It has now become near consensus that the financial malaise affecting the world is due to high corporate debt. According to Rana Faroohar, mostCEOs on Wall Street are addicted to high borrowings; especially due to the low interest rates accorded to the debt. Thus, debt is leveraged, time and again, despite the severity of the 2008 global financial crisis, to facilitate share buybacks, options trading, currency hedges and a slew of financial shenanigans, which do not create jobs apart from more finance job. In fact, finance has come to exist for finance’s sake.
Thus, the more publiclisted companies venture into the banking sector to borrow , the less they can accelerate the global economy.
But Adair Turner, who served as the chairman of the British Financial Committee when the global financial maelstrom struck with a vengeance also believes that private debt is the trigger of global financial problems.
High consumer debt driven by the generous expansion of credit cards, especially when jobs are scarce and highly unstable, makes for many impulsive purchases. This only saddles one with an enormous burden that cannot easily be repaid with a regular, stable job..
This book speaks of the dangerous allure of money and debt. To fix the problems, Adair Turner spoke of the need to address the debt explosion from a systematic standpoint, invariably, the excessive debt incurred by various companies that straddle at the top of the food chain, and a serious attempt to raise the minimum wages of the workers..