The Economy Takes It’s Toll
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Whether it was due to the economy, bad business management, loss of customers or all three, my friend John found himself on the verge of bankruptcy. If John could not find the funds to bolster his business, through this difficult time, he would have to close his doors for good. John decided to try to get a loan from his bank. After all, John had a long history with the bank and up until his recent problems, he was a very good customer. He thought his chances were slim, but he did have a shot at getting the loan.
Off to the bank John went to request his loan. To my surprise, they did not tell John no. They explained that if he could produce a co-signer, the bank would consider granting him a loan. John rushed back to his office and began to make calls to all his business associates and friends. He hoped one of them would agree to co-sign for his loan. Most, after learning of Johns financial troubles, declined. Toward the end of the day, one of his business associates agreed to be his co-signer. John was ecstatic! Not only hand he obtained a co-signer, but one with a name and brand recognized domestically and internationally. He felt positive the loan would be granted. The two men arranged to meet at the bank the next morning.
At the bank the next day, John introduced his business associate to the loan officer and explained that he would co-sign for his loan. The loan officer was impressed. He had never met the business associate personally but he, like everyone else, had heard of the man and his large conglomerate.
Money? I Have Plenty!
The loan officer, ever diligent, ran a check on the business associate. He was surprised by the information attained by the bank. It was nothing close to what the loan officer had anticipated. The business associate was in worse shape financially than John. He wrote out checks indiscriminately against bank accounts that barely had any funds. When the checks became questionable to some sources he just had more checks printed against another of his many accounts. The funds that did exist were leveraged so steeply they would never have withstood the scrutiny of a decent accountant. Yet no one questioned or disputed the business associates financial strength. Never had he been audited. In fact, people were known to seek him out in their time of need. Sure, the loan officer, like everyone else, had heard rumors, but they were glossed over or flicked away so quickly, one barely had time to digest them.
John was granted his loan with his domestically and internationally recognized business associate as his co-signer.
A Twice Told Tale
You know my friend John. Let me introduce him to you properly. You can call him Greece, Libya, Afghanistan…the list is endless.
I’m sure there is no need for an introduction as far as the business associate is concerned. For those of you late to the party, it is the good ole US of A.
If I replaced John’s name with yours and substituted a family member, friend, or business associate in the other role, would the outcome of this tale have been the same? Of course not.
What’s going to happen when one of those international banks, or countries the US is indebted to, decides they are tired of doing business as usual and calls in their loans? You think we’re in trouble now? Stick around.
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- Expression of Interest (ustamilobituary.wordpress.com)
- The Danger Isn’t Greece, It’s Everyone Else (blogs.wsj.com)
- Greek banks under siege (finance.fortune.cnn.com)
- German exposure to Greece, a bad bank tale (ftalphaville.ft.com)
- There’s A Huge Lesson For Regulators In The Bizarre Story Of Libya And Goldman Sachs (businessinsider.com)
- Greece bailout fails to halt debt woes (guardian.co.uk)
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