global perspective

Fear Of Debt

Debt has become a complete pariah. The pendulum on debt has swung to the other extreme compared to 2007.
The world cannot function without debt. All assets cannot be owned by equity. Investors have a desire for collateralized lending with first charge on assets cushioned by sufficient equity. They are willing to forego higher returns in exchange for reducing (substantially) volatility and risk. On the other side, entrepreneurs and managements have confidence in their abilities, their products and their markets to leverage up their scarce equity capital to enhance their equity returns. More...