Before the credit crunch, firms and households expanded through 'leverage'- borrowing to buy assets. It worked provided asset prices rose as lenders knew they could seize and sell them should a client fail to repay interest and/or capital. 'Deleveraging' is this process in reverse.
The trigger was the credit crunch, which spawned falling prices for everything from houses and stocks to commodities.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
-
RICS: homebuyers are returning after stamp duty shockThe housing market has been subdued since stamp duty thresholds dropped in April, but there are signs of a recovery
-
Reducing cash ISA limit will make lending difficult and expensive, warn providersAn open letter from the Building Societies Association has urged the chancellor to keep the cash ISA limit at £20,000. We look at whether a smaller cash ISA allowance will make it harder to get a mortgage or loan
