A Recession Fallout (Nuclear Winter?)

Credit Card Fallout?

If you really want to think about how scary this recession will be, consider this: Everything individuals and families were doing with their credit cards and homes, businesses were doing on a much larger level. Cheap credit pervaded every facet of the economy. From Construction to the Federal Government, expansion was fuelled by credit. Credit through low interest bonds, finance companies, and government debt selling. So how much of this credit-fuelled bubble is going to be around after this is all over? After this heavy recession and possible depression, how many companies will be left?

Every company that borrows to finance its operations will most certainly feel the squeeze. Now that credit markets are drying up and banks are charging punitive rates, credit is not so easy. Many banks have begun screening individuals much more strenously. Chase has raised thousands of people’s interest rates. Credit has now become difficult. For those companies that chose to finance through short-term debt will find that the banks are denying more credit. Using short term credit and debt means that a company cannot finance its operations in-house, through profits. Now the dreaded underbelly is being shown to companies that are not run well(Chrysler) or are obsolete(GM). The future presages doom for these dinosaurs and underperformers. So what would be the effect of such companies falling to the wayside? Would it open up capital and fuel the next craze? Or might it cost so many jobs that there is little to no capital. If people can’t earn money, they cannot buy things or save. Which will it be?