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The U.S. Federal Reserve has been buying assets including government bonds to lower interest rates and ease the de-leveraging process.
However, since the nation's debt is our debt, such a course would only temporarily hold in abeyance the eventual de-leveraging process.
Although the level of leverage is higher in developed markets, the speed of the recent leverage process in emerging economies, and especially in Asia, is indeed an increasing concern".
The power of the method is that it is a "high leverage" process.
The power of the method is that it is a "high leverage" process, providing exceptional return of work accomplished for each unit of time and energy expended.
It has been observed that repeated application of linkage and leverage processes may result in the firm learning to perform such operations more effectively (organizational learning).
If not managed carefully, the central reform imperative of inducing more conservatism in leverage requirements and risk management will risk intensifying the ongoing de-leveraging process.
Unsustainably high debt should be reduced in a rapid and orderly fashion to avoid a long and protracted (often a decade or longer) de-leveraging process.
A painful de-leveraging process implies that private and public spending need to fall, and that savings must rise, to reduce high deficits and debts.
The ongoing de-leveraging process, higher cost of capital, higher taxes and a weakened global economy suggests the likelihood of an even slower growth trend in the years ahead.Trend GDP growth rates have typically been mirrored in real earnings growth.
Unless the party in question can be bailed out, the de-leveraging process usually leads to default and insolvency.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com