Smaller Corporate Borrowing Is Good For Economy

Recently in a Wall Street Journal article by Dan Fitzpatrick and Shayndi Raice, the topic of smaller corporate borrowing was covered. The article has a negative tone towards the results of such activity for banks and the economy as a whole. But a couple of critical points are missing from the article.

The article stated that one of the reasons corporations are not borrowing is because of the fact that they have massive amounts of cash on their balance sheets. It is almost inconceivable that corporations would not borrow at these rates. It could mean that corporations feel that the growth from using their own cash will serve investors better than going into debt to do the same thing.

When was the last time banks were passed over to do their job? The government has almost literally handed them cash to lend. Even though standards have been raised, there were enough corporations and individuals that enjoyed the qualification and received extremely low rates when they borrowed.

This is all good news. For one, the fact that corporations are hemoraging cash on their balance sheets will get investors hungry for more growth and higher yields on their ownership. It has to get out somehow. The banks now will be forced to loosen the purse strings a little bit on new corporations and individuals that might not have the greatest credit. It's about time.

evil empire introduces 401k debit card

Hey everyone

Recently there has been an idea and execution of getting a debit card for your 401K plan. Stay away from that! It is simply another way for the banks to get at your hard earned dollars through fees, fines, and penalties. There is a plethora of articles on the subject with this one from genxfinance as an example.

Speaking of the banks, it has been noted here before how they have been saved by the federal government. I read in the Wall Street Journal today how Citi might be letting go of over 25,000 employees! Can you imagine what the damage might be had the feds not covered their butts?

PBW is trading at the low end of the range.

PBW news 2/25

Not much movement or news today. There was a story about First Solar in the WSJ's Investing section but it was fluff being the hot stock in 2007. But press is press.

The bands are within 2 points of eachother which is the closest they have been in 3-6 months. Expect some movement this week as the fed chairman speaks to congress and a couple of the companies are releasing earnings.

Later