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It was not always like that. There was a time when companies were not using so many finance tricks and had better resilience and balance sheets. Unfortunately,
by lifty 6y ago
It was not always like that. There was a time when companies were not using so many finance tricks and had better resilience and balance sheets. Unfortunately, since the 80's there has been a trend of increased financialization of the economy, most probably caused by the secular decrease in interest rates.
- curiousllama 6y agoI would argue this is actually fortunate. While financialization absolutely causes fragility of individual companies, it makes the aggregate more stable, as it's also easier to prop up (or pick apart) Hertz with minimal interruption of actual rental car service. At the end of the day, for most companies, too much debt relative to cash flows is just a sign of overextension. And aggressive "real" business practices is hardly something that companies were immune to prior to financialization.