The CBS Interactive Business Network. Credit Started This Recession; It Will Also Help End It - Credit was at the heart of the current recession; it is also key to its recovery. The absence of a smoothly functioning credit system is life-threatening to a capital intensive economy. We saw that trust and confidence, two of the essential ingredients to a free flow of credit, were both lost in 2008, causing the economy to sputter to a halt.
Consumers couldn’t get the financing they needed to buy big-ticket items; businesses couldn’t float short-term loans for production of new inventory, and long-term financing for plant and equipment expansion was simply not available. This sorry state of affairs is quite perplexing to policy makers. It has been so long since we have experienced anything evenly remotely close to the present situation, that it is difficult to find anyone who can get a handle on it.
In the United States we saw the utter bafflement in both the executive and legislative branches of government as to what to do. The New York Times phrased the problem well: Follow Ray Hendon. Bankrate.com. Guerrilla Billionaire™ Product Tour. The CBS Interactive Business Network.