Lambuth University can't make payroll

[Pale Blue Dot]

Source: The Tennessean

Lambuth University officials announced Tuesday that the school will not be able to make its regularly scheduled payroll today.

The business office was informed Monday that an anticipated line of credit would not be available as previously thought, according to a news release from the university.

Jerry Israel, interim president of Lambuth, broke the news to the faculty and staff at a meeting in the R.E. Womack Chapel Tuesday afternoon.

Israel said Tuesday evening that he did not know how soon the university would be able to pay employees.

"It might be a day, it may be two," Israel said. "It may be relatively short-lived, but we won't know until it is over."

The university's financial difficulty is directly related to the credit crunch that has spread from Wall Street to communities throughout the country, Israel said.

"The banks don't have the flexibility, and it is much more difficult to get credit," Israel said.

Read more: http://www.tennessean.com/article/20090415/NEWS0401/90415011

[Oregone]

1. Hard to comprehend this "credit crunch"

We just started out first round of layoffs. We let go of people for the first time in years. Our sales at at an all time high. The company couldn't be doing better on paper, but there is a cited cash flow/credit problem. Everyone else is taking pay cuts (starting at the execs).

[Pale Blue Dot]

2. It's possible that the "couldn't be doing better on paper" could be an illusion

created by the easy credit of the past decade. In fact, I think our whole economy was based on this same illusion.

[Oregone]

3. Its hard for it to be an illusion though...

I'm in retail. I see the sales volume. We are selling much more YTD, and millions more 2 YTD. There isn't any way to make it look like an illusion. Our overhead is tiny and static, our volume continues to accelerate (as do margins as we increase purchasing power). And still, now, there is a 'cash flow' problem. Now, while I realize that at this level, you are essentially purchasing millions in goods a month, but what I don't understand, is how laying off a few negligible workers is going to make or break the bank.

Of course this company, and others, operate off a strict credit line to stay afloat. Its simply how they are used to doing business. It doesn't mean they are in the red at all. It just means their monthly purchasing power is being challenged, since it is entirely based on credit in its current form.

I can't help thinking though, "Canary in the mineshaft".

[jimlup]

4. I was paid today and was nervous about it...

Thank goodness my employer has taken steps but this could get much worse...