The very rapid rise of global corporate debt since 2017—from $60 trillion to $85 trillion according to Federal Reserve data—points to the potential of a banking and financial system crisis underlying the current apparent liquidity crisis of energy and commodity producing and trading companies. In short, the bailouts now being thrown at the big corporations in Europe may soon be needed by the banks.
A Bloomberg News article this morning, headlined “ECB Ramps Up Scrutiny of Banks’ Response to Energy Crisis,” reported on the first step: The European Central Bank reaching out to the megabanks of London, Paris and Frankfurt to ask, “You don’t have any corporate debt default problems, do you?”
