Recycled Cycle

Posted by maloneybonds on February 9, 2011 under Banking, Contractors, EGCA Published Articles, Economy, Trends | Be the First to Comment

Don’t roll the dice; protect your bonding while waiting for the economic downturn to run its course once again.

Come stroll with me down econometric memory lane, back to the late 1980s - early 1990s.  The economy then was in the tank.  Credit markets clammed up, and lending virtually ceased.  The savings and loan industry imploded, with many institutions having to be taken over by the federal government’s “Resolution Trust.”  Evil Wall Street scoundrels such as Ivan Boesky, Michael Milken, and Charles Keating appeared to financially rape us.  Black Monday in October of 1987 saw the Dow drop 22.6% — in one day — a steeper one-day decline than any single day in 1929.  Construction in the private sector came to a screeching halt, resulting in the public works arena becoming flooded, muddied, and bloodied.  Things looked bleak, and we all ran for cover since it seemed as though the sky was falling.

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Ahead of the Curve: Maximize Your Bond Line of Credit Now

Posted by maloneybonds on under Banking, Contractors, EGCA Published Articles, Economy, Legal, Trends | Be the First to Comment

The history of our economy tells us that each and ever industry continually faces its cycles … up and down, with a few in-betweens.  Accept this fact, learn from it, and take appropriate steps now to position your firm to benefit from the coming cycle.

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Economic Good News

Posted by maloneybonds on June 18, 2010 under Economy, Trends | Be the First to Comment

Good News… The economy is improving. Growth in GDP is forecasted at 3.5% this year. Although modest, the housing recovery is real & sustainable. It now takes 18% of household income to pay a mortgage as opposed to long term average of 26%. As valuations stabilize, banks will be more inclined to lend. Pricing on public works construction has deteriorated to REALLY STUPID / SUICIDAL levels!!! With this & budget shortfalls of public bodies, “Exec’s” at Bonding Companies predict contractor defaults to hit the fan in 4th 1/4 2010 & continue into 1st 1/2 2011. Those that survive will enjoy another nice run.

The Economic Good, Bad, And Ugly

Posted by maloneybonds on March 9, 2010 under Contractors, Economy, Trends | Be the First to Comment

The Good: All recessions eventually do come to an end and it appears as though this one has run its course.

The Bad: The cycle for the Construction and Bonding industries trails the overall economy by twelve to eighteen months.

The Ugly: Unemployment on a national basis still hovers around ten per cent… Nationally, unemployment in the construction sector sadly is twenty-five per cent.  The “Kiplinger Letter” predicts that ten percent of contractors will “bite the dust” this year.  The Bonding Industry and their reinsurers are far more fearful.  Economic Darwinsim applies now more than ever.

Bonding Companies are very nervous.  Contractors, now more than ever should provide their sureties with a basic business plan along with their financial statements… Especially if the results are somewhat disappointing. Please call me if you would like some  assistance with this.

Mergers, Acquisitions, and Competition

Posted by maloneybonds on July 21, 2009 under Economy, Insurance, Trends | Be the First to Comment

Since 1990 ten of the top twenty bonding companies have either exited the surety business or have been absorbed via mergers and acquisitions. Rumor on the street is that another major bonding / insurance company is on the ropes and without significant capital infusion, they too will disappear. The reinsurance market for surety has also followed suit with the primary carriers. Fewer choices and less competition is not good for the industry. Now more than ever is the time for contractors to have a professional bonding agent to ensure for a smooth flow of surety credit. May we assist your business in this regard?