America’s major financial organizations have spent the better part of the last decade essentially giving away money.Against the hindsight of better judgment, they were bundling high risk home mortgages and “refi’s” like so many bails of scrap paper – which many of them have become – and trading them amongst themselves as if they were baseball cards, tossing them around like the hot potatoes they really were, playing “button, button, who’s got the button” with your financial future.
Yesterday, the Associated Press reported that the F.B.I. has opened preliminary investigations into possible fraud involving the collapse of the four giant financial corporations at the center of the recent turmoil — home mortgage giants Fannie Mae and Freddie Mac, and Lehman Brothers and the American International Group.
Sunday morning talk shows seemed to agree that the activities that led to this international crisis probably weren’t illegal but definitely ill-advised.One pundit said it was caused by a completely unfettered financial system which was allowed to be run by short term greed, not long-term sanity.
According to TradeTheNews.com, franchisees of McDonald's, the fast food giant, were being denied a Bank of America line of credit needed to expand into the ‘better cup of coffee’ business.If anything takes the pain of Wall Street directly to Main Street, it’s news like that.My days of $4/cup coffee at Starbucks might be over and I’ll need to supplement my caffeine habit with a buck a cup at Mickey D’s.
The Associated Press reported late last night that Bank of America has denied the credit freeze despite reports of an internal memo from McDonald’s corporate office advising franchisees of the contrary.Staving off a crisis of another kind, B of A spokesman Larry DiRita said the bank will honor its obligations to the company's franchise owners who are spending up to $100,000 per restaurant to overhaul their drink options.
Following the trickle down theory of economics, we have to take a hard look at the cattle business.It’s been buffeted hard by forces that have made it increasingly difficult to turn even a modest profit.Weather, the cost of feed, and the prices earned at the sale barn have all conspired against the average rancher’s bank account.With the easy credit business most likely turning into something run by Ebenezer Scrooge, finding a small loan to tide you over the winter after a not-so-hot year might be damn near impossible.Lost money so far this year?Grab a crutch and call yourself Tiny Tim before you limp into your friendly neighborhood bank for a buck or two this fall.
Extending a line of credit might be just a little easier but expect to pay a lot more for the use of your banker’s harder-to-find money.It might be time to have a long talk with your old friend, the guy wearing the green eye-shade and sporting those spiffy sleeve garters.Expect his pencil to be a whole lot sharper.
In fact, take your own pencil to paper before you make that trip.Take a look at how several more interest points will affect your bottom line.Maybe you’ll find that the cost of money is just too much to handle and you’ll save a trip and a few gallons of four dollar gas.