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New Exactly the point I was trying to make
"The modern corporation and it's dependence on finance means that actual cash flow is almost incidental."

I read a lot of small business blogs. Any one of them will tell you cash flow is king. Every time a politician talks about small business being the backbone of our economy, they turns around and points to the DOW as a barometer for the economy, I wonder if they even know how full of shit they are.
--

Drew
New Except for the fact that its pretty much dead wrong
cash flow is not incidental. It is a principle driver, even at big corporations.

Jay's analysis of what happened is also wrong...the banks and investment houses ran out of leverage because they were using it, not corporations...then when they dried up the supply, companies who used receivables financing to fund payroll during an off month..or to stock inventory or whatever...couldn't. The companies weren't being irresponsible. They were forced to pay for the irresponsibility of others.
I will choose a path that's clear. I will choose freewill.
New Comedic exaggeration
What I said above was a comedic exaggeration, though it has a bit of truth. Even start up companies that are literally trying to loan their way into large expansion watch their cash flow closely.

I'm also aware of how many companies play games to make cash flow and/or their books look better. From cutting deals they know will fail so they can book the income now, to delaying payments so they have more cash on hand this quarter even if it provokes penalties the next. Companies wouldn't play those games if cash wasn't important.

The same thing goes for my comment about loans. Only a small portion of corporate loans are really bad. Most are perfectly sensible short loans to cover payroll until the cash comes in or to finance real expansion. And there is another substantial chunk that are stuff that a company could do without loans but if the loan is cheap enough, why not do it now rather then wait to save up the money? Accounting departments are perfectly capable of judging that the $10,000 cost of the loan will be more then offset by the extra $15,000 in revenue.

The problem is that the bad loans and the insurance on those bad loans may be a small percent of the market in terms of number of loans. But in terms of cash value, they are significant, possibly even a majority.

Jay
     Companies get more leway in Mark to Market rules - (jay) - (18)
         Re: Companies get more leway in Mark to Market rules - (drook) - (7)
             that part doesnt change - (boxley)
             Net vs Gross - (jay) - (5)
                 Yup, missed the word "net" in there - (drook) - (4)
                     That happens in any technical field - (jay) - (3)
                         Exactly the point I was trying to make - (drook) - (2)
                             Except for the fact that its pretty much dead wrong - (beepster) - (1)
                                 Comedic exaggeration - (jay)
         This was absolutely necessary - (beepster) - (9)
             Kwak's take at BaselineScenario [tyop] - (Another Scott) - (8)
                 What he's not considering - (beepster) - (7)
                     I can play too: How much money did GM lose the last n yrs? - (Another Scott) - (5)
                         How do you know this? - (beepster) - (4)
                             There have been real losses, not just paper losses. - (Another Scott) - (3)
                                 Those home value losses don't belong to the banks. - (beepster) - (2)
                                     No, no and no - (drook) - (1)
                                         In a fashion, one of your nos is correct - (beepster)
                     Bloomberg: GS says FASB won't help bank stocks. - (Another Scott)

Ja Vohl, Laddie!
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