On his Insolvency Blog, Chris Laughton, a recovery and insolvency partner at the UK’s Mercer & Hole firm of chartered accountants, gives a UK and European perspective on the recent gyrations in the credit markets. His new post is entitled "The boom-bust cycle: where are we now?" and it chronicles the progression of the credit crunch from the United States to the UK and beyond.
After providing links to a number of recent articles from the UK press on the subject, Chris sums up his views:
So what does all this mean? Yes the capital markets are in turmoil, banks are lending much more cautiously and some high risk investment vehicles are failing, but essentially this is only a liquidity problem. Its effect though is that stressed businesses will no longer be able to borrow their way out of trouble as they have become hard-wired to do over the last 3 years.
Crisis cash management and operational and corporate restructuring will come back into vogue as refinancing becomes passé. Only if stressed businesses fail to seek appropriate and timely assistance will the business insolvency statistics really start to rise.
His informative post, and the UK articles highlighted, underscores the interconnected nature of today’s global credit markets. It makes for interesting reading — wherever you are.