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I read an article recently talking about the

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Schneidku40   Wednesday, 09/16/20 04:20:05 PM
Re: nowwhat2 post# 326792
Post # of 328057 
I read an article recently talking about the downside to companies of low interest rates. Sure, borrowing on debt is better when interest rates are low. But, they argued, too many losing projects get started because the risk is so low. In a normal interest rate environment, CEOs have to look hard at each project to make sure it makes financial sense. Now, it's much easier for them to just give a proposal a once-over and say sure, go ahead and try it, growth at any cost since it's basically free capital. So at some time in the future, all of these money-losing projects will become apparent and start dragging on these companies. It may show up in a large number of acquisitions, which are borderline being good even in the best business environment. Most acquisitions don't work out as well as planned. Or, we may not see it until interest rates start to rise in ~3 years? and companies can't roll over their debt so easily anymore, and have to actually pay it off in cash or equity.

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