On December 16th 2008, in what Ben Bernanke said took a tremendous amount of “moral courage,” the Federal Reserve officially arrived at its Zero Interest Rate Policy. ZIRP was a huge win for borrowers because it drove down the carrying cost of debt to historic lows. Unfortunately, savers didn’t fare as well…
Those frantic savers were forced to reach for yield far out along the risk curve. And an obliging Wall Street issued over $1 trillion in new junk bonds at the lowest spreads to Treasuries in the 35 year history of the junk debt market. To put this in perspective, the entire high-yield market had previously hit its frothy peak of $1.2 trillion in the bubbly days of 2007. But in October of last year.…
