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April 01, 2008

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Bill Warner

I hope you are wrong about this. I am not ready to back away from debt financing. If a company has appropriate collateral backing for a loan, then I would advise them to use it if they have a short term need for cash that isn't otherwise available.

I have little sympathy for the people who signed up for these poorly advised sub-prime mortgages and even less sympathy for the financial institutions that provided them. I certainly don't think the taxpayer should be bailing them out either. I am not guru in banking, but I prefer to let those chips fall where they may.

Some commercial banks are going to take a big hit. I advise entrepreneurs that they should deal with the smart ones who did not fall into this mortgage sink hole. There are some smart ones that still have good grounding and can offer viable debt instruments.

Best regards.........Bill Warner

Wayne

Bill,

My point was not that all debt is going to go away - clearly not possible or economically desirable, but that business owners need to re-think their financing strategies in the face of the current environment.

Scenario planning, stress testing, or whatever you want to call it, businesses need to prepare for more and longer financial upheaval.Their business lives may depend on it.

I do truly believe that we are still early in the unwinding of an epic leverage binge.

Wayne

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