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And if that wasn't terrifying enough, the Fed tells us this debt is STILL growing almost THREE TIMES FASTER than the Gross Domestic Product (GDP) -- the combined value of all goods and services produced by the entire US economy!
In fact, 157 big-name public companies now have more debt than assets. You'd expect these big, household name companies to be debt free and rolling in dough. But in reality, they have a net value of NEGATIVE $12.8 BILLION!
Think of it: These companies have a combined market capitalization of $50.4 trillion. That means US investors have shelled out more than $50 trillion for companies that are in effect, WORTHLESS!
Needless to say, investments in those companies are likely to be completely wiped out - reduced to ashes - when this great debt bubble bursts.
It gets worse: I've also identified another 668 big companies that are bleeding so much red ink that they will have a hard time surviving another year - and I am NOT talking about small, obscure companies here:
- Xerox has $22.5 billion in debt with just $5.5 billion in cash and fixed assets to secure it.
- Lucent has $8 billion in debt coming due within a year, and less than $0.3 billion in cash to cover it. Watch out below!
- Nextel is drowning under $18.8 billion of debt and has only $4.7 billion in cash on hand. Sounds like a lot of cash, right? Wrong! Nextel burned up $2.1 billion in cash last year alone.
- PSINet, a leading provider of Internet backbone services has 3.4 billion in debt, annual interest expenses of more than $300 million, and it doesn't even generate any cash!
- Amazon.bomb ... CableVision Systems ... and Paxson Communications are just a few of the other American corporations that are up to their eyeballs in debt with little or no practical hope of repaying. .... Plus, Del Monte ... Coca-Cola ... Trump Hotels & Casinos ... Ford ... J.C. Penney ... Campbell Soup ... and Time Warner, are also drowning in their own debt.
Think only big companies borrowed more than they could repay? Think again! Just about every type of business you can name -- from the smallest "mom and pop" shops to the largest multi-nationals -- are now so buried in debt there's little hope they'll ever dig themselves out.
No wonder corporate credit ratings are plummeting. No wonder there have been as many as 3 corporate credit downgrades for every 1 upgrade for 10 quarters in a row. And no wonder a fourth of all junk bonds are trading at "distressed levels."
This Debt Disaster Has Put Some of America's Biggest Banks At EXTREME RISK Of Failure!
It doesn't take a Nobel-Prize-Winning economist to figure out that unpayable debts at major corporations and thousands of smaller businesses is potentially devastating news for banks. Already ...
- US banks are being bludgeoned by BILLIONS in loan defaults: Just in the most recent reporting period, defaults in commercial and industrial loans jumped 30.0%. For example ... At First Union, deadbeat loans jumped 53.3% in 2000. Bank of America's bad debt surged 64.8%. Wachovia's flaky loans soared 118.3%. And at Bank One, bad loans skyrocketed 159.1%!
