If I had to sum up the current economy situation it would be a lack of trust. The bankers don’t trust each other or borrowers; Wall Street does not trust the bankers, the government, or consumers; consumers don’t trust banks or the companies; democrats don’t trust republicans; and republicans don’t trust the democrats. With this lack of trust people want to hold onto their money and are not willing to let others use it. They are afraid they will not get it back. That is why businesses are failing and it is expensive or impossible for people to loan money.
As a side note when I say lack of trust I do not mean that this is the main cause of the problem. The main cause of this problem was stupid decisions on the part of everybody.
When you are in business trust is very important. It is what keeps customers coming back for more business and it helps in your dealings with landlords, vendors, customers, and other business owners. Everybody has to trust that you will stand next to your word, pay your bills on time, treat the customer right, create quality products, and promptly resolve any problems that arise.
When you do not have trust this whole system falls apart. Consider Bernie Madoff if he was able to work with investments again no one would do business with him because they do not trust him. If you have no trust then no one will work with you.