RED ALERT: Moody’s warns of ‘particularly large’ wave of junk bond defaults ahead, China’s debt crisis imminent, Italian bonds spiral out of control

Since 2009, the level of global nonfinancial companies rated as speculative, or junk, has surged by 58 percent, to the highest ever, with 40 percent rated B1 or lower, the point that Moody's considers "highly speculative," as opposed to "non-investment grade speculative."

"This extended period of benign credit conditions has helped many weak, highly leveraged companies to avoid default," she wrote. "These companies are poised to default when credit conditions eventually become more difficult."

Remember in 2008 when Moodys and the ratings agencies were so far behind the game? Its now so obvious even they are sounding the alarm.