STRAIGHT TALK
MARK BARNES: Our desire for instant gratification has made debt a worldwide ramification
Cancer begins with a change in the gene of a cell. Debt is a cancer. It will change your financial DNA. Debt grows while you work, while you play and while you sleep. Debt has a place in the corporate capital mix. The tax and leverage advantages of debt within a predictable income structure can significantly enhance early growth and dramatically improve the overall return on capital. That’s all very well in a limited liability structure where the damage is restricted to the encumbered asset only; where contamination is contained. The very purpose of the limited liability construct is to enable specific risk-taking in a contained way. Personal debt is a different animal altogether. Even in a mortgage bond there is a disconnect between the yield of the asset (nothing but lifestyle) and the income stream that is required to service the debt (your salary). But, at most, they can only take away the house. Unsecured, consumption-driven personal debt is the real cancer of finance. It’s not...
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