A bankrupt company that was losing money, shuts down and lays off its workers. That sucks for the workers. The immediate culprit is the recession created by the collapse of the housing bubble. So why does the WSJ tell its readers that the workers are the victims of the "credit crunch?" What is their evidence that the problem is a credit crunch? How often do banks lend money in a steep downturn to a business that is losing money? The WSJ is just making this up. The problem was that the WSJ and other media outlets largely ignored the growth of an $8 trillion housing bubble, by far the most important economic phenomenon on the decade. Now that it has burst and sent consumption plummeting, they are blaming the economic collapse on a "credit crunch" instead of the more obvious problem that consumers just lost $6 trillion of housing wealth and another $8 trillion of stock wealth. Maybe someone should finally share the secret of the housing bubble with the WSJ.
--Dean Baker
