heinz, re "no doubt the 'industrial and commercial' loans are mainly used for stock buybacks. corporate America is leveraging it's balance sheets like never before."...
I'm the controller at a small private corp., and I was instructed about a month ago by my boss (President of corp.) to "get loans on everything you can, to build up a comfortable cash position". I normally don't like to do that, as we then incurr interest costs, and why borrow if you don't need to. However, I follow my boss's instructions, and immediately commenced carrying out his instructions.
We're not going to do anything with the extra cash, and of course next year I will commence a strategy of bringing debt back down. Depending on how sales levels are, I hope to proceed with that plan in late Jan., or perhaps Feb., provided my boss approves.
My boss and I have talked quite a lot of Y2K, and of course we hope the economy continues to chug along. It's the fear of the unknown (I think) is what is propelling the need to leverage balance sheets. The bottom line is, nobody can be sure what's going to happen post-y2k, and nobody can offer iron-clad assurances. Businesses hew to the maxim of "better safe than sorry". |
