Words-worth: Leverage

'Leverage' is at the heart of the financial crisis. To be 'leveraged' is to borrow money in the hope that the profit you make with it will outstrip the interest you are paying on it. To be 'highly leveraged' is to borrow massively more than your assets, a game the banks have been playing, with disastrous consequences. But it is also true of the unfortunate sub-prime housing borrowers, whose defaults set the collapse in motion in the first place. Given the source of the problem, it seems appropriate that the verb 'to leverage' is a US coinage, first recorded in this sense in 1957. Verbing, the conversion of nouns into verbs without changing them, is an American trait and the results, as here, can be ugly. The noun in question, 'leverage', has many non-financial uses: it has meant 'the action of a lever' since the 18th century, but it also means 'power' or 'strength'. The power of the lever was first explained by Archimedes, who famously said he could use one to move the world if he had a place to stand. A dangerous tool, then: leverage has rocked the whole financial world.

by
Last Updated: 31 Aug 2010
Tags:
Enterprise

Find this article useful?

Get more great articles like this in your inbox every lunchtime

Interview ghosting: Stop treating job seekers like bad dates

Don’t underestimate the business impact of a simple rejection letter.

5 avoidable corporate disasters

And the lessons to learn from them.

Dressing to impress: One for the dustbin of history?

Opinion: Businesswomen are embracing comfort without sacrificing impact. Returning to the office shouldn't change that....

How to motivate people from a distance

Recognising success in a remote or hybrid environment requires a little creativity, says Insight SVP...

What pushy fish can teach you about influence at work

Research into marine power struggles casts light on the role of influence and dominant bosses...

The traits that will see you through Act II of the COVID crisis ...

Executive briefing: Sally Bailey, NED and former CEO of White Stuff.