"What it shows is that next year, 2009, there will be a massive bulge in the value of bonds issued by European companies that have to be repaid."

Robert Peston on BBC with an interesting post to begin the day:

"The transformation of the years of easy credit into a financial nightmare for many big companies is illustrated by the Bank of England in its Quarterly Bulletin, which was published overnight.

This transition from credit feast to credit famine is depicted in a chart of the maturity profile of outstanding European corporate debt (stay awake, this matters to you).

What it shows is that next year, 2009, there will be a massive bulge in the value of bonds issued by European companies that have to be repaid.

Or, to put it another way, about $1000bn of "old world" companies' borrowings in the form of tradable debt has to be paid back during the next 12 months - with something like $800bn of this owed by financial companies and $200bn by non-financial companies.

That would be a colossal sum to pay off at the best of times, and is equal to about five times what's been repaid in 2008.

It is a disturbingly huge amount, at a time when even the bluest-of-blue-chip companies are finding it difficult and expensive to raise money by selling new corporate bonds.

More or less every chief executive and finance director I know is agonising about how to obtain debt finance - and is having very unsatisfactory conversations with banks.

Here's the Bank of England's characteristically euphemistic account of the implications: "a large volume of corporate debt matures towards the end of 2008 and over 2009, which presents significant refinancing risks for firms".

What's likely to happen is that Europe's biggest and strongest companies will vacuum up whatever meagre credit is available from malfunctioning wholesale markets and banks.

And that, in turn, means that weaker businesses, those most desperate for credit, are going to find that conventional sources of credit are simply not available to them.

Their desperate plight - their almost complete inability to raise vital finance - is shown by another Bank of England chart. It plots the market price of European leveraged loans - banker-speak for the debt of companies with big borrowings - which has collapsed to 65 cents in the dollar on average.

To translate: companies with large debts are only expected to pay back two thirds of what they owe, which doesn't make them a sound banking proposition in our harsh new world of tighter-than-tight credit.

So lots and lots of companies won't be able to raise the finance that would keep the bailiffs away, unless taxpayers step in as the lender of last resort.

Taxpayers have already done that to the tune of £600bn and rising for British banks (see my note "How much will taxpayers finance economy?"). And, as I've been pointing out for some time, we are being asked to provide life support to a swathe of the real economy, from steel makers to car manufacturers.

The Government will succumb and will lend taxpayers' money to non-financial companies.

In a way, there's no choice, because we'll be hobbled for years as an economy if our few remaining manufacturers and exporters are wiped out.

But many will urge that companies which borrowed recklessly in the good years - often to generate unsustainable growth in profits that triggered bonus payments or to finance excessive special dividends - should not be bailed out.

Though in punishing imprudence we would be foolish to punish ourselves.

The trick for government, therefore, would be to rescue fundamentally viable businesses, while somehow leaving feckless management to swing in the wind."

Peston is someone who has been getting this right. The Government is going to have to essentially Guarantee large portions of the economy. In this sense, John Quiggan is correct, in that Government Intervention in the economy is going to grow larger and more intrusive in the next few years. Paradoxically, the Hybrid Plans like TARP assure this fact. The Dual Nature invites Government into a partnership from which neither party easily extricates itself.

This problem of Coroporate Debt is why I have been calling for Tax Relief for Coroporations. We can focus on Investment, or simply try and free up more cash for these businesses. If we don't do that, the government will have to, as Peston says, intervene to save Viable Companies. There is no way out of this messy situation that doesn't involve government incentives or intervention. I would rather give incentives to businesses to handle this debt problem on their own than have the government essentially micromanage winners and losers.

I give you then "Peston's Promise":

"And, as I've been pointing out for some time, we are being asked to provide life support to a swathe of the real economy, from steel makers to car manufacturers.

The Government will succumb and will lend taxpayers' money to non-financial companies.

In a way, there's no choice, because we'll be hobbled for years as an economy if our few remaining manufacturers and exporters are wiped out."