...had CIT originally filed for bankruptcy earlier this year — around the time the US government bailed them out — it could have had a disastrous effect on the retail supply chain for the holiday season. But fortunately, the original delay — which we can thank the Feds for — allowed "both buyers and suppliers in the retail sector to get their shipments in and get paid," Kurt notes, in time for the holiday season.
That doesn't make the bankruptcy "good," since there could still be problems for stores. The Associated Press points out that this means retailers are going to have problems in early 2010 trying to get inventory, noting that "about 60 percent of the apparel industry depends on CIT for financing," and that retailers "still need a reliable source of lending to prevent shipping disruptions and to restock after the holidays." But it does mean that retailers were able to prepare for the shopping season without having to worry about how to get merchandise on the shelves.
"What Will CIT's Bankruptcy Mean for the Retail Supply Chain? (Part 2)" [SpendMatters]
"Retail faces uncertainty as CIT enters bankruptcy" [Associated Press]
(Photo: Paul Keleher)
The Federal Reserve did not fail to intervene in the early 1930's. The Federal Reserve is what caused the depression in the first place. Read "America's Great Depression", or at least skim through it:
[mises.org]
Between 1921 and 1929, the Federal Reserve pumped credit into the economy, creating an artificial boom that subsequently led to a bust. The Fed caused the depression, they caused the dot-com bubble, and they caused the housing bubble.
Here's an article from August, 2003, warning of a housing bubble:
[mises.org]
Here's an explanation of how the Federal Reserve creates bubbles in the first place. It's called the Austrian Business Cycle Theory:
[mises.org]
You note the "euphoric ramp up" without realizing the Federal Reserve causes that ramp up through inflation of the money supply with cheap credit and artificially low interest rates.
]]>I am concerned that there is an idea floating around that (I assume) the 700Bn TARP bailout is somehow the only/first bailout.
The whole point of the Fed is to intervene as the lender of last resort, which it failed to do in the early 1930s, and indeed, the only reason we have avoided another depression in this country is as follows:
1. After the euphoric ramp up of the economy the bubble pops
2. This, left alone, causes a debt-deflationary spiral
3. The Fed intervenes as the lender of last resort and injects massive amounts of capital so companies can meet their payment obligations (the US is an economy of finance after all)
4. Inflation
5. Eurphoric ramp up
6. Goto 1
So yes, being too big to fail does indeed entitle that entity to a big bag of money, and yes, bailouts (all of them!) cause inflation. The thinking goes, however, that some inflation now is much better than a debt-deflationary spiral, which is the real cause of a depression.
]]>I think it would have been a good thing for CIT to fail early, if only for the reason that we tend to associate
Christmas/holidays with spending money and buying material stuff than with what the holidays are really supposed to be about.
My most stress free Christmas was 4 years ago in Europe where Christmas creep and television commercials blasting holiday sales was so low as to be almost a religious experience in itself.
]]>Besdies while CIT may be bankrupt that doesn't mean they are pulling out of the market. There will still be loans next year.
]]>@bohemian: No, those receivables are an asset to liquidate like any other.
]]>Ha. Hahaha. Ha.
]]>Banks: "Sweet!! Too big to fail means we can do whatever we want, and when things get tough the government will give us a bag of money!!"
]]>@LJKelley: Ugh.. Bill Me Later is such a horrible concept. Worse than store credit cards.
]]>@bohemian:
It's a prepackage BK - they hope to be out and back up and running by year end, as a new company.
]]>The whole system is massively screwed. Investment banking is still an unregulated game. We still have too many banks on the too big to fail list. GM & Chrysler are asking for more money and no plans to change tactics.
I see nothing that is going on today that could stop the collapse situation we had a year ago.
Then there is the screw the consumer side. Fixing the credit reporting and data collection side of things isn't even on the government's radar. Banks are finding newer and bolder ways to screw people.
]]>@nstonep:
Thank you comrade, and a good Cultural Revolution to you!
@wcnghj:
You must have missed my post on anotherthread about how to take advantage of your BAD credit report! Have bad credit already and a DFS/CIT account? Go ahead and screw 'em, they already screwed you the taxpayer already! No moral proble here!
You need to learn that many do not give a fuck about the enslavement big business wants to create with all these recording/reporting groups.
]]>I do believe that CIT is the provider of Dell Financial Services (DFS). Let's stop paying those bills to get our bailout back (which now won't be repaid).
]]>I am assuming this means lots of stores will be closing instead. Does anyone know if they fund large sectors of retail people actually need like food stores?
]]>@dohtem: I noticed one thing the Wikipedia Article and most US Media has not reported on is that CIT owns CIT Bank in Utah that does Bill Me Later as well financing agreements such as NewEgg Prefered. So its just not business financing, there is also quite a large amount of consumer financing that allows people to buy on credit.
]]>