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Genesis Posts: 71430 Incept: 2007-06-26 
KD^2 
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http://market-ticker.org/archives/1234-H....
---------- "The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me
2009-07-19 20:14:27
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Infidel Posts: 2972 Incept: 2007-08-27 
orlando, fl Online
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"This just sticks the hose further into the pocket and vacuums out more money, all of which is going to wind up going to the "saviors". I thought defiling a corpse was illegal ---------- Today, there is a name for the political doctrine that rejoices in scarcity of everything except government. The name is environmentalism. George Will
2009-07-19 20:22:24
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Asimov Posts: 26708 Incept: 2007-08-26
east tennessee Online
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Quote:The question is in fact quite simple: Assuming this line remains open for a year, where is CIT going to get the $300 million in interest from? They are ****ed. You know, there's another point brought up here. If it's to be a "secured" loan, why can't they get it from the government? ---------- It's justifiably immoral to try to deal in a moral fashion with an immoral entity. If you trade based on what other people say, you will lose money. Especially what I say. I won't be held responsible. Festina lente.
2009-07-19 20:24:31
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Maple Posts: 4461 Incept: 2007-09-03
Southern California
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Chatter here this afternoon was that PIMCO was leading the bondholder group, GS held a $3 billion L/C, Platinum Equity and Saybrook Capital were sniffing around. LIBOR + 10% might be okay if the spread doesn't blow out, but carrying paper for such essential resources as retailers, fabric importers, and sporting goods manufacturers - how many more Dunkin' Donuts do we need?
2009-07-19 20:26:27
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Infidel Posts: 2972 Incept: 2007-08-27
orlando, fl Online
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"If it's to be a "secured" loan, why can't they get it from the government?" There is a Goldman in the woodpile? ---------- Today, there is a name for the political doctrine that rejoices in scarcity of everything except government. The name is environmentalism. George Will
2009-07-19 20:27:54
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Genesis Posts: 71430 Incept: 2007-06-26
KD^2
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Maple, there is no problem gettign an operating line of credit at the local bank IF IF IF your financials are ok AND if your receivables are of good quality. Local banks LOVE those deals as they make a REALLY NICE profit on them. CIT gets this business because those firms CAN'T QUAL for the bank line - their financials suck, their receivables quality sucks, or both. ---------- "The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me
2009-07-19 20:28:01
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Maple Posts: 4461 Incept: 2007-09-03
Southern California
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Thanks. I think I get it - they are factoring receivables, running faster on the treadmill.
2009-07-19 20:34:45
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Phantomace Posts: 2184 Incept: 2009-03-16 
Las Vegas, NV, and your screen
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So, in essence, isn't what CIT is trying to do the same as the consumer who can't pay their monthly bills, so they do a cash advance on a CC, thinking they can worry about it next month when the bills come due again? The one obvious difference, of course, is that CC's are non-secured... ---------- "That was a little trick I call math. Oops, now I'm not emotionally invested..." - Dilbert The only good thing I have to say about Barney Frank is at least he's not breeding...
2009-07-19 20:43:42
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Genesis Posts: 71430 Incept: 2007-06-26
KD^2
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Right. The reason this is outrageous is that they are now diluting the interest of the bondholders and general creditors in attempting to remain operational - those assets are what would provide recovery in a failure. If the firm destroys those assets bondholder recovery will be severely damaged - beyond where it is now. ---------- "The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me
2009-07-19 20:51:31
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Stemmit Posts: 2035 Incept: 2007-09-07
NYS
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If CIT assets are worth less than 300 million then the deal has bondholders ahead in less than a year, if assets are 'really' worth less than 75 million then the bondholders are ahead in less than a quarter. Possibly the reason for this deal.
---------- The path of the righteous man is beset on all sides by the inequities of the selfish and the tyranny of evil men. Blessed is he who in the name of charity and goodwill shepherds the weak through the valley of darkness, for he is truly his brother's keeper and the finder of lost children. And I will execute great v
2009-07-19 20:52:01
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Sideler Posts: 805 Incept: 2007-11-10
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"Avoidance Strategy" is the new hope.
2009-07-19 21:08:54
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Etz3l Posts: 9103 Incept: 2007-06-26
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Quote:The creditors need to file an involuntary petition against the company here and now to preserve what's left of their investment. The pigmen and their puppet administration would disagree. BUY!BUY!BUY! SPEND!SPEND!SPEND! ---------- Treating the symptoms of financial corruption isn’t the same as removing the causes.
2009-07-19 21:09:46
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Jonathanr Posts: 1462 Incept: 2008-05-16
Melbourne, Australia
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Quote:"If it's to be a "secured" loan, why can't they get it from the government?" If it a secured loan, why couldn't they offload the collateral and raise the funds that way? ---------- Are we wise in allowing the commerce of this country to rise beyond the point at which we can long maintain it? William Stanley Jevons
2009-07-19 23:04:13
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Pabloescobar Posts: 5325 Incept: 2008-04-23
Pacific Northwest Online
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So it's borrow at 11 and lend at 7. That's going to last a while. Not ---------- “Science is built up with facts, as a house is with stones. But a collection of facts is no more a science than a heap of stones is a house.” - Jules Henri Poincare
2009-07-19 23:51:09
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Dashingdwl Posts: 4564 Incept: 2007-06-26
los angeles
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Tis a bit like Thornberg Mortgage all over again. Screw over a few more bulltards.
---------- Think Green Tip.
2009-07-19 23:55:35
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Fortune Posts: 1455 Incept: 2008-04-21 A deep dark place...scary
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Wonder what the odds are of GS hedging this through... say AIG, who will in turn via another Govt bailout, pay GS 100 cents on the dollar when CIT inevitably runs into the reef again in a few more months given the fact that their business model is about to go from the frying pan into the fire.
---------- It's a toss up. It is the Rule of Law that transforms assets into money: Martin Armstrong Math IS: Karl Denninger
2009-07-20 00:50:08
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Sewerduck Posts: 121 Incept: 2009-03-18 Norman, OK
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Quote:This is nothing more or less than a bet on an imminent economic turnaround and return to at least trend growth. Can you say "DING DING DING DING DING DING DING!!!!!!" You can apply this statement to almost EVERYTHING "they" are trying to do. For those who have a brain, all we have to do sit tight and wait for it to fail, then pounce on the opportunities. It's amazing how quickly people get caught up in the emotions of a rally...forgetting how ****ty everything really is. If I am not mistaken, this behavior was predicted well in advance. The only question (at that point) was exactly when the turning point up would be. Well, it was early March...and things are going as planned. I'll happily wait in cash for as long as it takes...since I can do math like so many on this board. High five my math bruthas! 2 + 2 4ever!
2009-07-20 01:11:52
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Jata1 Posts: 2378 Incept: 2009-03-08
mi Online
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"CIT gets this business because those firms CAN'T QUAL for the bank line - their financials suck, their receivables quality sucks, or both." Yep, these guys take all the **** nobody else will touch. Especially last 2 years. ---------- Mayorquimby says- My Idea- Everyone gets Dick
2009-07-20 06:45:13
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Kylafoon Posts: 719 Incept: 2009-02-05
Zombie Portal Lookout
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I fear it will end up as another crisis whereby our Gov't will "be forced" to nationalize CIT. In effect owning the debt of thousands of small to medium size businesses. Why could this not happen? ---------- "...But whenever we see things done wildly, but taken tamely, then the State is growing insane..." - Gilbert Keith Chesterton 1910
2009-07-20 08:04:24
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Berkleyreindeer Posts: 560 Incept: 2008-07-22 Minneapolis , MN
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some nice info on bloomberg I'm not a lawyer, but this sure looks bad: http://www.bloomberg.com/apps/news?pid=2.... ---------- It'll get worse. Just wait.
2009-07-22 20:04:11
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