Circling the Drain – Tighten the Belt Until it Breaks

The Great Recession of 2008 and onward happened in large part due to the tightening of credit standards at major banks. Businesses of all sizes depend on positive cash flow to keep operations going, and often that involves some sort of credit. This happens routinely, and to everyone’s benefit when the system works. But when the banks tightened these lines of credit, invoices couldn’t be paid, inventory couldn’t be moves and ultimately cash flow ceased. Businesses failed by the score, and it’s happening again today, and for very similar reasons. Sometimes it’s not as easy as just “tightening the belt,” and today on Something’s Happening Here we’ll see a real-life example of how the best financial plans can mean nothing at all when the money dries up. Where is this problem heading? Welcome to the show.

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