Just read this article entitled "Corporate Debt is a Ticking Time Bomb" and it got me thinking. This debt binge has been a result of the historically low interest rates which probably lessens the concern but this caught my eye:
> "Ostensibly, the reason companies borrow is to finance expansions. Yet business investment in the economy fell over the same period that borrowing increased, and is now at astonishing lows. But even as the correlation between borrowing and investment broke down, the correlation between borrowing and payouts to shareholders tightened up considerably. Part of the reason is dividends. But an even bigger part is share buybacks, which were deregulated in 1980 and have now grown to epic proportions."
If the debt isn't growing the business and just paying out shareholders, while great for investors, doesn't improve the business's bottom line down the road.
Submitted August 19, 2018 at 12:43AM by yankee-white https://ift.tt/2N44OBC
