Holding the Ball

Who will catch the fallout from the subprime debacle?

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“Round and round and round it goes, where it stops nobody knows.” Remember that game? Remember what happened if you were caught holding the ball when the rhyme ended?

These days, many companies are reluctant participants in a real-life version of that schoolyard classic, with the ball being the high-profile fallout from the subprime debacle. As we go to press, the ball has been passed from American Home Mortgage to KKR to Home Depot. Many other companies are watching intently, hoping it doesn’t get tossed their way. In a similar vein, the associated tightening of the credit market has observers wondering which private-equity buyers will be stuck holding which hugely overvalued assets when the buying frenzy suddenly ends.

Another bouncing ball — in the form of Chinese sourcing problems — has landed hard on Mattel, which recently announced the largest recall in its history, just in time for the holiday shipping season. Some experts are predicting plenty of recalls to follow. There are, however, steps you can take to ensure that your company doesn’t end up in that position (see “Chinese Checking“).

A playground game that culminates with someone left holding the ball teaches some harsh lessons about fate, competition, and handling anxiety with a cheerful face. In the real world, however, to be left holding the ball is anything but a character-building exercise. Perhaps another game, currently out of favor, should be revived: dodgeball.

On a far more positive note, we’re happy to report that CFO recently won nine National Gold editorial awards from the American Society of Business Publication Editors, more than any other business publication. Substantially more, in fact, but we’ll limit our focus on accounting matters to the topics that are most relevant to you.

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