So we are at it again, yet another crash-warning indicator, inventory overload. Read the article for yourself, but note below...
Before 1970, wholesalers monitored the creditworthiness of their customers, and extended interest-free, asset backed credit to worth customers.
Once the banks got in the business of of lending nothing (credit) at interest, there was no rational limit to what they could lend, and easily and to the unworthy, driving the worthy out (like money, bad credit drives out good.) In the last fifty years, the unitive effect of bene-credit extension has completely atrophied, and no one currently knows how to manage this competitively. So add to the list of what to bring back after this next crash, and that is bene-credit management.
Feel free to forward this by email to three of your friends.
Hardly. Even today, for most companies, capital isn’t free. And there are millions of other reasons why large inventories are a risk: spoilage, changing fashions or customer preferences, new products and obsolescence, stuffed warehouses and overflowing storage tanks…. When inventories get out of hand, they become a nightmare, and whittling them down often means big price cuts and write-offs, euphemistically called “inventory adjustments.” Cash down the drain.When credit originates from the banking system, instead of the wholesalers watching their customers, an organic link is broken and wholesalers are blind (or simply do not bother to look) at the health of their customers.
Before 1970, wholesalers monitored the creditworthiness of their customers, and extended interest-free, asset backed credit to worth customers.
Once the banks got in the business of of lending nothing (credit) at interest, there was no rational limit to what they could lend, and easily and to the unworthy, driving the worthy out (like money, bad credit drives out good.) In the last fifty years, the unitive effect of bene-credit extension has completely atrophied, and no one currently knows how to manage this competitively. So add to the list of what to bring back after this next crash, and that is bene-credit management.
Feel free to forward this by email to three of your friends.
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