It Takes Courage To End a Recession
NEW YORK (CNN) — Brad Baugh lives in Savannah, Georgia, where he buys and renovates houses. He told me two things the other day that exposed a great opportunity in this treacherous recession — and that may even shine a light on our way out of it. The first thing he told me didn’t surprise me: he’s not buying anything. It’s not that he can’t find good deals; he showed me several reasonably priced buildings he’d like to buy. The problem is the bank. Here’s the painful part: Even the bank thinks the deals are good. It’s just that, for the moment, they’ve stopped issuing loans. See, they’re still afraid they might not survive this recession. They’re collecting on old loans, recapitalizing the bank. It’s not that they don’t want to do the deal. It’s just that they don’t feel secure enough to spend the money investing in it. Better to be safe. Which means the bank won’t make money on new loans. And Brad won’t buy and renovate the building. And the seller won’t sell the house. And the economy won’t move. We’re clearly not out of the recession yet. The second thing Brad told me did surprise me. Shocked me actually. He told me that he needed to install a sprinkler system in one of his buildings, a project that costs tens of thousands of dollars, but the sprinkler system guy never returned his calls. It’s been four weeks since Brad left his last message and still nothing. Why won’t this guy call Brad back? Doesn’t he want the work?