Ilargi: With all the attention for GM and Ford, most people would be inclined to think they are the biggest story in the US economy. But I'm looking at Circuit City, and the fall-out from its Chapter 11 filing yesterday. Circuit City managed to get a $1.1 billion temp loan to carry it over till after January 1. It is then suppsed to use the proceeds from the shopping season to pay off the loan.
Bit of a gamble, I'd say. They'll run into the same problems that keeps GM away from Chapter 11 in the first place: who'll buy your products if they fear you won't live to honor service contracts? Plus, once the loan is paid back, will Circuit City be a healthier company? More likely, they’ll be lucky to be back to square one.
Peacenik has read a lot of stuff about this ongoing crisis and the most frightening thing is that no one seems to have any idea how to stop it. No one has any answers or solutions. Certainly not the U.S. government. Obama doesn't seem to have a new idea. Commentators are at a loss. Newspapers report the bad news but offer no ideas how to stop it. The Canadian government is paralyzed. If the consumer society is truly dead, what will replace it? Bush's answer to 911 was to encourage people to go shopping, to go further into debt. Peacenik worries that Bush will try to hyperinflate this debt away. Peacenik worries that Zimbabwe is the model that Bush is following. Lunch in Zimbabwe costs $2 billion.
