Investment

Now that investment banks no longer exist, and false wealth cannot be created out of fresh air,
does this mean that large corporations cannot get large wads of cash to build things?

Does this mean the end of large capital projects for the forseeable future,??

If so, that is a real problem, my jobs a gonner for a start…

Credit is, and will continue to be, more expensive. But large engineering projects that can prove they will make a return will still get funding. So you dont have to worry if you work on those kind of projects.

The credit drought will affect firstly the construction industry. Secondly it will affect takeovers by private equity. Corporate raiders will be less able to take over companies with debt.

My own feeling is a tighter credit environment is a good thing. When businesses are funded out of current cashflow, rather than borrowed money, shareholders are less likely to tolerate outrageous executive pay packets.

Nah, it will have no real effect. The banks formerly known as investment banks will broker the deals, the hedge funds will carry them until the banks syndicate the debt. If it is not hedge funds, arms length SPVs will be used. The BFKAIBs will be living off fees rather than carrying the debt themselves.

A bigger threat to large capital projects is that the government is going to be the only player in a year’s time. That’s why it is vital that it cuts its cloth now, so that it has some scope to drive up the economy from the bottom. There is no point in slowing a decline only to find at the bottom that you are tapped out and unable to fund a pump-priming to get out of it - look at the state the Japanese are in!

All strictly from the amateur’s viewpoint.

McDonalds unable to access credit to put coffee equipment into restaurants.

bloomberg.com/apps/news?pid=20601087&sid=aAw5v_t72uqQ&refer=home