Nice story, and the lessons people will try to deduce from this are irrelevant as it pertains to our economy at the macro. When lending gets tight, growth slows down. I don't care about La Toya and her $400,000 home. Let her go under, she should have never had that loan to begin with. But, it's the investments in capital machinery, R&D, new factories, the ability to have a great idea become a multi billion dollar industry in this nation which I'm worried about. Tight lending = economic slowdown.
“However, in business, it is the various forms of debt that allows new ventures, massive growth, inspiring ideas to become reality, the real investments that bring a return..........”
It is also those various forms of debt that allow otherwise profitable companies to go bankrupt due to liquidity shortfalls, and are ultimately responsible for the economic problems we’re seeing right now.
Debt is not necessary for business expansion. It’s often better to start small and expand out of retained earnings, and if necessary, raise capital through sale of ownership interests. While that’s definitely the road less traveled, particularly amongst the overpaid MBA’s that have run so many companies in the U.S. into the ground in recent days, running a business without debt is not only possible, it is in many cases highly desirable.