89 days to bankrupcy and layoffs

The credit market has seized up. We are right back at August 2007... again.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aCk0Qr1f2Eew

Ok, here's the drill.

1. When the credit market for commodity debt instruments lock up (securitized loan) then the banks or the holders of debt have to borrow high cost money in order to stay solvent. This in turn, sucks up the available consumer and small business credit. That's why you are seeing more credit limits being reduced or accounts dropped.

2. The normal users of the higher cost money, such as Corporate paper or folks who sell accounts receivable don't have any buyers of their short term (89 day or less) loans.

3. Within 10-29 days, the short term floats are used up. People lose the early payoff of accounts payable. Profit goes down the drain.

4. Within 30 - 59 days, people carry the cost on their balance sheet. Day 60 is usually when the account is turned over to collections.

5. From 59 - 89 days, companies can't make payrolls, bounce accounts payables, and generally do not service their debt. This causes a ripple effect in the economy, resulting in:

LAYOFFS and BANKRUPTCIES. The clock is running... 89 days and counting.

Today is Julian Day 036 (05FEB08). Starting around Julian Day 125 (05May08), the layoffs will start. Bankrupcies will follow on day 155 (04JUN08).

Can B-52 Ben bomb the credit markets into liquidity? Stay tuned... same Bat Time, same Bat Blog.