Liquidity Hoarding: The Mathematics of Surviving Credit Freezes

Profitable businesses do not go bankrupt because they lack a good product; they go bankrupt because they run out of cash on a Tuesday. When a recession hits and systemic panic sets in, banks immediately tighten their lending criteria. Overnight, the easy credit lines that companies relied on to float their daily operations snap shut, triggering a catastrophic chain reaction known as a credit freez...