's going to fail spectacularly. The hubris of these CEOs is amazing and will go down in history as a college course in how to fail.
Boy if I could only count the number of times "calm before" has been used.
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