The Drawing Board :: Debt Overhang's Effect on Business Investment and Economy

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Uploaded by on Jul 19, 2010

Business expansion is dragging and slowing the economic recovery, and it seems everyone is searching for reasons. In his new paper, Federal Reserve Bank of Cleveland researcher Filippo Occhino says a contributing factor may be something called debt overhang. Simply put, when companies have too much debt it discourages them and their investors from taking on projects because the debt consumes any profits the investors might make, even in situations when the investment raises equity in the company.

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  • The entire U.S. has debt overhang!!!

    Individuals are underwater on their houses; individuals are underwater on their student loans; businesses may be underwater; the U.S. government may be underwater.

    If the solution is to forgive the debt - let it begin!

  • Thank you for this series!

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