The ‘Buy Now, Pay Later’ Economy; Klarna

Serious credit-card and auto-loan delinquencies have climbed to 2008-09 recession levels. 

The housing market shows cracks while the labor market is weakening.

You wouldn’t know it from the buoyant stock market and consumer spending.

Sweden’s Klarna, a popular buy-now-pay-later service, last week announced the launch of an initial public offering, which is expected to be one of the biggest this year. 

Margin borrowing has surged this year amid market exuberance and anticipation of more easing by the Fed. 

Meanwhile, companies are raising capital by piling on debt. Issuance of junk-rated debt hit a record this summer as investors demand less of a premium to buy risky debt. 

Spreads between high-yield bonds and Treasurys have shrunk to levels seen during the dot-com and housing bubbles.

Allysia Finley Wall Street Journal Sept. 7, 2025



The current junk spread, at 2.73%, is not just in the lowest quintile — it is lower than 97% of all monthly readings since 1997.  



Spreads on junk debt are compressed to levels seen during the wildest phases of pre-Lehman speculation

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