Tuesday, April 15, 2008


That's what the credit crunch is.

As banks are pulling in their horns, hanging onto money, credit is drying up everywhere. Here's yet another example:

Retailers are being hit by a double whammy, as not only are consumers spending less but no one will extend credit to the companies, so many are finding themselves stuck. Although retailing might seem like an incredibly profitable business, the truth is that its seasonal nature means many retailers need to borrow money to make ends meet. Without available credit, many are being forced to close their doors. To make matters worse, when these stores close, they also directly affect other companies because many keep on owing money to their suppliers.
Apparently many mid-sized companies are looking at bankruptcy. And given that this is a large employer these days, that shouldn't be much help to the unemployment rate.

The housing mess simply needs government bailout. If prices continue to plummet, the ripple effect will continue as well.

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