The article "Junk Bond Avalanche Looms for Credit Markets" in The New York Times, catches my interest in two respect. First, the name of junk bond is one of the most well-known causes of the current financial crisis. Second, I find its introduction which references to the predicted disaster from Maya in the movie 2012 very effective in catching the reader's interest.
The article tells us that in 2012, the three-year bonds, mostly junk bonds, will come to due date at the amount of 155 billions USD from the whole amount of 700 billions USD. The author expresses the concern that this could trigger the new financial crisis because when the large amount of debt due in the same time, it would be difficult to secure new source of money for refinancing the debt.
I think this problem might cause a difficult situation in 2012 as the author expect. However, it might not be as severe as what the author says. Given that now the USA already realize the scale of the problem as well as it would have already weathered the difficulties in 2009-2011, the situation in 2012 might not create the great damages to the whole financial system as it did in 2008. Furthermore, in current situation, many countries come to realize the importance of well-disciplined financial practice; therefore the coming crisis might not be as serious as it was. Although, in the long run, people might forget the current lesson and commit the similar mistake again, I believe that in the near future, people is unlikely to forget so easily that they would fail to prepare for the coming problem.
The article tells us that in 2012, the three-year bonds, mostly junk bonds, will come to due date at the amount of 155 billions USD from the whole amount of 700 billions USD. The author expresses the concern that this could trigger the new financial crisis because when the large amount of debt due in the same time, it would be difficult to secure new source of money for refinancing the debt.
I think this problem might cause a difficult situation in 2012 as the author expect. However, it might not be as severe as what the author says. Given that now the USA already realize the scale of the problem as well as it would have already weathered the difficulties in 2009-2011, the situation in 2012 might not create the great damages to the whole financial system as it did in 2008. Furthermore, in current situation, many countries come to realize the importance of well-disciplined financial practice; therefore the coming crisis might not be as serious as it was. Although, in the long run, people might forget the current lesson and commit the similar mistake again, I believe that in the near future, people is unlikely to forget so easily that they would fail to prepare for the coming problem.
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References
schwartz, N. D., (2010, March 15). Junk Bond Avalanche Looms for Credit Markets. The New York Times, Retrieved March 16, 2010 from http://www.nytimes.com/2010/03/16/business/16debt.html?pagewanted=1&hp
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