Saturday, July 5, 2008

Mish comments on finance for machine tools

Mish has posted on his blog an email from a friend who is complaining about not being able to finance machine tools:

An emerging trend this year is the sudden scarcity of capital from banks & machine tool finance companies. We planned to purchase two new machine tools this year. It now appears that we can obtain financing for just one, in spite of a spotless corporate credit record and continued sales growth. The lenders seem to be over-tightening because of the recent credit crisis. As I told my banker, “You guys seem frightened of your own shadows!”"
Mish rightly points out that the main problem is not (as the email author suggests) that the banks are "frightened" rather the problem is that the finance companies can't finance themselves.

Now I might be a little dopey - but this looks awful good for a company that (a) makes capital equipment and (b) can afford to finance it.

Did anyone say General Electric?

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The content contained in this blog represents the opinions of Mr. Hempton. Mr. Hempton may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Hempton's recommendations. The commentary in this blog in no way constitutes a solicitation of business or investment advice. In fact, it should not be relied upon in making investment decisions, ever. It is intended solely for the entertainment of the reader, and the author.  In particular this blog is not directed for investment purposes at US Persons.