Risk and Leverage
Gary emphasizes the critical role of creditor expectations in mispricing risk, leading firms to leverage excessively. Despite the inherent dangers, firms are drawn to low borrowing costs and perceived investment opportunities, often resulting in significant gains for some while others face dire consequences. The discussion highlights the paradox of firms thriving amidst systemic risks, raising questions about the sustainability of such practices.In this clip
From this podcast
EconTalk
Gary Stern on Too Big to Fail
Related Questions
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