Bankruptcy trend among small firms stuns lenders
- Thread starter ByLoSellHi
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An Ebay store selling a download you pirated from Finallyfast.com doesn't count.
When you own a brick and mortar retail business, employ people dependent on a paycheck, and find yourself in court financing the stupidity of your customers, then you can comment on the business decisions of your peers. Until then, shut up.
Actually I have owned a business. Look, I donât have all day to try to reason with all you Fox News, Obamaâs a Socialist, Republicans with all your useless one liners, but let me just say not everything that goes bad is necessarily somebodyâs fault. This is what you people donât understand. You think thereâs a cause and effect with everything and there isnât. Why do seemingly healthy people suddenly develop cancer? They eat right, excericise, keep healthy, but yet thatâs no guarantee of anything.
I have a friend who owns a store in the local mall. He has been there for over 10 years, however for the past 2 years he has been on the brink of closing because business is terrible. His sales have probably been cut by more than 50%. Itâs not just him, everybody is hurting. He has now burned through his whole savings. There was no bad decisions made out of the norm, itâs just the way it is.
If you still wanna believe your simplistic logic, explain this to me. If companies only go bankrupt because of poor business decisions, why is it necessary to still apply for a loan from a bank and submit a business proposal? I mean wouldnât the bank already know good and poor business decisions beforehand and already know which businesses will profit and which will fail? That way they can just choose the companies to lend to because they already know they will be profitable.
While it may be overstating the case to say that all failures are the result of bad decisions by management it certainly accounts for the lion's share of those that go down. I have owned a number of businesses in the US and Western Europe over the years and looking back every serious problem I ran into was a fairly direct result of an imprudent decision or, more frequently, series of decisions.
In one case the problem turned out to be missing a huge opportunity that relegated my company to the minor leagues when we had the inside track to be a real player in a very profitable niche. The competition jumped on our slow response and ate our lunch, dinner and came back to grab a piece of breakfast. We made money -- peanuts -- while they made boatloads.
As a society we have now spent decades pretending that this country can be horribly mismanaged and still maintain our position as world leaders. Fiscal policy, immigration, war on a whim, literally bending over to be screwed by hospitals, doctors, lobbyists, banking and insurance monopolies bought and paid for in Washington has produced a grotesque monster that flails about without a plan or even a clue.
WE STILL DO NOT HAVE AN ENERGY POLICY. IT IS INCREDIBLE!
The harsh reality is this country has mismanaged itself into near bankruptcy and many people who pretended (mostly to themselves) to be in business simply fed off the debt fueled binge that has gone on with only a few minor corrections for 40 years. They were not even prepared for a year of lean times. They never even educated themselves about what it means to build an enterprise that has some staying power. I am a New Yorker and twenty years ago -- in good times -- saw one restaurant in SOHO go out of business just 30 days after it opened its doors -- literally 30 days. For the skeptics its name was The Last Roundup and it was on the corner of Sixth Avenue and Spring Street where Aqua stands today.
Hard, very hard times are right around the corner, this bull run not withstanding. The ramifications of this insanity will not just last years it will, in all likelihood, impact on the world for decades and potentially many decades. The piper will present his bill and our political scum will try to weasel out of paying the tab. My bet is that a major part of our coming debacle will be a dollar collapse (accompanied by a Yen collapse and potentially other paper) that will make the entire world shake in fear -- both friend and foe. I believe we will try to stave off the piper's bill by subsidy and a "managed" economy. Every step will be a temporary measure that immediately after its implementation will be (or at least seem to be) impossible to undue. Our AAA will be AA and soon thereafter it will cease to matter what S&P rates the paper.
Free fall ignores ratings
Just so it is clear where I am coming from: I did not oppose the AIG and bank rescue back in the fall of '08. I think the way it was done was wrongheaded but those that say we should have let the markets run their course have no idea what would have happened when (not if) Goldman and Morgan Stanley went down.
I believe we are very deep into the process of destroying the credibility of our currency, our credit and our standing as reliable partners. I think within the next decade (and maybe within the next three or four years) we will see weekly swings in gold, crude and other tangible assets of 30%, 40% and more. I think we will see hundreds of millions of people (almost everyone with a net worth beyond a few months living expenses) in every corner of the world search for a reliable store of value. And what is worse the fluctuations may be sufficiently chaotic that for most it will be an everyday feeling of uncertainty and dread. And it is exactly those conditions that have frequently lead to totalitarian states.
After all won't we -- and other nations -- clearly need a charismatic "strongman" who will promise a return to stability in the short run and a return to our former glories in just a few years?
And, as Franklin said, those that trade liberty for security end up with neither.
In one case the problem turned out to be missing a huge opportunity that relegated my company to the minor leagues when we had the inside track to be a real player in a very profitable niche. The competition jumped on our slow response and ate our lunch, dinner and came back to grab a piece of breakfast. We made money -- peanuts -- while they made boatloads.
As a society we have now spent decades pretending that this country can be horribly mismanaged and still maintain our position as world leaders. Fiscal policy, immigration, war on a whim, literally bending over to be screwed by hospitals, doctors, lobbyists, banking and insurance monopolies bought and paid for in Washington has produced a grotesque monster that flails about without a plan or even a clue.
WE STILL DO NOT HAVE AN ENERGY POLICY. IT IS INCREDIBLE!
The harsh reality is this country has mismanaged itself into near bankruptcy and many people who pretended (mostly to themselves) to be in business simply fed off the debt fueled binge that has gone on with only a few minor corrections for 40 years. They were not even prepared for a year of lean times. They never even educated themselves about what it means to build an enterprise that has some staying power. I am a New Yorker and twenty years ago -- in good times -- saw one restaurant in SOHO go out of business just 30 days after it opened its doors -- literally 30 days. For the skeptics its name was The Last Roundup and it was on the corner of Sixth Avenue and Spring Street where Aqua stands today.
Hard, very hard times are right around the corner, this bull run not withstanding. The ramifications of this insanity will not just last years it will, in all likelihood, impact on the world for decades and potentially many decades. The piper will present his bill and our political scum will try to weasel out of paying the tab. My bet is that a major part of our coming debacle will be a dollar collapse (accompanied by a Yen collapse and potentially other paper) that will make the entire world shake in fear -- both friend and foe. I believe we will try to stave off the piper's bill by subsidy and a "managed" economy. Every step will be a temporary measure that immediately after its implementation will be (or at least seem to be) impossible to undue. Our AAA will be AA and soon thereafter it will cease to matter what S&P rates the paper.
Free fall ignores ratings
Just so it is clear where I am coming from: I did not oppose the AIG and bank rescue back in the fall of '08. I think the way it was done was wrongheaded but those that say we should have let the markets run their course have no idea what would have happened when (not if) Goldman and Morgan Stanley went down.
I believe we are very deep into the process of destroying the credibility of our currency, our credit and our standing as reliable partners. I think within the next decade (and maybe within the next three or four years) we will see weekly swings in gold, crude and other tangible assets of 30%, 40% and more. I think we will see hundreds of millions of people (almost everyone with a net worth beyond a few months living expenses) in every corner of the world search for a reliable store of value. And what is worse the fluctuations may be sufficiently chaotic that for most it will be an everyday feeling of uncertainty and dread. And it is exactly those conditions that have frequently lead to totalitarian states.
After all won't we -- and other nations -- clearly need a charismatic "strongman" who will promise a return to stability in the short run and a return to our former glories in just a few years?
And, as Franklin said, those that trade liberty for security end up with neither.
What the hell? Everything is cause-and-effect. Show me something that is not? Unless you have discovered some new laws of physics, you are again talking from your rear. Your cancer analogy is a failure because cancer is no mystery: it's either something from the environment or genetic, so I've been told by a number of different oncologists.
And btw, I watch CNN, PBS and bloomberg. Watching Fox for news is like watching CNBC for business.
Your friend DID MAKE A BAD DECISION - he didn't plan for what to do when his revenue stream dried up. If he was the only store selling something that people needed within 100 miles of his location I GUARANTEE he would not be hurting for business.
It's not necessary to apply for a loan from a bank: ever. However, banks are businesses to, and as such they are likely to make poor decisions themselves, right? Unless a bank has a crystal ball there is no way they can magically bless a business as good or bad. Banks have LLR and a handful of other regulations for just those purposes. Also a lot of times people will go into a bank with a business plan, give the banker the pitch, and without even looking at the plan thoroughly politely send them on their way so no, they don't always need to look at a plan or proposal if something sounds obviously bad.
Add in all the regulations about fair lending standards, etc. and you have banks that end up making bad loans. The banks mitigate the risk by having a higher interest rate/terms on the more risky loans, so it's never really black or white. I spent some years in the IT department of a mid-size business bank working on the pricing models so I can speak authoritatively about the types of models and ratios banks use. It's not really complicated, just wordy...