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08/26/2018

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Thanks Colleen for sharing this great article! I agree on this debt financing has become a norm in the large US corporations. The company I am working for has been acquiring left and right for the last 5 years, and it has taken so much debts to finance each of them, while keeping the cash intact for rainy season. Most people in the company were wondering if we are going in the right direction for each acquisition, since the impacts have trickles down to individual's compensation and benefit reduction. I guess only time will tell.

I think this is a very interesting topic and can be undermined by the average citizen or investor. They may be naive to the downstream impact of their investments especially in the fluctuation of bond markets. The re-pricing of bonds, coupled with high risk defaults from counties issued from emerging countries such as China, India, and Brazil can blind-side investors. In addition, higher debt levels could mean that big U.S. employers may resort to reducing personnel as interest rates may shift higher, which impacts employment levels and U.S economic growth.

On the other hand, debt financing is the trend especially with funding new companies such as start-ups. It is what really drives the spirit of entrepreneurship! It could be risky, but there is always hope of an acquisition from a corporate giant to relieve the pain. Of course, organic growth and success in the business may ultimately prove the premise of debt financing.

I read an article too that countries such as China and Japan are countries that rely on debt as a large part of their country's GDP,but is there a concern? Perhaps not, just as long as the people are able to help fund it. Also, globally, if countries such as Japan can find buyers for its debt, then most likely the U.S will be able to as well.

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