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In Reply to: RE: Is this a catastrophe? posted by tweaker456 on May 20, 2023 at 05:39:10
Stable, moderately successful corporations carry pretty much as much debt as they can because it means that shareholders get all the up-side, (and the downside too of course but that's not why the corps carry the debt).
Typically corporate debt is rolled over, NOT repaid in full. On the contrary, the debt is planned to increase with the growth of the enterprise.
How then is national debt so different from corporate debt?
Dmitri Shostakovich
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And fascists.
"Horse sense is the thing a horse has which keeps it from betting on people. "
― W.C. Fields
Well maybe Larry Ellison and Peter Thiel could be the exceptions.
The product of corporations is something your or I may purchase. The product of government is not.
Government does not show a profit or expect one. Bonds are paid off with future tax revenue.
Corporations issue stock from which stockholders expect either growth, perhaps an increase in value, or a regular dividend. Companies like INTEL seem to be cyclic. Huge investment in manufacturing equipment to make the next generation of CPU, the profits from which fuel the generation after. Semiconductor equipment is off-scale expensvie and a complete manufacturing facility costs Billions.
You are right about corporate debt. But some companies carry debt to make themselves Less attractive to some form of corporate raiding or takeover. I don't know how common that approach is. Some debt is short-term and might be repaid on that basis....PLEASE see link I provide. They get into more depth than I can manage....
the company I worked for bought a lot of its own stock at one point.
Too much is never enough
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