Friday, September 26, 2008

Are you going to get paid on Tuesday?

A LOT of payrolls get paid at the end of the month. The next for many companies is September 30. Three different people with hugely relevant knowledge said to me today words to the effect of: "Why don't your economist buddies want[insert fortune 100 company/companies here] to be able to pay their employees on Tuesday. If Washington doesn't do something now, they won't be able to". That just scared the hell out of me. I can go into more details if you like, but all of them involve the four horsemen of the apocalypse.

As I say, I don't know what your view is. And if it is that the problems with the "bailout" exceed the benefits then I obviously respect that.

A reader of Greg Mankiw succinctly summarizes why everyone should care about the financial crisis. Many companies rely on short term financing to meet their payrolls. Without short term financing, these companies can not pay their employees and will be forced in to bankruptcy. The fear in this crisis is that the credit crunch has made it impossible for companies to acquire short term financing.