The IMF (International Monetary Fund) issued a report today[i] that shows we learned nothing from the Great Recession. In fact, as the world slid into recession and growth slowed into reverse, instead of deleveraging, we collectively amped up borrowing – private borrowing by consumers and businesses and sovereign borrowing by countries – in massive quantities. Counterintuitively, economies shrunk and debt blossomed:
The IMF report is chock full of beautiful charts and graphs and loads of scholarly research. Really great stuff. Exactly what you expect from a group that has such exciting committees as: Dissemination Standards Bulletin Board (DSBB), General Data Dissemination System (GDDS), Reports on Observance of Standards and Codes (ROSCs), and Special Data Dissemination Standard (SDDS).
The one thing that the IMF got right is placing the blame on globalization of banking and easy access to credit. Which brings us to you. And me. The easy access to credit pre-recession was universal – consumer mortgages leading the way. Post-recession, the credit bubble has been inflated primarily by large corporate borrowing, governmental borrowing and two areas of consumer borrowing: cars and student loans.
Notice what is missing from the above list? It is the heart of the American economy – small and mid-sized business borrowing. It has been incredibly difficult to obtain. The bright note today is we have found a few brave sources of capital who will work with great management teams who have a great products and better business plans. It’s not easy, in fact it is harder than it has ever been. And we have to navigate often unconventional terms. When we get your deal financed, it is all worth it.
Vertical Capital Advisors LLC
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[i] Source IMF http://www.imf.org/external/pubs/ft/fm/2016/02/pdf/fmc1.pdf