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Re: Fed Economists Warn Of Looming Disaster Due To High Interest Rates

By: micro in 6TH POPE | Recommend this post (0)
Wed, 05 Jul 23 2:09 PM | 19 view(s)
Boardmark this board | 6th Edition Pope Board 		Msg. 44122 of 58506
(This msg. is a reply to 44119 by Decomposed)
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De,

as former owner of two companies that were corporations, I can assuredly tell you that chief executives that do the kind of stuff you are describing , and many do, should never be allowed to be the decision maker in that company or any other for that matter.

Sound and conservative business practices for the most part are tried and proven to work. Those who engage in adding more and more debt to payoff on the "what if" notion that our sales are going to increase (how about the margins? )
so we should have no difficulty remaining solvent.

The level of stupidity I see in today's so called leadership with easy money abundantly available is just incredible to me.

Back in the mid 1980's I had a serious downturn in business because my largest customer had suddenly and without talking to me, made a change in their operations that reduced our sales to them by about 90 percent.

I was able to get with their President and discuss what was going on and get a firmer grasp of the long term effects from that.

My next move was to look into maerjets and prospective customers we did not do business with and started making appointments across America to go and have face time with them. I was successful in bringing on board ALL of them and within a matter of of 4 months our cash flow vastly improved and I repaid the bank the money we borrowed and after a year I had a mortgage burning party.

So no the physical building was not costing me a large amount of money every month either.

Running a company is not rocket science or require a genius. But what a lot of these pinheads do is always bet on the future.. THAT is a huge mistake..

So that is exactly why the things that you described in your post occur. PINHEADS for corporate heads.

I am so glad those decades are well behind me and I am not spending my days and weekends working on running the corporation. I just can;t believe all the dumb stuff these other folks do today size of company notwithstanding. Its almost like they have no clue about ramifications of their actions.

Wow.


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The above is a reply to the following message:
Re: Fed Economists Warn Of Looming Disaster Due To High Interest Rates
By: Decomposed in 6TH POPE
Wed, 05 Jul 23 4:53 AM 		Msg. 44119 of 58506

Zimbler0:

Re: “If the corporations took out low interest loans . . . Assuming the loans were fixed interest at those low rates . . what is the problem?”Over-leveraged is over-leveraged. It's never good, no matter what the interest rate might be.

Many companies took on too much debt after getting used to refinancing as a means of making excessive debt manageabl. But with interest rates up, refinancing is not an option.

On top of that, some American companies got the low rates they did by taking out variable rate loans. When rates fall, variable rate loans are wonderful. But when they rise, it's a different story.

So the scenario you describe isn't the reality. A lot of companies took on more debt than they could afford, expecting rates to stay where they were or to even go lower. They gambled and they lost.

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