Wednesday, April 29, 2009
It's All About The Balance Sheet
In a meeting a few weeks ago, a banker crystallized what's going on right now in the credit markets. "We are undoing 30 years of underwriting in 18 months," he said. What this means is that over the last 30 years, banks got more and more aggressive on lending higher and higher percentages of corporate assets. These percentages are now being rapidly lowered.
What this means for companies us that they need to focus clients this year on their balance sheet. Deleveraging is the name of the game. If banks are going to led less, businesses need to replace the debt with capital. Those businesses that can do this will weather the storm and emerge stronger. Those that can't will close up shop.
The Chicago Cubs roster certainly seems to be in a similar situation. Right now, they have several under performing assets. With Aramis Ramirez hurt (and possibly headed to the DL), Geovany Soto under performing (and also somewhat hurt), Milton Bradley hurt, but potentially recovered, and Derrek Lee hurt, the Cubs lineup is missing its central core. Just think of where the team's record would be if Alfonso Soriano was repeating his April from 2008 and Kosuke Fukudome was repeating everything after April 2008.
All these injuries have left the Cubs puttering along near .500 and 3 games behind the Cardinals. This has induced panic among many Cub fans and much teeth gnashing among others.
This worry is unfounded. Why? Just look at the Cubs' balance sheet of talent.
Over the next few days, the Cubs are going to add Aramis Ramirez, Milton Bradley and Derrek Lee to their lineup. And Soto will likely improve when his World Baseball Classic enhanced shoulder injury clears up. That’s a lot of talent to add to a team that’s already over .500.
Now. it is possible that A Ram could be hurt far worst than the team is telling us, Bradley could spend 100 days on the DL, Soto isn’t hurt and is having a horrid sophomore slump, and Lee is just continuing the death spiral he looked to be on since last May.
But is all that really likely? No.
This is a well-capitalized team. Strong capital positions give you the opportunity to emerge quite healthy from hard times. The 2009 Cubs are a good bet to do just so.
What this means for companies us that they need to focus clients this year on their balance sheet. Deleveraging is the name of the game. If banks are going to led less, businesses need to replace the debt with capital. Those businesses that can do this will weather the storm and emerge stronger. Those that can't will close up shop.
The Chicago Cubs roster certainly seems to be in a similar situation. Right now, they have several under performing assets. With Aramis Ramirez hurt (and possibly headed to the DL), Geovany Soto under performing (and also somewhat hurt), Milton Bradley hurt, but potentially recovered, and Derrek Lee hurt, the Cubs lineup is missing its central core. Just think of where the team's record would be if Alfonso Soriano was repeating his April from 2008 and Kosuke Fukudome was repeating everything after April 2008.
All these injuries have left the Cubs puttering along near .500 and 3 games behind the Cardinals. This has induced panic among many Cub fans and much teeth gnashing among others.
This worry is unfounded. Why? Just look at the Cubs' balance sheet of talent.
Over the next few days, the Cubs are going to add Aramis Ramirez, Milton Bradley and Derrek Lee to their lineup. And Soto will likely improve when his World Baseball Classic enhanced shoulder injury clears up. That’s a lot of talent to add to a team that’s already over .500.
Now. it is possible that A Ram could be hurt far worst than the team is telling us, Bradley could spend 100 days on the DL, Soto isn’t hurt and is having a horrid sophomore slump, and Lee is just continuing the death spiral he looked to be on since last May.
But is all that really likely? No.
This is a well-capitalized team. Strong capital positions give you the opportunity to emerge quite healthy from hard times. The 2009 Cubs are a good bet to do just so.
// posted by Chuck @ 4/29/2009 09:56:00 AM 
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