Minnesinger: Great Questions
There is simply no way for me to respond to your inquiries without a dose of commentary. Sorry, lol.
You related:
comment on how Wall Street's "Credit Concerns" might effect GSI's business plan/model?
Reply:
Wall Street credit concerns are well founded. After all, one only need take a glance at the many "no down, bad credit" programs that have been offered to the public in the last several years.
These financing activities pushed borrowing capabilities of the average consumer to unacceptable limits, housing prices reacted accordingly, rising, while the fiscal/stability requirements of borrowers decreased. These two factors may only grow apart for a relatively short period of time before bust occurs.
There is a rotating bubble break taking place, first came the coasts, then Vegas, and so on. Locations with the largest gains, have taken the biggest hits.
Most did not notice, but this has been getting progressively worse for well over a year. Home purchasers buying power as it relates to wages and tax considerations will always dictate where the housing market will steady price wise, this, after the eventual completion of the ongoing mini collapse.
The first sign of alarm was signaled long ago by the Fed itself, when they decided not to release M1 money supply numbers to the public.
There was simply no way for the Fed to introduce enough liquidity to sustain growth without alarming the capital markets with the possibility of inflation, so, they simply stopped releasing the all important daily activities of the Fed window. Smart money surely noticed this, but it was largely ignored.
So, how does this affect GSI and its related businesses ?
There is no significant affect, the target markets of GSI are virtually recession proof. Insurance, Health Care. Can't live without them, on occasion, literally.
Health care in the US is nearly 25% of GNP, and growing.
Money is always available, the price just goes up when less is available and liquidity is experiencing decreasing trends.
The models used by GSI to determine what amounts to pay for certain receivables are not constant, one factor would be the cost of money/funding. Any increase in interest rates/discount would simply be passed along to the borrower and would be deducted from the final amount funded by GSI/Funder. The client itself would simply receive less.
You asked:
Does it help as institutions will be seeking alternate funding methods, or does it potentially hinder as all avenues of finance are tied to the same mechanisms?
Reply
Most of the payments that involve health care are paid by various agencies of the Federal Government. Medicare, Medicaid, and so on. Yes, there are large financially strong insurance companies as well that are called on to pay much, but in the end, the USGOV is responsible for the majority of the payments.
The USGOV (with the mighty hands of the Healthcare Financing Administration etal) pretty much control health care payment flow industrywide. They take anywhere from 60-120 days to pay claims, and only pay if the claims are properly filed within the confines of the constantly changing rules.
GSI is getting public market financing, now while the rates may increase to facilitate individual borrowings to meet GSI client needs, plenty of money would be available as it is nearly risk free. With most of the money from claims coming from such low risk "debtors" eg: USGOV/Large Insurance Firms, then the risk is nil. Therefore, no problem getting money, money is always available in large quantities for low risk applications. This is especially true when the economy is contracting. When the economy falters, capital markets follow with decrease and there is a so called "flight to quality". That flight lands directly at GSI's airport. Good or bad times, there is always money available for low risk propositions such as GSI.
To make it simple, GSI is borrowing against the eventual payment by the USGOV and large insurance firms. Collateral such as this "secured" by GSI is considered the absolute lowest risk in the capital markets/banking industry.
This is why the Stephens Investment Bank will eventually become involved, GSI will employ Stephens to access the bond market for funding when strategically/economically logical.
I hope this sheds some light.
