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Could you please help me understand what this phrase "leg breaking" means? Does it relate to violence? Kind of threatening to break the borrower's legs?

Some of these changes were gradual. Moe had originally been one of the least likable characters on the show. He owned a dank, dilapidated bar, the meager income of which he supplemented by running a number of side-line criminal schemes. The one time he did hire a waitress, he sexually harassed her at her interview and later had sex with her. The next season, when asked by Homer if he’d ever felt “unattractive”, the leg breaking loan shark replied with an unequivocal, “No”.

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Yes, it is referring to breaking a borrower's legs, or threatening to break them if the borrower doesn't pay back the loan on time.

This is an obvious reference for most people familiar with American crime and movies about crime. Breaking somebody's legs is a punishment that the mafia is known for in the U.S. It's such a well known practice that it can be used to describe the stereotypical loan shark on The Simpsons without any further explanation.

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The Moe character in The Simpsons TV cartoon series is a loan shark who is known to use violence, or the threat of it, including breaking legs, to encourage the repayment of loans. If we use a noun and the gerund form of a verb like that, it can imply a habitual or customary action, or that the action happened at a relevant time. Usually the noun and verb are joined with a hyphen: a gun-carrying robber, a leg-breaking loan shark, a window-breaking thief, two violin-playing truck drivers, a music-loving neighbour, a card-carrying member of a political party.

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