deleveraging
Paying down obligations
Deleveraging is the process of reducing debt relative to assets or income.
Companies deleverage by paying down loans, selling assets, or raising equity; households deleverage by paying off mortgages and credit cards.
The term gained prominence after the 2008 financial crisis, when overleveraged institutions and consumers were forced to reduce their debt burdens: The economy stalled as banks and homeowners deleveraged simultaneously.
Prolonged economic decline
- credit crunchSevere reduction in lending
- 2008Year before 2009
- systemic riskEconomy-wide collapse potential
- banking sectorInstitutions handling money professionally
bailout · austerity · contagion · market collapse · Lehman Brothers · quantitative easing · deflationary · economic downturn
Decreasing money owed
- balance sheetAssets-liabilities-equity report
- restructuringRearranging an existing framework
- asset salesSelling owned property
- divestitureDisposal of assets
loan repayment · refinancing · bondholders · creditors · liabilities · financial health · debt-to-equity · writedowns
Completing payment on home loan
- consumer debtMoney owed by individuals
- savings ratePercentage of income saved
- debt-freeWithout financial obligations
- financial planningOrganizing future monetary goals
budgeting · loan consolidation · frugality · downsizing · spending cuts · net worth · personal finance · debt snowball
Central bank economic controls
- fiscal stimulusGovernment spending to boost economy
- private sectorEconomy outside government control
- central bankNational currency management institution
- debt-to-GDPBorrowing versus economic output
national debt · IMF · sovereign debt · economic recovery · interest rates · capital flows
recession
Prolonged economic decline
- credit crunchSevere reduction in lending
- 2008Year before 2009
- systemic riskEconomy-wide collapse potential
banking sector · bailout · austerity · contagion · market collapse · Lehman Brothers · quantitative easing · deflationary · economic downturn · financial stability
debt reduction
Decreasing money owed
- balance sheetAssets-liabilities-equity report
- restructuringRearranging an existing framework
- asset salesSelling owned property
divestiture · loan repayment · refinancing · bondholders · creditors · liabilities · financial health · debt-to-equity · writedowns · fiscal discipline
mortgage payoff
Completing payment on home loan
- consumer debtMoney owed by individuals
- savings ratePercentage of income saved
- debt-freeWithout financial obligations
financial planning · budgeting · loan consolidation · frugality · downsizing · spending cuts · net worth · personal finance · debt snowball · emergency fund
monetary policy
Central bank economic controls
- fiscal stimulusGovernment spending to boost economy
- private sectorEconomy outside government control
- central bankNational currency management institution
debt-to-GDP · national debt · IMF · sovereign debt · economic recovery · interest rates · capital flows
- economyGDP, money, inflation, inflation rate, GNP
- restructuringrestructuring, reorganization, consolidation, turnaround, Chapter 11
- Bailoutsbailout, bank bailout, bank bailouts, rescue package, rescue fund
- bear marketbearish, decline, downturn, correction, sell-off
- financial crisesfinancial collapse, bank run, economic collapse, bank failure, bank failures
- housing crisishousing bubble, housing crash, subprime mortgages, foreclosures, subprime loans
lever, leverage, leveraged, leverages, leveraging, deleverage, overleveraged, unleveraged