Articles Comments

America's North Shore Journal » Entries tagged with "credit crisis"

Debt, Debt and More Debt

October 10th, 2008 | 1 Comment

CNN Money and Fortune Magazine tally the top corporations in the United States yearly. In the midst of this credit crisis, I thought it might be interesting to look at the debt burden of the top ten American corporations. I used the latest quarterly balance sheets as posted on Yahoo Finance. The top 10 American corporations currently carry over $2.5 trillion dollars in debt on their books. Just over one trillion dollars is classed as short term, expected to be repaid in the next year. The remaining long term debt, $1.52 trillion, will be repaid over a period longer than a year. That’s just ten companies, the ten largest, but just ten. Imagine, if you will, the total debt load for the top 100, the top 500. Business thrives on debt. Use … Read entire article »

Filed under: American Economy, Analysis, Original writing

Mark to Market Changed for Now

October 1st, 2008 | Comments Off

One of the accounting rules that has created this “crisis” is called mark to market. What that means is that securities are to be valued at the price they could be sold for at market. It allows a company to recognize that its investments have appreciated, or sadly, depreciated in value. The credit market got tied up when major players refused to buy at prices they viewed as too low. If you cannot sell a security, it has zero value. Suddenly, banks and other institutions held massive amounts of mortgage securities with no apparent value. As has been demonstrated here, they do have a value, but the refusal to buy and sell at those values shut the credit market down. Companies went bankrupt due to their losses in securities marked to market. The SEC … Read entire article »

Filed under: American Economy, Commentary, Original writing

Emergency Economic Stabilization Act of 2008

September 28th, 2008 | Comments Off

Here is a link to the Financial bailout agreement. It is in PDF form. It is a long and complex document but a very quick scan reveals some issues for the American taxpayer. Emergency Economic Stabilization Act of 2008 Lots of bad options were taken out. Still: The government would have the authority to buy troubled assets from foreign banks and governments. The government, in certain circumstances, is authorized to pay more for the troubled asset than its current owner paid. A substantial bureaucracy to administer and inspect these programs is authorized. While the government is urged to mitigate foreclosures by interest rate changes and / or the forgiveness of principal, foreclosure is not ruled out. The government is authorized to begin buys before creating any policies, procedures or regulations concerning such activities. Fire Congress! Previous in series … Read entire article »

Filed under: American Economy, Commentary, Original writing