Debt Crunch: A Memo to My Banker
There's an old truism on Wall Street, though often forgotten, that for every buyer there's a seller. And vice versa.</br></br>I first learned it many years ago when as a young reporter on The Wall Street Journal I got up enough nerve (and enough money) to make my first stock purchase. Having done so, I sidled up to Oliver Gingold, our longtime stock-market watcher who dated back to Charles Dow, and announced I had bought some General Motors. Oliver looked at me with a twinkle in his eye and remarked, "Maybe you're dumber than the fellow who sold it."</br></br>There's a like truism in the banking world, though hardly anybody remembers it. For every borrower there's also a lender. It always takes two to tango.</br></br>I'm reminded of that by all I read in the papers about the troubles bankers have lately got into by lending so much money to borrowers who can't repay. Sometimes it's hard to figure out which one is dumber, borrower or lender.</br></br>Take all those farm loans. All over the country farmers are going broke and having their farms auctioned off at bankruptcy sales because a few years back they borrowed too much money for tractors, combines and other machinery. So now the banks are in trouble, too. A lot of them have even gone belly up. Just the other day the Journal had a front-page story about how the banks' current ills are resisting the usual "cures." The Federal Deposit Insurance Corporation is itself running low on money.