Saturday, September 5, 2009

Bank Comedy

This is from the August 30 Las Vegas Review Journal.

"It certainly is a horrendous market right now," said Arvind Menon, chief executive officer of Meadows Bank. "It certainly is getting harder and harder to find good borrowers to lend money to, primarily because of all the financial devastation that's going on in the market. It's very difficult to be able to make loans that we think will be able to weather the storm."

Menon is looking for borrowers who have strong liquidity, low debts in relation to assets and few contingent liabilities in the form of personal guarantees for outstanding loans.

But why would a person with lots of cash and low bills want to borrow money? The only time a shrewd person would want to borrow is if he was dead certain that prices were going up faster than the cost of the loan. In that case, why would banks want to loan?

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