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Why do you think large companies refinance debt? So they can invest in productive areas of the business. If debt refinancing became illegal or widely impractic
by twoodfin 9mo ago
Why do you think large companies refinance debt? So they can invest in productive areas of the business.
If debt refinancing became illegal or widely impractical due to an interest rate spike, you’d quickly see how much of the productive economy it’s fueling!
- palmotea 9mo ago> If debt refinancing became illegal or widely impractical due to an interest rate spike, you’d quickly see how much of the productive economy it’s fueling! You're missing the point. Read the article. And no one is saying "don't refinance debt." The passage you're reacting to was making the point "less than a tenth of [the capital banks raise] goes toward building anything new." > Why do you think large companies refinance debt? So they can invest in productive areas of the business. The article is talking about banks and the finance industry, not non-financial companies. Also, if you think they were restructuring debt to invest in productive areas of their businesses, don't you think more than 10% of the capital banks raise would be going to building something new? If you read the article, it spends a lot of time talking about how much money goes into "mergers and acquisitions" and how it's a waste.
- twoodfin 9mo agoSorry, what is the argument that when a company refinances debt—replacing current cash obligations with larger future cash obligations—they’re not going to use that current cash flow to build something new, or at least hire more people than they would have otherwise? AFAIK, manufacturers refinance debt to build more/better factories all the time, for example.