No bailout people will not get to eat at Sonic anymore...

[gopbuster]

Here's an example that's being repeated thousands of times every day across the nation. Sonic Corp., a drive-in restaurant chain based in Oklahoma, told Dow Jones Newswires on Thursday that its lender, GE Capital, had stopped extending new loans to the chain's franchisees. That could block plans to refurbish restaurants, add equipment or open locations, according to Dow Jones. When Sonic can't borrow, contractors don't get the remodeling work, equipment-makers lose sales, and restaurants don't get opened.

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/09/27/MN8F135EL0.DTL

[billyoc]

1. OMFG, we'll be down to only 40 pounds overweight!

Armegeddon!

[KansDem]

12. Armageddon my burgers now!!!

While they still have some!

[thewiseguy]

24. It would not hurt to read posts you know.

Rather than just responding to thread titles.

[ThomWV]

41. The same thing happens at the chain grocery stores and the chain auto parts

And the chain everything else. And at the same time look for layoffs in the next week or two the likes of which haven't been seen in decades as small concerns find themselves unable to make payroll and not have letters of credit to swing them through.

[GetTheRightVote]

2. As long as the average Joe on the street isn't taxed for it so be it...

:grr:

[hobbit709]

3. Maybe if they improved the quality of their food

instead of spending money on those stupid commercials they would do more business.

[RUMMYisFROSTED]

31. They spend money on those?

Who knew?

[amdezurik]

4. don't bail them out

re-regulate the markets so credit is worth something again...

[Renew Deal]

5. Less Sonic, more butchers.

Shocking!

[stray cat]

6. Farmers borrow money to plan crops - anyone here eat?

or is everyone here a subsistence farmer with supplies left from last year to plant for the coming year.

[napi21]

11. I posted that yesterday! I don't think we'll see farmers being

affected YET, but if this extends into Jan. it will be a BIG PROBLEM!

[islandmkl]

37. do you know why?

the mega-agriculture entities have helped to evolve the 'family farmer' into another cog in the 'food production industry' as opposed to the basically 'small' farmer planting, harvesting, and re-seeding...

you want to sell soybeans?...see if you find more than one buyer...

back in the early '80s, farmers became one of the favorite 'targets' of lenders...farmers in general had historically been 'low-involvement' participants in financing anything other than land...once they were actively solicited to get 'easy loans' for equipment upgrades, etc. they became much more 'normalized' in the credit/interest/debt process...

unless you are going to an actual 'farmers market' supplied by local farmers...you are not eating Farmer Joe's crops...you are eating ConAgra or ADM's crops...

[NickB79]

44. Small family farmers gave up seed-saving many decades ago

Hell, my grandfather in the 1950's was already using purchased corn seed simply because the yields were so much better than open-pollinated local strains. The practice of individual farmers saving seed went out of practice DECADES before the rise of the mega-corporations.

Even modern organic farmers buy their seeds from organic seed suppliers in bulk every year to guarantee seed quality.

[ProfessorGAC]

7. Alarmist Nonsense

Capital companies make their money by lending. There is ZERO evidence that there is a liquidity issue. There is cash available. GE Cap is obviously trying to create a "corporate grass roots" movement to push this bail-out along.

GE Cap makes its money by lending. If they don't lend, they make NADA. Lending firms don't stay in business that way.

The Professor

[phantom power]

15. I listened to several stories on NPR and also my local news...

about small-business owners who are either unable to get their normal credit, or having their credit lines reduced.

Why is this happening?

[ProfessorGAC]

18. Because Of What I Said

The big cap companies want this bill. So, they're creating a faux grass roots demand. The money is there. M2 and M3 are far big enough. There is no liquidity crunch. If the cash flow is sufficient, there is no credit crunch.

The big caps have money invested in and through this failing entities. They want the bail-out to assure their investments stay solid. And, they're pressuring from the SBO's upward. But they've got the cash. Go on their website and look at their quarterlies filed with SEC. They've got the liquidity.
The Professor

[Lydia Leftcoast]

30. In other words, a capital strike

Yes?

It's a bit of socialist vocabulary that particularly apt these days.

[ProfessorGAC]

36. Aptly Put

Yeah, i think that is an appropriate analogy. Here's another: They are taking the ball and going home.
GAC

[phantom power]

38. As I understand it, their problem isn't liquidity, it's confidence...

Otherwise liquid banks are shy of lending to each other because nobody has yet determined who is poisoned by mortgage-backed securities, or how much.

[ProfessorGAC]

40. Hence, It's PR Not An Actual Economic Problem

That's why the underlying causes are different than what the bailout is intended to correct. And that's why i'm opposed to the bailout, because i don't think it addresses the root cause to the problem. And i'm convinced that it's better to be patient and do the right thing then to kneejerk and do the wrong thing and either accomplish nothing or make things worse in the long run.
GAC

[Cessna Invesco Palin]

43. Having not seen any of your previous posts on the issue, I'm curious...

...as to your take on the root cause of the problem.

[ProfessorGAC]

46. Sure.

The root cause of the problem has been a rampant expansion of the derivatives market, the lack of oversight of the options markets, and the complete ignoring of the concept of "bundling" in which so many mortgages of various qualities are all wrapped together that it makes it impossible to know what one is buying. In order to offset that risk a little, investors got into participation portfolios, and there was no oversight, so the more risk that was taken, the bigger the bundles got, the faster they sold, the faster the commissioned mortgage brokers shed their firm's liabilities, and the quicker the cash turned over to do it again.

Then, the whole industry has been bitten by the 70's MBA "firms have no obligation except to their shareholders" bug, when the banking industry was run, since FDR, as a STAKEHOLDER obligation, not just a shareholder, obligation model.

The current bailout does nothing to curb the unrestrained greed and obfuscation that led to this crisis and is, therefore, a band-aid on a bullet wound. But, rather than plug up the wound and let it infect, i would suggest that we let it bleed out to prevent infection, and then do the proper surgery to correct the real problem, and that's the bullet in the thigh!

The list is longer and more detailed than my simple synopsis here, and i've got some facts and figures behind it, as well as the experience of being a board member of a community bank for >20 years that didn't fall into this trap and have perfectly good CAMEL ratings right now. The regulators love us, in fact!
The Professor

[crispini]

52. Good analysis. Do you have an OP somewhere I can read?

If not, I'd suggest you write one! Thanks for the thoughts!

[ProfessorGAC]

57. Sorry, No (eom)

.

[Cessna Invesco Palin]

60. I for one would be happy to see you do a post on this subject.

You've certainly made me reconsider my stance on this issue. OTOH I can see why you might not want to, given the, um... atmosphere around here these days. Nonetheless, yours is probably the most informative and eye-opening post I've read all day.

[Hannah Bell]

59. i encourage you to do an OP, too. Information prevents people from being driven by fear.

[BrklynLiberal]

66. Thank you for your informative and lucid post.

[phantom power]

45. I guess I halfway agree.

My spectator's understanding is this:

Somewhere out there is a big toxic blob of mortgage-backed securities (Big Shitpile). We know where some of it is, but not all of it. The real benefit of this bail-out would be to serve as a kind of "toxic-dump," where banks could sell their shares of Bit Shitpile.

The benefit to the taxpayer is that we get all of Big Shitpile in one place where we can all see it, and so banks can heave a big sigh of relief, and say "OK, now we can all re-value each other again, and get about our regular business of lending each other money." And that means that Joe Small Biz-owner can once again get his usual line of credit, and the wheels of capitalism start turning.

Now, that begs the question of what the terms of this deal should be. I think the terms should be fairly aggressive, and if possible involve gratuitous public humiliations for the CEOs who take part in it. I suggest being forceably paraded through the streets in clown costumes, while being pelted with rotten fruits and vegetables by taxpayers.

I'm hoping that since yesterday's bailout bill died, the next version will involve better terms for the govt (us). No bailout at all is another option, but if the above model is correct, it would cause the damage to spread beyond Big Shitpile, which is dangerous.

[girl gone mad]

61. I agree.

The bill as written did not address the causes. A move to force these securities into the light of day would bring back confidence, but the banks don't want to have to make good on their gambling debts.

[The_Casual_Observer]

8. If GEcaptial doesn't loan money GE capital will go under. It's there choice.

They can take their capital with them.

[ProfessorGAC]

9. Read My Post

I wrote the same thing at the same time!
The Professor

[mainegreen]

10. OMFG, they might have to have the money first to pay for things!

This is not a reason for a bailout.

I've heard some reasonable reasons, but this ain't one of them.

[Cessna Invesco Palin]

39. Businesses need to be able to borrow money. That's part of how businesses grow.

Not everybody who utilizes credit is irresponsible.

[SoCalDem]

13. Never ate at Sonic..never wanted to

:)

[El Pinko]

14. It's freaking sonic. Who cares if the locations are refurbished?

Jeez - what is the deal with all the expensive remodeling of fast food joints? I don't care if the decor is from the 70's if the employees would just be halfway polite, not spit in my food, and wipe the counters and tables now and then.

They spend all this money on trying to "Starbuckify" fast food joints, but then the condiment bar and self-service soda fountain are still a gross mess!

[ourbluenation]

16. schadenfreude

:wow:

[Junkdrawer]

17. OMG: yibbehobba WAS RIGHT....

I can't has cheezburger.

Nobody can has cheezburger ever again because teh cheezburger haz been levrijed to 1000x its akshual value with kredit default swaps end sumbudee defaultez on teh pickles. kthxbye.

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x4124693

And here, I thought he was mocking those who thought that obscene leverage margins were wrong.

[gopbuster]

19. lol! n/t

[Cessna Invesco Palin]

32. I was simply mocking the entire tenor of the debate around here. n/t

[gopbuster]

35. I understand, his comment struck me as funny. n/t

[TooRaLoo]

54. FULL ON BELLY LAUGH

This will affect a family member of mine directly, sadly. She's part owner (or almost part owner) of a franchise. Part of that relies on her ability to get the loan to buy in to the company. Wonder if she will be able to get that loan in time.

[marions ghost]

20. The food at Sonic is so full of HFCS

it would be a blessing. :thumbsdown:

Something happens to people's brains when they eat that stuff. They can't think straight so they run out and vote Republican.

[Lars39]

21. Around here, Sonic jobs enable kids to earn money for college.

No jobs,no college.

[azurnoir]

22. CNN yesterday had a some talking heads saying

that banks "could not" make short term loans to businesses so that they could meet their payrolls this week and beyond, now if banks have been making their own rules and these businesses have not defaulted on outstanding loans WTF is really going on with this?
Seems to be blackmail, a way of pressuring the American people to pressure Congress to pass the bailout and if the government can give $700B to banks why can it not cover businesses so real people can get payed while they figure out what to do in a more measured way>
There is also the fact that we have been hearing for how long that the "sky will fall" if we don;t hand over the money, with each passing day that there is still a sky above us the ploy becomes more obvious.

[ThomWV]

42. A bank is under no obligation to make a loan

And if a banker has reason to suspect that the recipient of the loan will not be able to repay it what would you expect him or her to do?

[azurnoir]

53. What is "suspect" is why the banks

in this case will not make the loans

[johnaries]

23. Doesn't anyone here understand "metaphor"?

:shrug:

The point is that it doesn't just affect Sonic, it affects everyone who does business with Sonic, and everyone who does business with those businesses. It's a domino effect.

And it's not just Sonic. I can guarantee whatever job you have will also be affected. "send not for whom the bell tolls, it tolls for thee."

[wtmusic]

26. Is it possible Sonic doesn't deserve the credit?

Borrow, borrow, borrow. Let them come up with some capital for their improvements. :eyes:

[magellan]

25. Two of our local Sonics shut down MONTHS ago

Along with several other restaurants and businesses. It wasn't about their not being able to borrow. It's about the FUCKED ECONOMY brought to us by Bush** and the Repubs and the resulting inability of CONSUMERS to CONSUME.

[LiberalHeart]

29. And one just opened here. They have to have a cop there to direct traffic it's so busy.

Long waiting lines.

[islandmkl]

27. and....

OPM won't be used to finance operations which have SOME risk for a while...

so, this is the 'trickle down' effect?...seems to be a long way from the bank financing to the benefit of 'everyone'...

first of all, these Sonic (and any other) franchisees are not needing funds to merely get started, remodel, etc...the net worth of franchisees is required to be XX$$$$ by the franchisor...numbers usually $500,000 to $1million minimum...

it is time for those 'with the money' to dial it back down to using their money to accomplish their activities...

yeah, it will slow down things...but the ramifications of this 'bailout versus collapse' are rooted in deeper fundamental problems than just 'liquidity'...

there seemed to be no problem when the train left the station at 200 mph, with all of wall street, most of congress and the bankers 'on board' with the engineer...

now that some kind of 'end of the tracks' is in sight, all the people they wouldn't let on the train' are supposed to not only stop the train, but pay for the damage from the wreck?

many americans don't trust the system to actually take care of itself, anymore...read Studs Terkel's 'Hard Times'...we've been through this before...

I don't like whippings, and it's been a long time since I've had one...but I remember, as a boy, the temporary evasion of the inevitable ALWAYS MADE IT WORSE...

i don't think we are getting the full truth about the real situation:

A) If it's NOT as fundamentally dangerous as it's being presented...mainly by those with an active stake in the 'game'....we won't support the bailout

OR...

B) If we are actually looking at a real collapse...lay it ALL out for the people...explain EVERYTHING that is going to happen, where the money will HAVE to go, and who gets what, and how the money will GUARANTEE A REMEDY

otherwise...I'll take my whipping, now...and let the chips fall where they may...


PS - OPM: other people's money...a staple of 'business'...as long as the 'other people' don't need to actually have their money back...

[guitar man]

28. OH NOES!!!!!

Tuesday is half-price hamburger night...I want my cheap burgers...:cry:

[Raineyb]

33. Sonic exists?

I've seen the commercials but have never seen a single store. I was starting to wonder.

Regards

[gopbuster]

34. OKC is their base of operations, there is one on almost every corner

I saw one down in South Florida not sure where else

[Raineyb]

47. Interesting

I went to their website and checked their store locator and there isn't a single store in all of NYS.

Regards

[Renew Deal]

56. They are mostly in the south and west.

So if you live north and east, you won't see one.

[Chovexani]

48. I just saw Cotton Hill say this shit on CNN

GIVE ME TATER TOTS OR GIVE ME DEATH!

[Shakespeare]

49. Sonic is a 100% blue company, FYI.

Just mentioning for those who weren't aware.

[gopbuster]

58. Wow..did not know that , thanks n/t

[Liberal In Texas]

50. The Sonic 3 blocks from my house is still open. They're still taking credit cards.

The food and service still suck.

[MadHound]

51. Oh noes, we're repeating history!

Hmm, let see, there was an economic crunch in '01, '91-'92, '87, '81, 78' 74' etc. etc. that prohibited business from expanding for awhile. They survived then, we'll survive now. The end of the world isn't nigh.

[That Guy 888]

55. Title of the linked article? Bailout won't put the brakes on downward slide

Quote:

The intense political wrangling over the Bush administration's rescue plan for holders of bad mortgages has obscured the fundamental issue: A program to take bad loans off the books of lenders and investors, however necessary, won't quickly bail out an economy that appears to be headed downhill.

...But, at best, all a government program can do is keep things from getting dramatically worse, economists say. In the worst case, a government bailout program won't keep financial conditions for households and businesses from deteriorating much further.

...Indeed, it's possible a bailout package could get a euphoric reception from both the stock and credit markets. But any psychological effect would be temporary, experts caution. In the medium and long term, it's by no means certain a bailout will succeed.

"I'd give the government a 50 percent chance of stabilizing the markets," Edlin said. "The reason for optimism is that there will be an enormous amount of money. The reason for pessimism is that nobody knows how the money will be spent."

- end quote




The article says something should be done. It seems caution, planning, and reason would be of more help than fear-mongering.

[ddeclue]

62. OH BOO HOO!!

It's not like there aren't too many fast food franchises destroying our country already.

They are a blight and an eyesore. They contribute to global warming in a multitude of ways, not the least of which is the lines of cars going through the drive through that are filled with fat lazy people to lazy to even get out of the car and go inside somewhere.

They are turning our nation from America to Generica - the same fast food restaurant every where you go - BK, McD, Wendy's, Sonic, KFC, Boston Chicken, Dead Lobster, LJS, etc., etc.

Enough!

They are killing our health with cholesterol laden fried foods - this is driving up health costs and insurance costs.

They cost too much and eat into our budgets.

They kill off real mom and pop restaurants with actual decent wages for the employees and with actual history, ambience, originality, and good food.

So long Sonic... welcome back Mom and Pop!

Doug D.
Orlando, FL

[Geek_Girl]

63. I heard a similar story about McDonald's the other day

Basically some McDonald's won't be able to roll out their new coffee product or something to that effect. Oh no I won't be able to try the new product Mickie D's is rolling out or eat from a new sonic. The Sky is falling!

:scared:

[Seldona]

64. What happened to reinvesting profits back into your business?

What is it with business in this country that everything has to be BORROWED?

[rucky]

65. Kick for the funniest thread of the day!