The Bush Administration was given a thundering and stunning rebuke on Monday afternoon with the defeat of the Bailout Bill in the US House which shocked and surprised nearly everyone globally. As a consequence, the US stock market dived precipitously as all indices were down by 7 % and more. Count on a similar performance Tuesday. The big concern in reality though is the virtual disappearance of credit across the nation, mainly for business. Many businesses use credit to carry them through periods to meet payrolls and other operating expenses while waiting to get paid by buyers and purchasers. There will be cases that will occur as soon as later this week with payrolls not met and bills not paid by a number of businesses, some with household names and a strong brand recognition by consumers. Businesses will shut down or suspend operations, leading to greater unemployment and the further fall of additional economic dominoes. Banks are in serious trouble, as two of the nation's largest banks failed in the last few days with Washington Mutual and Wachovia having to be bought up for virtually nothing by JP Morgan Chase and Citicorp, two larger institutions that themselves may careen towards collapse sooner than later. That makes twelve banks that have disappeared this year. Another jolt will be coming later this week with the release of the September unemployment report, which is likely to show an increase in the official unemployment rate to perhaps in excess of 7 %. With the US House in recess until Thursday due to the Rosh Hashanah Jewish Holiday, no actions or considerations will be made in the next two days...
The American Economy is at the precipice of its greatest crisis in nearly eight decades. What will happen next is anyone's guess, but it is very difficult to have any optimism.
.
-
.
*****
I wonder how this will affect fast payment discounts for accounts. 2% 10th net 30? Hell, it probably be 4% net 2 weeks as companies are starving for cash. Time to read up on accounting and discount bargaining methods.
ReplyDelete