Monday, April 14, 2008

Sharper Image?

Understanding the perils of debt is akin to seeing a dinosaur in a Magic Eye stereogram.
Remember those once-popular, colorful prints with hidden 3D images that could only be seen with steady, unfocused gazing?  

Thanks to a whack to my vision, I finally saw the monster lurking in my finances. 

So when I read this story from the New York Times on the increase of retail business bankruptcies, I saw my old foibles on display.

Many retailers have relied on borrowed money to finance merchandise purchases and meet payroll, according to reporter Michael Barbaro. When sales are strong, the debts are repaid. 

Enter a market downturn and perhaps recession, plus a growing mortgage credit crisis that has made lenders unwilling to extend new loans.

The equivalent in my life would be a cut in pay or a layoff, which is never quite off the table at my company, while my credit card was maxed out.

I was surprised to see Levitz, Bombay and Sharper Image among those that filed for bankruptcy. Linens N' Things is weighing the move as well. Apparently their executives are no brighter than I was.

A retail consultant said the consumer spending slowdown was merely wiping out the "bottom tier" of companies.

I wonder. It seems this approach to business and personal finance is way too common. Unfortunately.

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