13 novembro 2008

The Domino Effect

The chain of events - which began with salesmen on commission wildly dishing out sub-prime mortgages (to poor people the United States who did not even have to prove they had the earnings to repay them) and ended with Jackie Horn losing her job - is a long one. I have spent the past few weeks tracing each link in that chain through the stories of a series of people:

* The fall-off in demand for Chemix's products was the result of decisions like the one made by a Birmingham newsagent whose domestic economizing including not having his windows replaced with uPVC frames because his cigarette sales were down.

* Cigarette sales at the newsagent's had fallen because staff at the nearby Range Rover production plant had had their hours cut.

* Range Rover sales are down because a wide variety of businesses are now tightening their belts; not replacing company cars is an obvious money saver.

* Among the businesses not replacing company cars as part of general cost cutting are those like the shop-fitting, sign-writing and advertising firms employed by retail giant Marks & Spencer, which has had two-thirds wiped from the value of its shares this year.

* Trade in shops is down because consumer confidence has fallen in line with catastrophic drops in the price of shares.

* Share market volatility was provoked by the sudden refusal of the banks to lend money to anyone, including each other.

* The crisis of confidence within the banks was fed by the collapse of Lehman Brothers, which was the biggest bankruptcy the world has ever seen.

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