3 ms·

> In this situation, large capital expenses make sense on the buyer side (to ensure future supply and widen their visibility horizon) Does it? Are these actua

> In this situation, large capital expenses make sense on the buyer side (to ensure future supply and widen their visibility horizon) Does it? Are these actually large capital expenses ("cash" [or credits on a bank balance sheet] is actually being locked up and transferred to the suppliers) or are these purchase orders where fractions of the cash are actually transferred at the point these long term deals are being made and some ones else is actually on the hook (i.e a creditor) securing that? Because if its something like the latter (which I'm pretty sure it is), suppliers still run the risk of future demand cratering as well as the buyers (esp the ones that are fronting the cash and still will have that innovatory on hand until they can actually unload it on to consumers in finished products), and if Jeffery Snider who as been warning about something like this for months now and more recently in "When GDP’s Almost All Inventory" [0], I'm pretty sure those buyers are gonna get hosed with the suppliers… [0] https://alhambrapartners.com/2022/01/27/heightened-conflict-of-interest-rates-when-gdps-almost-all-inventory/ https://alhambrapartners.com/2022/01/27/heightened-conflict-...

Kliment 5y ago
Unless you're a giant customer with something big to beat up the vendors with, like high-level political connections, you're going to be paying up-front for delivery sometime in the distant future if you order anything today. Many vendors won't take any orders without payment up-front.
- cinquemb 5y ago
  Ok, so many vendors might get through unscathed for the duration of those orders (but not after, and not if one excludes all the auxiliary services to the buyers who will become stressed with all the inventory on their hands that vendors expect their buyers to also purchase from them along the way for the duration of those orders), but their buyers wont.

Kliment 5y ago

Unless you're a giant customer with something big to beat up the vendors with, like high-level political connections, you're going to be paying up-front for delivery sometime in the distant future if you order anything today. Many vendors won't take any orders without payment up-front.

cinquemb 5y ago
Ok, so many vendors might get through unscathed for the duration of those orders (but not after, and not if one excludes all the auxiliary services to the buyers who will become stressed with all the inventory on their hands that vendors expect their buyers to also purchase from them along the way for the duration of those orders), but their buyers wont.