It's a bit infuriating when you have a 73-year-old Texas-based furniture chain, Lack's Stores Inc. closing all of its stores and filing bankruptcy while some of our so-called economists have the nerve to claim that the recession is over.
In a news release, the 73-year-old company said the action was necessary because lenders are no longer willing to provide Lack's funding to finance customers' purchases, and it said lenders have demanded that Lack's repay its outstanding loans.
You know why banks aren't willing to finance customer purchases? Because banks believe that many of Lack's customers, most of whom are part of the shirking middle-class don't have the jobs or income necessary to pay for those loans. Wasn't the bailout supposed to increase the amount of credit available to consumers so that companies such as Lack's don't need to file bankruptcy and close their doors? Yes, that's what they told us; but as most who are on the frontlines of this economic mess recognize, the truth is that the bailouts did little to alleviate the credit crunch experienced by most ordinary middle-class Americans and the businesses who cater to them.
The problem Lack's ran into is not unusual for a regional chain that sells to middle-class consumers, Epperson said. Unlike retailers such as Louis Shanks Furniture, which target wealthier consumers who rely less on credit, Lack's is "a credit-driven, popular-price furniture store, and that's one of the problems," Epperson said. "They rely on consumers, and banks and lending institutions to finance the consumers to buy their furniture."
That's right; we won't see Louis Shanks filing for bankruptcy because the wealthy don't need credit to buy their furniture or their homes for that matter. But what does that mean for the rest of us? As some furniture industry experts have noted many quality chains have liquidated in bankruptcy during this recession leaving fewer options for middle-class consumers. But this isn't just about furniture. This is also about how our society is built on the need for credit. You can't even buy a home without accessing credit. And just like it's difficult for the middle-class to get credit for their furniture, it is also becoming increasingly difficult for them to access credit for essential things such as purchasing a home. Are we looking at a future where more businesses which cater to the middle-class are forced to liquidate in bankruptcy because they are denied credit access, while the wealthy continue to buy their wares with cash? We hope not.