Pasha wrote:Do you think this World Financial Crisis will set the premises to a lot of merge and acquisition between companies?
Do we have to expect that small companies be sucked into bigger ones?
Can our beloved small companies be doomed?
Let's share our feelings.
financial crisis already has set the stage for merge and acquisitions of publicly traded companies.
Answering your other two questions is a little bit more complex, since a lot depends on what you consider as "small" companies.
If we're still talking about relatively smaller financial institutions being "sucked" into larger ones, then yes we we will continue to see this happen, but probably no more than usual. This has always been common place where the larger companies buy out the smaller competition, when the competition is successful. If they're not successful, then they might as well let the competition just fail as part of this economic meltdown.
If we're talking about mom & pop shops, then I'm not worried about companies buying them up, but instead I'm worried they'll end up closing due to rising energy costs and lower consumer spending. I truly hope many of these shops can remain open through this because I don't want to imagine the many places in NY all bearing the names of McDonalds and Starbucks. The many unique neighborhoods are all about cultural identity and that's what makes NY what it is (IMO).
Now as the discussion has turned...
There's a lot to consider about value of homes, who bought them, who sold them and for how much or why.
It's not really fair to blame individuals for buying property beyond their financial reach. There's a lot more responsibility to lending institutions as they look at every aspect of potential borrowers before lending money. The problem is that companies were set up that were intentionally lending money to "high risk" borrowers, because once the loan was signed it was then sold to the highest bidder. Many people invested in these high risk loans as they were providing the highest returns due to the buying and selling of these loans. Everyone from top and down to the lowest positions in this industry new of the high risk, but the business can be compared to a game of musical chairs, where the last one left standing is the one that gets burned and everyone knew that someone would eventually get burned but they would not pass up easy money.
So again, don't fault the new homeowners, as many didn't understand how much they could end up paying and at the time they received their loans, it was within their financial limits, but either they didn't have stable jobs or were given variable interest rates on loans which sky rocketed mortgage payments as interest rates went up... and keep in mind that even though the feds lower interest rates, it doesn't mean banks lower interest rates to borrowers.
Its a very sick game that is went unregulated for too long because too many people made a ton of money doing it.
The lending practices as stated above began in 2000, climaxed between 2002 - 2006. The last two years have been mostly a blame game, with very little intervention as most in government were avoiding the possibility that it would reach the results we see today. Which is why it is such a major crisis today... this really should have been avoided years ago.