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SW MN | I remember the last dip in farming (2014-2018) certain lenders were sending out letters to its customers saying they could go to interest only payments for a period of time. Now this ad? When you are taking operating money and putting it on interest only, you are one small hiccup away from being out of the game. If you can't pay back your operating line, you aren't making money. And putting it on interest only and not addressing the issue is kicking the can down the road until it becomes a problem too big to handle and you are out. You are betting on the come and it better.
Predatory lending feasting on the likes of people not smart enough to fix their problems, hoping for a bailout/miracle. They probably have enough paper equity to make/take this risk but for those in the back... EQUITY DOESN"T PAY THE BILLS!!!! Only when you sell it.
I was told once by a farmer that $6 corn was good for everybody, when the market corrected to $4 and he didn't know how he was going to make it work because he expanded like $6 was going to be there forever.
The 80's became an issue because the collateral equity started to dry up and they couldn't kick the can. Cash flow is the start of the problem, equity erosion comes next. Problem that I have heard right now is that there isn't enough free cash flow to service existing debt, let alone refinancing of said debt. Those cheap interest rates that people have are potentially going to go bye bye when this happens and will only accelerate the issue. | |
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The bubble looks to grow
