Is shale the new sub-prime?

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The FT notes this morning that:

Global debt markets are on the cusp of an unwelcome development with the number of companies defaulting on their obligations set to reach the century mark, driven largely by struggling US shale gas providers.

Currently, 99 global companies have defaulted since the year began, the second greatest tally in more than a decade and only exceeded by the financial crisis which saw 222 defaults in 2009, according to Standard & Poor's. US companies account for 62 of this year's defaults.

Three things. First, as US QE dries up refinancing debt is becoming harder for a wide range of companies, in the US and way beyond, especially in the emerging markets. A debt crisis is developing, and these always spell trouble.

Second, it is now obvious that shale is not a viable energy source: a mountain of money has been thrown at it and much will not come back according to experts I speak to.

Third, put these facts together and downturn is likely. Misplaced hope and high bad debts have never in human history been good news.

Oh, and the answer is? A green new deal, of course.

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