Dr. Mike Walden, North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State University, responds:

"The answer is 'yes,' and we're seeing that, really, right now. Certainly, leverage can work for you when you buy an asset with a relatively small amount of money, and you're controlling a much bigger value, and that asset appreciates substantially. So, for example, you buy a piece of real estate, say, you put 5 percent down, you borrow the rest. You come out ahead if that real estate goes up in price at a very fast rate. You look very good. You look very smart. In fact, this happened to many people in the residential real estate market in the early years of this decade. But now, when real estate prices are falling in many markets, leverage can really come back to bite you, because now you have borrowed money to buy an asset, and instead of that asset's value going up, it's actually going down, which means that you're going to have to come up with more money to cover the loan. This is exactly what's happening to many people. They're finding their home value is actually less than the value of their loan. They're going bankrupt or walking away. This is a good example of where you have to be careful with leverage and really focus on what's going to happen to the value of that asset that you're leveraging."