We Are In A Bind
The Pensacola Beach Blogger has a story about the effect of the insurance companies refusing to issue property insurance policies in Florida. The state has cut a deal with Berkshire Hathaway [Warren Buffett’s company] to provide a $4 billion loan to the state at 6.5% in the event of a major hurricane. The deal will cost the state $224 million whether or not the loan is needed.
This would be totally unnecessary two years ago, but today, because of the mortgage meltdown, a loan of that size isn’t possible through the normal channels – the normal sources don’t have the money to lend. Even successful businesses on solid footing can’t get the credit they need in the short term to operate. Many of the people who will be going out of business in the near future simply can’t get the money they need to continue, as they borrow to restock their inventory. If they can’t restock, they can’t stay in business.
2 comments
heh. warren buffett thinks we could be a business worth saving. i’m not sure if that’s good or bad news.
Actually, Warren Buffett has the cash because he doesn’t see anything worth buying, and his company makes $224 million regardless.