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View Diary: Can someone explain to me why? (46 comments)

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  •  Where I work now... (2+ / 0-)
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    oldjohnbrown, guyeda

    ...financing is a necessity.

    I work in a college bookstore. I'm only a salesman but I ask a lot of questions and because I'm good at what I do, management takes me seriously enough to answer some of them.

    We have two seasons of major business, semester rush and buyback (at the end of the semester). During buyback, we're handing out huge amounts of cash - sometimes more than the store actually has on hand. But we need to buy the books from students, in part because it's something we're expected to do by everyone, in part because the company can't afford to always buy new books from the publisher, and in part because we want to be able to sell used books (which are cheaper and promote higher volume of sales). So what do we do? We go to the bank and get a loan, arranged from corporate headquarters.

    During the first few weeks of the next semester, though, we're typically pretty deeply into the black. So the loan can be repaid.

    That's just an example, and somewhat oversimplified.

    Ask not any question of the Eldar; for they will give you three answers, all of which are true, and all terrifying to know.

    by Shaviv on Fri Feb 13, 2009 at 09:17:34 AM PST

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    •  and again (1+ / 0-)
      Recommended by:
      oldjohnbrown

      that is basic simple credit.  The leveraging that goes on in the US and wall street is an entirely different and insane creature.

      (regarding the bank mess) They want to cure the patient but not deal with the disease.

      by dark daze on Fri Feb 13, 2009 at 09:22:02 AM PST

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    •  I'm familiar with the sales part of this (0+ / 0-)

      sometimes more than the store actually has on hand.

      operation.  I worked for a university bookstore my junior year and can see what you are saying.  But that does not ask the why.  The managers know this seasonal cycle...just like farmers know they need to buy seed in the Spring...but why, over time, do they not have money ratholed so they can self-finance for the run on their cash reserves and save the interest costs of borrowing?  That's what I am trying to understand?

      ...Former candidate for Congress.

      by Steve Love on Fri Feb 13, 2009 at 01:37:11 PM PST

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