Extend and Pretend
One of my partners said yesterday that we are going to call this phase the “extend and pretend” phase in our economy. Which is you extend someone’s maturity – because they are going to default – and you pretend that business will come back or that leverage factor is going to come back.
Then we’ll enter phase two, which he said is the request to extend or “amend”.
Then “send”. In other words send the keys.
That is the phases we are in right now. Everyone is trying to buy time, as opposed to dealing with the leverage, they are trying to buy time. Whether you are a banker or a company, they are all trying to buy time. I don’t see the leverage coming back, and I don’t see the consumption of good and services coming back.
Bryan Marsal, CEO of Lehman Brothers Holdings.
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It’s also interesting that he thinks that they should have done an orderly unwinding or bailout instead of bankruptcy.
Comment by Vernon Dozier — 7/8/2009 @ 11:02 am
Looks like the financials are starting to join in the ‘breakage’ today. This market is in a bit of trouble…
Comment by BMB — 7/8/2009 @ 11:20 am
I’m thinking that we’re going to see slow growth for a while accompanied by lower oil prices (lower demand). On the inflation side I’m in the camp that it will likely be dampened and relatively low due to too high and increased debt and slow growth (all bad things). I’m hopeful that some technology companies may do relatively well over the next couple of years as a result of very tight expense controls, good balance sheets and somewhat pent-up demand for technology.
Comment by Vernon Dozier — 7/8/2009 @ 12:47 pm
@BMB – They were in trouble today…until we somehow got the late-day-save in the last 20 minutes. Tomorrow is another day.
Comment by Randal — 7/8/2009 @ 3:04 pm
Don’tcha love that late-day save? There’s always GM stock to line your pockets with while everything else crashes
Just don’t hold it for more than 3 days…
Comment by Andrew — 7/8/2009 @ 7:57 pm