Eurodollar University Moody’s Report Exposes at a Massive Wave of Corporate Collapses
Jul 21, 2025
Steve Van Metre joins the conversation, shedding light on Moody's report revealing rising corporate distress, particularly in private equity. He discusses how banks are quietly pulling back from commercial real estate, revealing vulnerabilities in credit markets. The duo explores the risky 'extend and pretend' strategy, drawing chilling parallels to the 2008 crisis. They dive into the illusory stability of asset valuations and the fragility of economic fundamentals, while highlighting alarming labor market trends and their implications for the financial system.
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Distressed Companies Avoid Bankruptcy
- Companies are entering a high distress phase but avoid bankruptcy to prevent price discovery.
- This freeze on price adjustment conceals the true economic and financial fundamentals.
Private Equity Leverage Risks
- Private equity leveraged companies heavily post-crisis for returns, often stripping assets.
- When these companies fail, the hidden debt level shocks investors and worsens market confidence.
Market Freezes Price Discovery
- The current market opposes 2008's sell-off by freezing prices to avoid system damage.
- Extend and pretend hides inevitable credit market imbalances worsening economic outcomes.