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Yes but some of these companies cannot survive in a high interest rate world with a recession.
by gitfan86 4y ago
Yes but some of these companies cannot survive in a high interest rate world with a recession.
- slaw 4y agoThat interest rates is non zero doesn't mean it is high. Real interest rate is negative, close to -5%
- mandeepj 4y ago> Real interest rate is negative, close to -5% Can you elaborate on that? Are you saying corps are getting paid to take money on interest?
- im3w1l 4y ago"real" in this context means inflation adjusted. Inflation decreases the value of money, but also the size of debts. Inflation is currently shrinking debts faster than the interest payments build it up. But it depends on what interest rate you have, high risk - high rate debt does not work like this.
- treeman79 4y agoDebt only decreases if your income is going up as well. Otherwise it just stinks.
- slaw 4y agohttps://en.wikipedia.org/wiki/Real_interest_rate https://en.wikipedia.org/wiki/Real_interest_rate
- pixl97 4y agoWhat may matter is other businesses are talking about cutting spend with you next quarter in which companies will drop staffing quickly in order to show the same level of profitability even if a gross revenue loss occurs.
- gitfan86 4y agoWhen I said high, what I meant is that loan payments have gone from 10k/month to 20k/month. For a company that was previously making 15k/revenue the 10% inflation will not help them prevent bankruptcy, even if they raise their revenue by 10%