Brian A. Davis

'Panics Do Not Destroy Capital'

Dear Readers,

Panics to not destroy capital. Panics simply put a lender on notice as to how many bad loans they have already made. For instance, in California when thousands and thousands of (bad) loans were made to high risk borrowers, that was the point where capital was lost. Now that the financial market is approaching the "Panic" stage (and things will get worse before they get better) lending institutions are simply realizing now how much capital that has been put into "unproductive works."

While some readers will contend that it is a good business to see their fellow American in a debt ridden situation, and finally relying on credit cards for necessities, it is a perilous position for the companies and borrowers who are involved in this practice.

Finally, I firmly believe credit card issuers (and any other loan originators for that matter) and their clients have a business relationship. However, should the clients fall upon hard times (see the state of the U.S. Economy) credit card underwriters are in an extremely unenviable position.

Respectfully,
Brian A. Davis

The Market Domino Effect: Staying Ahead of the Curve

Dear Readers,

Continued growth of MA and V will be predicated on consumer demand.

MA and V, have excellent business models. Both companies have healthy stock prices as well. MA and V are based on consumer credit transactions (which should see weakness in coming months).

1. Over-spending
2. Inability to service debt
3. Default rates
4. Tighter underwriting standards

The ability for consumers to service debt will be tested. While this becomes more or less an issue for the underwriting banks, it will also effect the bottom line of MA and V. Furthermore, once a MA or V user defaults, then that customer is unable to continue transactions. Last, banks will continue to scrutinize customers with tighter underwriting standards. There will be come customers that banks will not want. These issues will effect the bottom line of MA and V.

Respectfully,
Brian A. Davis

P.S. I do not hold positions on MA and V at the time of this article.

The Market Domino Effect: Staying Ahead of the Curve

Dear Readers,

Thank you for the positive and negative feedback. This article intends to analyze the current trends, and how they will impact financials markets. While some would prefer to live a charade, and pretend that deflation is not an underlying factor to a weakening economy, it was appropriate to build a case as to the impact of the Fed and U.S. government policy.

Bonds may be viewed as a "safe haven" for investors. However, in this scenario, bonds are a trap. They simply lose value faster than it is accumulated.

Last, this article encouraged readers to be proactive toward investing decisions...thinking outside the box.

Respectfully,
Brian A. Davis