Friday, March 06, 2009

519 The Warning Note

519 The Warning Note

Back in junior high school, when you were in danger of flunking a course, the teacher would mail home what they called a "warning note."  A dreaded warning note may be a better way to put it.

The note would tell you that you were in danger of flunking English or algebra or some such, but that there remained hope that with diligent work ("apply yourself!") you might still reach a passing grade for the academic quarter.  By the time it was time to issue the warning note, you pretty well knew you were going to get one.  But when it came in the mail, you had confirmation of your fears.

Sometimes you COULD get back on track in time to earn at least a "D" for the quarter.  Mostly not.

The biz world equivalent of the junior high warning note is called a "going concern notice."  A going concern notice comes from your auditors and they send it when they think you're in such deep yogurt that you might not make it.  A passing grade for THIS warning note is survival.

This week, the auditors sent a going concern note to their client, General Motors.  GM is in danger of flunking the quarter.  Maybe in danger of flunking out, entirely.

And like the kid in junior high, the company knew this thing was likely to come.  But also like the kid in junior high, their hearts no doubt sank when they got it.

So should yours.

You get a warning note in junior high, you maybe find some extra help.  Same with GM.  They knew this was coming, and to their credit (to use a dubious word,) they have been seeking extra help.

From you.

Thing is, even with extra help, in this case, billions of dollars in loans, you sometimes can't pull out of the tailspin.

They're not going to fold tomorrow, exactly.  Maybe not at all.  But everyone learning of this condition will assume they will and act accordingly.  Which in this case is to not buy their stuff.

This creates further downward pressure and likely speeds any eventual bankruptcy filing.

Unlike junior high, when you flunk at this level, you don't get to simply repeat the class until you get it right.  When you flunk at this level, you're toast.



Shrapnel:

--Times are tough, so municipalities across the land are skimping on pot hole repair.  It's not that they don't fill 'em.  It's just that they fill 'em with watered down goo that means they come back soon.

--Westchester Johnny loves the old pop standards.  Complains you can't get that on the radio, any more.  Won't learn to use a computer, so he remains stuck.

--What to ask the doctor on entering the waiting room?  "How late is he or she running."  It's a good question, even at 7:30 in the morning.


I'm Wes Richards. My opinions are my own, but you're welcome to them.®
©WJR 2009

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