In Praise of Junk

When is junk a good thing?  When you can’t afford a new car, a rusty old one might do just as well, at least for a little while (even if it is purple, like mine).  And if bond rates are so low that you might as well put your money in the mattress, you might also develop a taste for junk – junk bonds, that is, or more politely known as “high yield bonds”.  It’s been the latest trend in the bond market and, strangely, it might be proof that things are getting better.  It’s not the quality of the debt that really counts, it’s what they do with it.

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