When “Virtuous Debt” Turns Ferociously Vicious: The Mother Of All Corporate Margin Calls On Deck
by Tyler Durden
ZeroHedge.com
09/06/2015
More debt begets higher market value of equites which in turn improves the debt/equity ratio which gives the incentive to issue more debt ad infinitum. Or in a slightly simpler version, debt begets more debt. We have seen the story before. In the shaded grey areas we highlight episodes when the virtuous relationship turns ferociously vicious. Remember, markets take the escalator up, but the elevator down. And the longer the escalator the further down the elevator goes.
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