The bubble this time was not in valuations and their relation to interest rates, the usual metric, but in debt and leverage.
Mortgage REITs buy the riskiest types of debt, use leverage to do it, and are often rife with conflicts of interest.
The question is, with most of the GOP already deeply invested in using the debt ceiling as leverage to force a spending reduction without ridding our tax code of perverse elements of corporate welfare, can they still be brought back from the brink?
If the best that the Republicans can do is to pass a bill that hopes to balance the budget in 10 years, then there is little credibility in attempts to use the debt ceiling as leverage to force Democrats to accept any significant spending limits.
But again, we cannot forget -- and I think -- I'm sure you talked about, if not wrote about it -- the major step that seems to have been taken by Republicans in acknowledging that using the debt ceiling for leverage did no one any good.
Cantor explained why he argued at the retreat against using the debt ceiling as political leverage.
Equity financed mutual funds are, thus, small banks with zero leverage (debt).
Coming from Singapore to California during the height of the financial crisis, we uncovered more and more horror stories over casual conversations about debt and over-leverage, fueled by relentless, uninformed optimism.
Most recently, they have been hallucinating that the debt ceiling would give them leverage to cut federal spending.
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My guess is that the private equity managers are not personally guaranteeing the debt in a 100% leverage transaction.
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We're sitting on lots of cash and little debt and can use financial leverage to fatten up things we think are attractive.
Rep. Louie Gohmert, R-Texas, also disagreed with giving up the leverage of the debt ceiling without any guaranteed spending cuts in return.
But the debt ceiling is the only leverage that Republicans in the House have left to force fiscal responsibility on their spendthrift rivals.
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If you look at the data, about 49 percent of homeowners have one measure of vulnerability: high debt payments, high levels of variable interest rate debt, a very high leverage, they own very little of ground homes or they own very little outside of their homes.
What is striking is that there has been modest reductions in the indebtedness of British households and non-financial companies over the past three years, to 98% and 109% of GDP respectively - which are still high levels of leverage or high debt ratios by historic standards.
And they were papered over by massive leverage, credit card debt, a housing market bubble.
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Many of these purchases are financed not with retained profits but with debt, thus increasing firms' leverage and reducing their creditworthiness.
That won't work, because the debt limit doesn't provide much leverage.
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There's excessive corporate balance sheet leverage in dollar-denominated debt.
Still, the major debt-market improvements will lead to more leverage and easier terms for PE financing.
The advocates of using the debt ceiling as a bargaining chip have no leverage.
Softbank also believes in leverage and has a lot of debt itself.
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Although smaller deals involve much less debt than the bigger ones, the amount of leverage is creeping up.
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IR You correctly recognise one of the key causes of asset-price inflation during the past three years excessive leverage by noting that margin debt has doubled since 1996.
John Geanakoplos of Yale University explained how the debt cycle in remortgaging high amounts of leverage during booms, low amounts during recessions can act like an out-of-control pendulum to create instability.
Japanese debt is unique to other countries because Japan has been indebted for the past two decades, its leverage didn't increase rapidly and the gap between Japan and others declined because other countries' debt-to-GDP ratio increased.
In fact it continues on a lower trajectory as the world continues to de-leverage from years of built-up excess debt.
Unilever has reduced leverage over the past five years from a debt to equity ratio of 1.6 in 2005 to 0.73 in 2010.
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What the table also shows is that Debt estimates have to be off by 50% for leverage to rise materially into the 5.4-5.5x range.
But the impact can be all too real, as write-downs reduce overall book value and increase leverage ratios, a particular concern in these debt-averse times.
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