Abstract Science Construction’s business is in planning, developing and building road projects. The major of its clients are municipalities, city governments, and other public sector entities. While the bankruptcy rates for these clients is very low, when economic downturns happen, their ability to pay in a timely fashion also suffers. This leads to businesses such as Science Construction needing to take on additional debt and to find creative methods in order to stay afloat during times of recession. Methods such as selling accounts receivables at discounted rates and taking larger lines of credit through banks and other lending institutions are some of the ways organizations can remain viable when their cash inflows have turned into a trickle. Science Construction is asking the Turkish Courts to postpone their bankruptcy proceedings for a year while they attempt to restructure. Through this, suggestions such as forcing shareholders to pay their debt to the organization, gaining credi
The “Black Monday” in 1987 was followed in quick succession by two more crises in US economy till the advent of new millennium. The Saving and Loan crises in 1989 and thereafter the Long Term Capital Bailout in 1998; were the two turmoil that rocked the US economy.
In US, like banks, savings and loan institutions accept deposits from public and offered mortgage loans to them. They are in the business since 1800s and remained under strict regulation till 1970s. In late 70s, new competitors, Money Market Funds started offering higher interest rate than S&Ls. The S&Ls sought deregulations to offer higher interest rate and more loans from government; what they got. It was something like handing in babies with shot-guns.
The 1980s real estate boom saw many S&Ls grew so fast as never before! Their speculative assets grew faster than ever. Loans granted against superficially priced properties brought many S&Ls prospects down, even to dooms! It was due to huge payment defaults by borrowers. By 1987, believe it! 505 S&Ls went bankrupts. The depositor’s money with F&Ls was guaranteed by Federal Savings and Loan Insurance Corporation (FSLIC). But the enormity of amount turned FSLIC itself bankrupt! By 1995, half of the total F&Ls in US, totaling 747 went bankrupt.
It was in 1989, the newly elected President George H.W. Bush bailed out F&Ls, dolling out $153 billion dollar. Out of which $124 billion was tax payer’s money. This saw dissolution of FHLBB and the FSLIC and replaced by other regulatory bodies while seeking recourse.
While the F&L crises were on, seed of another crisis was planted. Legendary bond trader John Meriwether founded his own hedge fund leaving Salomon Brothers. A man of his stature attracted top financial minds of his time. He could raise $1.25 billion as capital to start with for his newly established Long Term Capital Management Meriwether. It was commonly known as LTCM and its mantra was scientific way of leveraged arbitrage.
This was primarily a Hedge Fund; how it brought about another Wall Street crash in 1989 is another story. It will be discussed in the next article.
In US, like banks, savings and loan institutions accept deposits from public and offered mortgage loans to them. They are in the business since 1800s and remained under strict regulation till 1970s. In late 70s, new competitors, Money Market Funds started offering higher interest rate than S&Ls. The S&Ls sought deregulations to offer higher interest rate and more loans from government; what they got. It was something like handing in babies with shot-guns.
The 1980s real estate boom saw many S&Ls grew so fast as never before! Their speculative assets grew faster than ever. Loans granted against superficially priced properties brought many S&Ls prospects down, even to dooms! It was due to huge payment defaults by borrowers. By 1987, believe it! 505 S&Ls went bankrupts. The depositor’s money with F&Ls was guaranteed by Federal Savings and Loan Insurance Corporation (FSLIC). But the enormity of amount turned FSLIC itself bankrupt! By 1995, half of the total F&Ls in US, totaling 747 went bankrupt.
It was in 1989, the newly elected President George H.W. Bush bailed out F&Ls, dolling out $153 billion dollar. Out of which $124 billion was tax payer’s money. This saw dissolution of FHLBB and the FSLIC and replaced by other regulatory bodies while seeking recourse.
While the F&L crises were on, seed of another crisis was planted. Legendary bond trader John Meriwether founded his own hedge fund leaving Salomon Brothers. A man of his stature attracted top financial minds of his time. He could raise $1.25 billion as capital to start with for his newly established Long Term Capital Management Meriwether. It was commonly known as LTCM and its mantra was scientific way of leveraged arbitrage.
This was primarily a Hedge Fund; how it brought about another Wall Street crash in 1989 is another story. It will be discussed in the next article.
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