Profits in the land continued to erode and businessmen began to realize that without increased consumption it would be impossible to support the excess factories and the massive amount of debt they had taken on. The government tried to help by given everybody some money, but most just paid off some of their debt postponing the problem for some months.
Realizing that something has to be done soon, the bulls who had the most overextended risk and financed at the highest interest rated started liquidating debt-financed assets closing factories, firing workers, selling houses, thus starting a wave of bankruptcies and a decline in the standard of living as people lost their homes and jobs. The sheple who had seen some of their friends being dragged through the mud also become worried and start liquidating their assets. Even the bears began to worry that their loans wouldn’t be paid back. The general attitude changed from optimism to pessimism and people stopped purchasing which further eroded profits triggering a new wave of downsizing. Millions of sheple then learned that they had invested in unprofitable businesses. Still as the economy was going downhill occasional rebounds happened in various sectors of the economy. Yet that was of little comfort because soon they resumed their downward spiral.
to be continued …
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Originally posted 2008-11-03 07:08:06.