So for the moment, the 3 US auto companies were rejected by the Senate in their media circus application for a multi-billion dollar bailout. Accusations and blame are being exchanged as pre-Christmas gifts amongst the management, union and politicians.
Whilst the quality of management and overall competitiveness of the US auto industry is debatable, it’s important to point out that at some level they are also victims of Wall Street’s financial engineering debacle. This is because the 3 US auto companies rely on short term financing via the commercial paper market, which seized up.
The politicians played tough with the auto CEOs – demanding oversight, cutbacks in wages and executive pay, then crashed their bailout in the Senate. It was the same song they sang to the investment bankers but then handed over hundreds of billions with no oversight in sight.
Those politicians screaming for greater financial regulation will no doubt be fortified in their views by the now collapsed, decades long, multi-billion buck Ponzi scheme run by Wall Street grandee, Bernie Madoff under the nose of the SEC (to whom he was an adviser) and NASDAQ (of which he was Chairman). Just how many complaints are necessary before the SEC will act? Ask them. There were complaints about Madoff since 1999.
Call Madoff the aftershock to the main financial earthquake. The best that can be said about him is that he appeared to be an equal-opportunity scammer, targeting the ultra-rich and charities. It’s all great news for the lawyers.
There are lessons to be learned for SMEs. It’s been widely reported that Madoff was under financial and emotional stress. Even a Ponzi scheme requires cash flow. SME Directors facing cash flow pressures frequently resort to paying off favoured creditors at the expense of others. Cooking the books is another option, but both are a zero sum game.
Cash is king and cash flow is the true measure of business success. Like Madoff, a business may be showing a profit, but is in reality insolvent.
With US interbank lending rates now cut to 0.5%, the hope is this will translate into widespread consumer lending so that the average American can once again, enjoy his drug of choice – debt.
SAW’s suspicion is that the US consumer has been so traumatised, they might actually start doing the unthinkable – save.
© 2008 Sanjeev Aaron Williams All Rights Reserved
Whilst the quality of management and overall competitiveness of the US auto industry is debatable, it’s important to point out that at some level they are also victims of Wall Street’s financial engineering debacle. This is because the 3 US auto companies rely on short term financing via the commercial paper market, which seized up.
The politicians played tough with the auto CEOs – demanding oversight, cutbacks in wages and executive pay, then crashed their bailout in the Senate. It was the same song they sang to the investment bankers but then handed over hundreds of billions with no oversight in sight.
Those politicians screaming for greater financial regulation will no doubt be fortified in their views by the now collapsed, decades long, multi-billion buck Ponzi scheme run by Wall Street grandee, Bernie Madoff under the nose of the SEC (to whom he was an adviser) and NASDAQ (of which he was Chairman). Just how many complaints are necessary before the SEC will act? Ask them. There were complaints about Madoff since 1999.
Call Madoff the aftershock to the main financial earthquake. The best that can be said about him is that he appeared to be an equal-opportunity scammer, targeting the ultra-rich and charities. It’s all great news for the lawyers.
There are lessons to be learned for SMEs. It’s been widely reported that Madoff was under financial and emotional stress. Even a Ponzi scheme requires cash flow. SME Directors facing cash flow pressures frequently resort to paying off favoured creditors at the expense of others. Cooking the books is another option, but both are a zero sum game.
Cash is king and cash flow is the true measure of business success. Like Madoff, a business may be showing a profit, but is in reality insolvent.
With US interbank lending rates now cut to 0.5%, the hope is this will translate into widespread consumer lending so that the average American can once again, enjoy his drug of choice – debt.
SAW’s suspicion is that the US consumer has been so traumatised, they might actually start doing the unthinkable – save.
© 2008 Sanjeev Aaron Williams All Rights Reserved
