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I dont think CIT was nearly as deep in the hole as GM was, though havent looked it up.
Cit was in the hole more than GM..
CIT had $31B in bonds coming due, GM had a total outstanding $27.5B, and Ford who was left hanging on their own had even more debt.
CIT will go through the standard bankruptcy, reorganize, and come back stronger, thats the way it works. CIT just received their bailout months ago to "save them from bankruptcy".. They should have just stopped prolonging the agony and filed it previously..
Small businesses indeed need "credit", especially this time of year when they have to buyup more products for their shelves to sell over the holiday season..
Sure there are other banks, but do you know any of them loaning right now?
Well that's the freakin' problem in my estimation. Credit NEEDS to tighten so prices can collapse and allow the sickness of excess to be purged from the system. Savers need to enjoy the fruits of their sacrifice. When the Fed finally gets it through their thick skull they cannot force people to lend and allow interest rates to increase to a true market rate, these smaller banks can begin lending again without having one hand tied behind their back. Monetary policy should follow what the little guys are doing, not the big guys. The former is a much better gauge on whether businesses are lending or borrowing.
Because they DIDNT get a bailout, they were forced to deal with their losses and face them headon rather than just taking money to "get through" the tough times.
When you cut your costs the outcome is PROFITS.. When you get "bailed out", you are not forced to make tough decisions..
Thought this was clear by now..
Not entirely true.
The saying goes if Ford did indeed need a bailout, it would of been the end for Chrysler. So they wanted to take a bailout but felt it was better to help one of their domestic competitors. (it had to do with parts supply, mainly)
Ford basically asked for a line-of-credit just in case (not sure if they actually used that line or not; maybe so) and put up lots of collateral to get things going.
Well that's the freakin' problem in my estimation. Credit NEEDS to tighten so prices can collapse and allow the sickness of excess to be purged from the system. Savers need to enjoy the fruits of their sacrifice. When the Fed finally gets it through their thick skull they cannot force people to lend and allow interest rates to increase to a true market rate, these smaller banks can begin lending again without having one hand tied behind their back. Monetary policy should follow what the little guys are doing, not the big guys. The former is a much better gauge on whether businesses are lending or borrowing.
So if we stop giving out credit, how do you suppose you'll be able to buy gas, since gas is sold to the gas stations on credit, how about stores, do you think stores have TENS of billions in cash to buy products to sit on until the holiday season comes around? How in the world do you expect companies to come up with the trillions in cash needed to keep their businesses going?
When is the last time you bought a home, or even a car for cash? Some of us can do so but I couldnt do it without putting credit into other ventures.
The saying goes if Ford did indeed need a bailout, it would of been the end for Chrysler. So they wanted to take a bailout but felt it was better to help one of their domestic competitors. (it had to do with parts supply, mainly)
Ford basically asked for a line-of-credit just in case (not sure if they actually used that line or not; maybe so) and put up lots of collateral to get things going.
Not true, if Ford needed a bailout, they simply would have borrowed a few billion more to loan it to everyone. Its not like the Government is practicing sound fiscal policy
So if we stop giving out credit, how do you suppose you'll be able to buy gas, since gas is sold to the gas stations on credit, how about stores, do you think stores have TENS of billions in cash to buy products to sit on until the holiday season comes around? How in the world do you expect companies to come up with the trillions in cash needed to keep their businesses going?
When is the last time you bought a home, or even a car for cash? Some of us can do so but I couldnt do it without putting credit into other ventures.
Credit markets would not seize up entirely. Credit would be offered by a local CU @ 20% interest or whatever the prevailing market rate is, based on acceptable risk to the lender. Unfortunately, that's just the cost of lending money nowadays. I thought you were more free market oriented? If you are suggesting credit continue to flow from whatever government TARP program or whatever, that artificially reduces the prevailing market interest rate and distorts the credit market. Also, peer to peer lending would explode as many savers would be more than satisfied to lend @ 30-50% interest. It's pay now or pay dearly later.
Believe me, I am not a fan of bail-outs. But CIT filed for bankruptcy protection. They are not liquidating....yet.
Yeah I know, but bankruptcy is bankruptcy.. (up to last week I held 200,000 shares of CIT untill I talked to Icahns office to get clarification on the bk offerings).. I'm VERY familiar with this company.
p.s. their stock is down 50% this morning so tell the investors that its not liquidating.
Credit markets would not seize up entirely. Credit would be offered by a local CU @ 20% interest or whatever the prevailing market rate is, based on acceptable risk to the lender. Unfortunately, that's just the cost of lending money nowadays. I thought you were more free market oriented? If you are suggesting credit continue to flow from whatever government TARP program or whatever, that artificially reduces the prevailing market interest rate and distorts the credit market. Also, peer to peer lending would explode as many savers would be more than satisfied to lend @ 30-50% interest. It's pay now or pay dearly later.
What? You think we have to much credit and your solution is to offer credit, at a MUCH higher rate? You must LOVE seeing companies file bk..
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