Fare Thee Well, Frosted Circus Animal Cookie

Let's review this last week:

1. The stock market has lost about 20% of its value over the past seven days. (A "crash" is defined as losing 20% or more in a single day or over a few days.)

2. The bail out bill has been signed.

3. The government is actually contemplating investing in banks (which is frankly better than buying their bad assets).

10/3/08 - 10/9/08

With all the doom and gloom, the man on the street still isn't sure how this will affect him. Don't worry. It will. Give it some time. (Please excuse my un-gender neutral pronouns.)

Wait a second. After further developments, perhaps the hurting starts now:

4. Mother's Cookies, the makers of the Frosted Circus Animal Crackers (just to name one flavor), is bankrupt.

The reason? I'm sure poor money management had a bit to do with it. But a large part of it was the increased cost of raw materials combined with the "credit freeze" / collapse of the "Commercial Paper Market."

Many, many LARGE companies rely on the Commercial Paper Market to fund their day to day operations.

As a typical company doesn't have the same amount of money coming IN to it everyday, it will not have enough to cover its expenses. So Company XYZ takes out, say, a 3 day loan for $1,000,000 (because it knows in 3 days it will have a big check coming in), which it will pay back for $1,010,000.

Who is lending this money? The big banks.

Problem is, however, that the big banks aren't lending because

a . They are scared silly. Many banks have already lost money lending in the paper market, making everyone else run for cover.

b. They are busy shoring up their capital - so as not to fail. (A common malady these days.)

c. It doesn't help that there are silent bank runs going on right now (depositors taking their money out). That makes it even harder for the bank to save money.

How unusual is this? Very - it's really never happened before. The Commercial Paper Market used to be considered the most liquid market ever. That's why the government has started to lend directly to businesses as a de facto Commercial Paper Market.

The current problem is that nobody is lending to nobody (yes, double negatives aren't no good).

If this continues, business - like Mother's Cookies - will start dying from the inability to borrow. Expenses grow higher and higher. Next stop: Bankruptcy.

This is how it affects the man on the street.

And now we have no more Frosted Circus Animal Crackers.

Or Taffy Sandwich Cookies

Or Iced Oatmeal Cookies

Or Archway Iced Molasses Cookies (also made by Mother's)

Or Archway Fruit Filled Apple Oatmeal Cookies

Have I missed any other important flavors?