CIT = Country In Transition?
CIT, controversially, didn't get additional TARP money this past week, and now seems to have found private financing. Do you think the government's gamble will pay off?
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I appreciated that CNN article for pointing out how why the government didn't provide additional TARP funding for CIT; I also appreciate the government for not providing this money.
ReplyDeleteI'm an eternal optimist (my glass is 1/4 full damnit!), so take my opinion with a grain of salt you naysayers, but I feel that we're approaching a point where our economy can start 'acting normal'. I don't think Uncle Sam will need to provide more TARP funding to any more distressed companies, and should, as Chairman Bernanke said in his WSJ Op-Ed today, start looking to build an exit strategy.
Bernanke's Op-Ed: http://online.wsj.com/article/SB10001424052970203946904574300050657897992.html
Also the optimist here...I am very encouraged by the Fed's confidence and CIT's ability to gain private funding to hopefully stay bankruptcy. One way or the other, this company that many people never heard of, will influence the US economy a great deal.
ReplyDeleteLoved the article on CIT. I like that we recognized there was an opportunity for the open market to resolve this problem, and let it happen.
ReplyDeleteHowever, I am not as optimistic about you guys as the immediate future. I think we have some more bumps in the road - this is a lull in the storm. But I am still optimistic about the long-term view.
Here is the excerpt that stood out most to me from the article:
"The ability for companies to successfully restructure under Chapter 11 bankruptcy protection is the economy's way of picking up the pieces of a failed business and putting them to better use."
In other words, shit may happen and companies may go bankrupt, but if that bankruptcy is creative in its destruction then we're okay. Everyone has suffered big losses in the economy, and there are systemic problems with the way the stock market was trading that have to be fixed. But ultimately I don't think the foundation of lending and growing businesses has changed significantly. Even failure will result in a stronger economy, because that's kind of the way capitalism is built.
Also I tried to read Bernanke's article but it was too technical for me to follow. All I took away was the general viewpoint that we are heading towards a recovery relatively soon.
ReplyDeleteDo you guys feel that things are mostly up from here on out? Are you expecting at least one more big slide in the market, or no?
I'm expecting one more slide - there has to be some pull back from the March (and now beyond) jump before I'm too comfortable with the current bull market. I think 2010 ushers in another 5-10 year bull market where we ultimately will end up back around 13K (hopefully a much more reasonable market too).
ReplyDeleteAn update on this, it looks like CIT is not out of the woods yet and is going through some more debt restructuring. We have yet to see how this plays out in the end. If the company still goes under, or a bunch of bondholders get screwed, that is a pretty poor portent of things to come in the context of the momentary optimism from earlier this year.
ReplyDeleteJumping into the Wayback Machine for another update on CIT as they emerge from bankruptcy and begin to value their assets and liabilities. Investors are trying to gauge what this company is worth after restructuring.
ReplyDelete