Tuesday, June 01, 2004

Corporate America has done a rip-roaring job in balancing their books. After running serious red ink during the stock market bubble, US firms have moved quickly into the black. Profits, on a hard decline from 1997 to 2001, turned on a dime under the Boy King and are now heading for the stratosphere. How did it all happen? Tough choices by US CEOs? The famed flexibility of the US economy? Stunning innovation? Maybe it was thanks to free money.
it may be that companies have de-leveraged without really having to try too hard. Often, it's a real slog, a period of gut-wrenching pain, to pay down debt, but if, on this occasion, the government and the consumer have come along and simply taken the debt away, the achievement no longer seems quite so laudable. Put another way, company debts may have fallen not because of the tough qualities of the average American CEO but, rather, because corporate revenues were boosted by the aggressive borrowings of the American government and consumer.

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