Ireland should leave the eurozone

ACustomer · 25-07-2011, 19:46

Thomas Ralph: If I produce widgets, I have to pay for raw materials, labour and equipment before I can get revenue from selling the widgets. So how do I do that without credit from someone? Of course I could try to persuade my suppliers and workers to wait for payment until I got paid myself, and even if I succeeded in doing that, then they would need credit in ordder to live.

Can't do without credit, I'm afraid.

Thomas Ralph · 26-07-2011, 12:56

If you've been producing them for years, you use your retained profits as working capital. If you're just starting, you use some of your equity.

ACustomer · 26-07-2011, 14:37

In that case what about start-ups or people with innovative ideas? They used to be able to release equity in their houses: try that now! Recovery from banking-collapse induced recessions is often painfully slow, because of banks' being over-restrictive on credit, perhaps a reaction to their previous excesses in the other direction.

Thomas Ralph · 27-07-2011, 10:06

Well, when I was a banker (I still am technically, but now decidedly a risk manager) the three Cs were mentioned in training — character, capacity (to repay), and collateral; without all three we should be looking carefully at proposals.

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25-07-2011, 19:46	#1
ACustomer Really Regular Poster Join Date: Jan 2006 Posts: 767	Thomas Ralph: If I produce widgets, I have to pay for raw materials, labour and equipment before I can get revenue from selling the widgets. So how do I do that without credit from someone? Of course I could try to persuade my suppliers and workers to wait for payment until I got paid myself, and even if I succeeded in doing that, then they would need credit in ordder to live. Can't do without credit, I'm afraid.

26-07-2011, 12:56	#2
Thomas Ralph IT Officer Join Date: Sep 2007 Location: Greenwich, London Posts: 1,860	If you've been producing them for years, you use your retained profits as working capital. If you're just starting, you use some of your equity.

26-07-2011, 14:37	#3
ACustomer Really Regular Poster Join Date: Jan 2006 Posts: 767	In that case what about start-ups or people with innovative ideas? They used to be able to release equity in their houses: try that now! Recovery from banking-collapse induced recessions is often painfully slow, because of banks' being over-restrictive on credit, perhaps a reaction to their previous excesses in the other direction.

27-07-2011, 10:06	#4
Thomas Ralph IT Officer Join Date: Sep 2007 Location: Greenwich, London Posts: 1,860	Well, when I was a banker (I still am technically, but now decidedly a risk manager) the three Cs were mentioned in training — character, capacity (to repay), and collateral; without all three we should be looking carefully at proposals.