Sears is a 2nd Lucent for sure, as was Cisco, but they have eluded the hardship
I believe Cisco financed to at least 100 DotComs, many of whom are bust now
just shows how regardless of your line of business, mgmt can turn you into either a casino or a lending business in five easy steps, five quick years
so many observers (cheerleaders) view our financial creativity as a strength, with innovative financing that confuses even intelligent people, so adaptive, so efficient
I dont share this confidence
I instead view our financial lending creativity as a thousand sticks of dynamite in every business, in every home
our debt entanglements are like nooses that will find necks!!!
the effectiveness of such diverse lending practices has as its basis in profitability an expanding economy with hiccups at worst
until now, the end of the supercycle
Sears lending had 14% of revenue, 50% of profit
their Discover creditcards are losers
what is happening here with Sears is a preview of what will happen to Fanny Mae, along with a wagon train of lenders, starting with mortgage and extending to cars and installments
lending without much attention to being creditworthy is a keg of dynamite with a long fuse
in today's environment this vulnerability is deadly
nice dig
/ jim
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