Is this what will bring on the crash?

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Bear replied

15 February 2007, 13:49
No - the crash will happen when Sockpuppet finally buys a house........

......and it'll all be the stupid agents fault!!!
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DimPrawn started a topic Is this what will bring on the crash?

15 February 2007, 13:45
Is this what will bring on the crash?

http://news.bbc.co.uk/1/hi/business/6364673.stm

The head of one of Britain's best known private equity firms has warned that his sector is now "near the top of a crest of a wave" - which, when it breaks, is likely to cause some businesses to fail.

Private equity groups have taken over businesses ranging from the AA to Birds Eye, and one consortium is considering a takeover of supermarket giant Sainsbury.

Most of these deals have been leveraged buyouts, where a company is bought with borrowed money in the hope of improving profits and selling it on at a higher price.

But the company must earn enough to keep up the repayments on the debt.

"The debt levels have been rising very rapidly in the last few years."

Mr Moulton said there were two main scenarios for companies over-burdened with debt.

"If there's nothing else wrong, it just gets restructured and it doesn't have much effect on the business or its employees. That's the benign scenario," he said.

"If a company has too much debt, stops investing, runs itself to the point where it can't even buy enough stock to run the business, then you have bankruptcies.

"Then you will have unemployment coming out of it and business failures."

And with it a house price crash?

Doomed!
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