Highly Leveraged Situations Are Extremely vulnerable During most of the 1980s, many managers, including corporate raiders, pursued a strategy of debt financing(leveraging) in contrast to equity financing(stock ownership). Funds for such borrowing were usually readily available, heavy debt had income tax advantages, and profits could be distributed among fewer shares so that return on equity was enhanced. During this time a few voices the over-leveraged situations of many companies. They predicted that when the eventual economic downturn came, such firms would find themselves unable to meet the heavy interest burden. Most lenders paid little heed to such lonesome voices and encouraged greater borrowing. The widely publicized problems of some of the raiders in the late 1980s, such as Robert Campeau, who acquired major department store corporations only to find himself overextended and lose everything, suddenly changed some expansionist lending sentiments. The harsh reality dawned that these arrangements were often fragile indeed, especially when they rested on optimistic projections for asset sales, for revenues, and for cost savings to cover the interest payments. An economic slowdown hastened the demise of some of these ill-advised speculations. The subprime mortgage bubble of 2007 and 2008 was arguably the supreme example of wild exuberance crashing down to bring the whole economy to within a whisker of recession. Disney was guilty of speculative excesses with Euro Disney, relying far too much on borrowed funds, and assuming that assets, such as hotels, could be easily sold off at higher prices to other investors.As we saw in the break even box, hefty interest charges from such over leveraged conditions can jeopardize the viability of the enterprise if revenue and profit projections fail to meet the rosy expectations.