The global fi nancial crisis grinds on with day-to-day market volatility refl ecting successive government interventions. It has become increasingly clear that the fundamental point, however, is that the underlying debt in developed economies has grown unsustainably high. Whatever government interventions may achieve in the short term, this debt has to fall in the medium to long term.There are two particular implications of this. First, the fall in debt funding available to economies represents a drastic cut in the money supply which will have effects on the real economy. Amid worsening economic expectations, analysts' estimates for 2009 earnings have started to fall. Second, there will be clear winners and losers in this process.Companies with the strongest reliance upon debt, either for their own balance sheets or those of their customers, will fi nd the adjustment process particularly painful. Conversely, those with strong balance sheets and customers with low levels of debt should be less affected by ongoing de-leveraging.There is one clear silver lining in the current situation: the increasing availability of high yielding stocks. While there are question marks about the sustainability of dividends in the tougher macro economic environment, we are fi nding increasing opportunities to buy growing long-term income streams, albeit selectively.
85.02p
