
Netflix's Junk Bonds Explain How We Are in a Corporate Debt Bubble - DarkContinent
https://jumpstartbk.com/netflixs-junk-bonds-explain-how-we-are-in-a-corporate-debt-bubble/
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01100011
At what point does the massive pile of money injected into the economy
translate into large price increases(i.e. inflation)? IIRC, inflation is the
money supply multiplied by the velocity of money, so if the economy slows,
will we suddenly see the current asset bubble turn into a price bubble? What
then? Does it all just work itself out because we devalue the currency and
inflate away our debt and asset bubbles, or do we get slammed by stagflation?

For those of us in the tech industry accumulating absurd salaries, what do we
do to defend our wealth? Normally when inflation is coming, I'd think real
estate or commodities would be a safe bet, but they're already in a bubble. It
seems like jumping into them at this point might be better than nothing, and
maybe that's all we can hope for at this point in the economic cycle?

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quotemstr
> At what point does the massive pile of money injected into the economy
> translate into large price increases(i.e. inflation)?

A burger at a nice restaurant in Seattle can now cost you $18-$20. Maybe we're
already in an era of more intense inflation and just don't realize it yet.

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01100011
I went to buy a chocolate bar at Target yesterday. What used to be $3 for
3.5oz is now $3.98 for 3.15oz. I think it's been creeping up in some areas for
a while now, but I don't see it as inevitable, across the board inflation just
yet. Gas is still cheap. Utilities haven't gone up much for me. Rent is
definitely up in CA, but I'm not sure how things are in the rest of the
country. Generally, I haven't noticed inflation in most things I regularly
purchase.

Honestly, I work in tech and have a large, fixed alimony payment, so I could
personally use some inflation.

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WillPostForFood
How about housing?

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01100011
Definitely a bubble. I wonder though, it seems, at least in CA, that the
prices are up but sales volume is down. People, perhaps, aren't converting the
market increases into liquid assets. Maybe they're pulling refi's? Otherwise,
a bubble in real estate may not be translating to any sort of broader economic
gain?

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jusonchan
I'm surprised how this made it into HN front page. Looking up the author, it
seems it's someone who graduated in 2018 throwing out his theory about bonds
and how it's all a bubble with a nice click bait title.

The reality is very different though. Bonds are how most large companies
finance themselves. And when they can issue a bond that people buy for < 5%
yield, it's almost like free cash. Assuming in 2027 - Netflix has say
conservatively 220M members paying an average of say $11 (which is less than
the average price today, not accounting any price increases). That will be a
whopping 29B in revenue. Way more than enough to pay off debt + some in a
single year. This is even after accounting for a massive spend on making
movies. For context Disney+ spent 1B this year and planning to spend up to
$2.4 billion by 2024.

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zhaso
Not sure if we're looking at the same thing but I found the author to have had
a JD for 14 years and finished his undergrad >20 yers ago..

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jusonchan
This is my source: [https://www.avvo.com/attorneys/91103-ca-victor-
look-1755244....](https://www.avvo.com/attorneys/91103-ca-victor-
look-1755244.html)

"I came out of school during the Recession of 2018."

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neurobro
Looks like a typo for 2008, considering "recession" and "over the last 11
years".

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m3adow
The site was down for me. archive.org link:
[https://web.archive.org/web/20200204023040/https://jumpstart...](https://web.archive.org/web/20200204023040/https://jumpstartbk.com/netflixs-
junk-bonds-explain-how-we-are-in-a-corporate-debt-bubble/)

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krit_dms
ctrl+f mirror

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blackrock
I’m waiting for this bubble to pop, and take everyone down with it.

This QE insanity has gone on for far too long..

And for the rich.. don’t worry about your assets. The next president will bail
you out first.

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kortilla
Shareholders took huge losses in the bank “bail-outs” in 2008 so there isn’t
really a precedent for bailing out the rich. The only precedent is bailing out
entire business sectors that the whole economy depends on.

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blackrock
And who owns the “entire business sectors”?

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nopenotthatway
The fed got majority of the banks when it bailed them out, and all executives
where on a leash, and getting paid less until it was all back to normal.

In fact, the fed ended up turning profit, as the banks healed, and the fed
sold its part.

those "owners" got their assets froze until the situation became under
control, and the fed got its money back.

All these complaints about savings big banks are just extremist (both commies
and libertarians complain about it) FUD. If banks were not saved, the economy,
the middle class and the poor would be far worse.

and as grandparent said

>Shareholders took huge losses in the bank “bail-outs” in 2008

Shareholders are by definition "who owns". Sure there are both Billionaires
and middle-class shareholders, but if you have a bigger % of shares, you have
a bigger loss.

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DarknessFalls
The amount of subsidies given to farmers to offset the tariff wars with China
are said to eclipse the amount given to bail out the banks. Do you think the
Fed will ever see a similar return on investment from agriculture?

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johnebgd
We are in an asset bubble. All assets. Bonds are an asset.

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echelon
Assets? Physical, material goods? Or investment vehicles like bonds and funds?

What happens when the bubble bursts? What doesn't lose value? Who doesn't wind
up underwater?

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0xCMP
Anyone with cash and low-leverage cash producing assets.

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paganel
And it will be a challenge deciding who really has cash and what cash really
means when the bubble will burst.

I remember that for a short but intense period of time money-market funds were
in negative territory in late October 2008, which was really interesting
because they were seen as basically cash (rightly or wrongly, that’s another
discussion) and a run on them would have made many people very, very unhappy.

