Word: debt
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...said that a decade ago, students graduated mired in loan debt, but in 2008, the University began
...price of electricity: When electricity prices are high, SWIFTs enjoy higher revenues. SWIFTs have become expert at using customized derivatives to offset the risks associated with these revenue fluctuations, yielding net earnings that, until recently, had appeared to be virtually risk-free. They then issue short-term debt backed by these stable earnings. A typical SWIFT finances 90 percent of its assets using overnight notes that yield only slightly more than Treasury bills...
...assets invested in a single Georgia wind farm, which was forced to shut down for two weeks over protests that its turbines were killing large numbers of local waterfowl. The resulting revenue loss forced Pro-SWIFT to sell assets in an effort to service its maturing short-term debt. Although only $10 billion of assets were liquidated, they fetched just 60 cents per dollar of book value. J.P. Morgan, in purchasing the assets, noted that, “Our more conservative financial policy puts us at a disadvantage in buying wind-farm assets—hence the large discount...
...More significantly, the rise in asset values that supported much global prosperity turned out to be an illusion largely fueled by easy credit; when the bubble burst, highly leveraged speculative positions reversed gear, and the international financial system came uncomfortably close to crashing. Even more troubling, the ongoing Greek debt crisis has suggested that weaknesses in sovereign debt may trigger another, even more profound global financial meltdown...
...economics: The free market is still the foundation of prosperity, but the rules of the road have to change to align benefits and costs with decision-making. We have felt the consequences of bankers leveraging other people’s money on speculative bets or politicians dispensing favors using debt that will be saddled on the next generation. The new architecture of business and political economy will have to assure that those who gamble must bear their own losses, and that public spending does not distribute benefits today while postponing burdens until the next generation...