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Greg

Here is a reason why this might matter. This has more to do with small businesses than larger one's. Not sure if I would classify Sonic as small, but maybe to the individual franchise holder it could be.

It is common sense that if a business's get big they have tremendous resources they can call on to map out a survival strategy. But the people that are most vulnerable at this time are the small and medium sized businesses that are typically built on owner sweat equity and are significantly under capitalized. In a sense we are being told get really big and you are 'too big too fail'.

On the other hand small businesses survive on guts and improbability. If the owners understood how likely it was that their chosen business was likely to survive, or how much capital they really need they would never open their doors. Brimming with insatiable American optimism they keep coming like salmon jumping up the falls in an impossible challenge to physics. They do make it. Largely on personal credit cards they survive expand and eventually end up at their neighborhood bank where they are always pushing the acceptable ratios of what a business should do.

They take their orders down to the bank and pack the credit and borrow against future deliveries, they extend their payables and massage their receivables. They use informal money markets known as 'uncles, in-laws and buddies'. When credit gets tight they exist on fumes and when credit freezes they will be wiped off the face of the economy by the tens of thousands.

What this most about, it is about the possible upcoming credit freeze. There are hundreds of thousands of struggling small and medium sized businesses with millions of employees going to bed tonight wondering what money they can use to pay their payroll and keep fighting. If their credit line is approved but the banks won't have any money to put in their account, what happens to their employees and what happens to their companies? Yes, we can do without Sonic Burgers, but how many small businesses and employees of these small businesses will suffer? How much of these losses are acceptable. What will be the overall cost to out society if these businesses go belly up??

So the issue is larger than the Sonic Burger and the fat cats on Wall Street. This has serious implications for everyone. If you work in a car dealership and you depend on the free flow of credit, then your job is at risk. If you work for a small company which uses a line of credit for inventory and payroll then this effects you too. The ripples of this are far reaching. I am not sure if a bailout is the best answer, but smug talk about Sonic Burger is not the answer either, and it trivializes what is the most serious part of this mess.

Greg

Think I am joking??

In an example of how fragile credit markets have become, the state of Massachusetts yesterday tried to borrow $400 million to make its routine quarterly local aid payments to cities and towns. State treasury officials said the credit markets abruptly froze midday, leaving them $170 million short. The state will have to use its own funds to complete the local aid payments, draining the state's balance to extremely low levels.

"I don't think any treasurer alive could say they've ever seen anything like this," said Timothy P. Cahill, the state's treasurer. "There have always been cash shortages, but you could always go to the market and get more. This is the first time we haven't been able to do that."

Cahill said he believes the credit market will in effect remain shuttered today as the nation's largest lenders hold on to their cash amid uncertainty over plans for a federal bailout. In short, the House's rejection of a $700 billion Wall Street bailout plan takes Massachusetts and the rest of the US economy into territory that few policy makers and analysts wanted to explore.

It tests the forecasts of Federal Reserve chairman Ben Bernanke and Treasury Secretary Henry Paulson that failure to approve the plan will dry up credit markets, damage the financial system, and send the fragile US economy spiraling into a deep recession. The economy may yet muddle through, analysts said, but the risks of a catastrophic downturn have risen.

www.boston.com/business/articles/2008/09/30/unknown_terrain_for_economy/

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