Problem Isn't Consumer Demand
Financial Express - December 10, 2008
The primary problem at this juncture is not the lack of consumer demand, but the lack of funds desperately needed by companies to stay afloat on a week to week basis. This, if not addressed soon, will cause corporate collapses, leading to job losses and business associates collapsing, leading to more job losses, and a shattered faith in the economy.
Typical stories around us today are of companies that have over leveraged themselves and expanded aggressively in the past few years; and who have, until recently, diverted cash flows to fund even more aggressive expansion. The implicit assumption they made was that further equity and/or debt would be available on call; the question was never about its availability, but only about its price.