junk bonds

Burning cash, dogged by creditors, and deep in debt, Ford had to hock its most famous icon back in 2006, putting it up as security for $23.4 billion worth of loans. On Tuesday, Ford got it back -- and that will mean better, cheaper cars coming out of Dearborn.

Wall Street and the media have been fixated with the debt crises in countries such as Greece, Portugal and Ireland. But we're not hearing nearly enough about a much bigger economy closer to home that's on the brink of disaster. We're talking about California -- the eighth largest economy in the...

As small investors flee the low returns of Treasury bonds, many have piled into high-yield debt -- also known as junk bonds. Problem is, as one pro puts it: "The trade when you could buy anything and make money ended six months ago." Investors need to be far pickier now.

Investors hungry for higher yields are flocking to the credit markets, putting junk-bond issuance on a record-setting pace. And lenders are loosening credit standards, while companies take on debt just because it's cheap. Sounds like a familiar scenario.

Many investors are trying to make themselves feel safer in this uncertain economy by jumping out of stocks, buying bonds or even dabbling in higher risks looking for bigger returns. But that sort of short-term strategy could jeopardize your portfolio.

Now that credit rating agencies can be sued for issuing inflated ratings, they're refusing to allow their ratings to be used to sell bonds. Unfortunately, since some types of bonds are required to have such ratings, those parts of the bond market are shutting down.

They got a lift just yesterday, when Moody's warned that the the U.S. and Britain are "substantially" closer to losing their triple-A ratings. But too bad for them, it won't come to that. They'll just have to keep watching the Hollywood version of Armageddon, 2012.