Rural impact of the credit crisis: Time for a look

The credit crisis has dominated the headlines over the past week, but very little of the focus in national media has been on what it means for rural America. However, many regional and specialized news sources are trying to address this worrisome question. We offer a few examples as encouragement for other rural journalists to probe the question.

Douglas Burns of the Iowa Independent asked Tom Gronstal, the state's banking superintendent, how the collapse of Lehman Brothers, the sale of Merrill Lynch and the federal bailout of AIG will affect Iowans. Gronstal said the rural environment will alleviate some of the housing pressures: "Most of the community banks develop a relatively long-term relationship with their customers." For that reason, Burns writes, banks "aren’t looking to finance homes people can’t afford." But Gronstal does admit that "it will make it harder to borrow money for business and agriculture," and that if we are not already in a recession, one is inevitable. (Read more)

One Vermont newspaper focused on the effects that local businesspeople and economists anticipated would experience in their community. "Life is like a food chain and we're all affected," James McNeil, the town's state representative, told Cristina Kumka of the Rutland Herald. Don Keelan, a local accountant and investor, said "The average man will get affected through taxes," and the crisis would result in a continued weakening of the dollar and a loss of capital for start-up companies. (Read more)

Mike McGinnis and Jeff Caldwell of Agriculture Online examined the effects on farmers. "AIG especially is a large player in the ag sector," says Jason Ward of Northstar Commodity Investment Co., and "banks are tightening credit with everyone, which directly tightens credit at ag banks." At the same time, an overall weakened market will affect market prices for agricultural commodities, although Matt Pierce ... floor trader for Futures International LLC, says, "When the financial collapse is over, all agricultural commodites will rally significantly."

The article also addresses reactions to the crisis from farmers, many of whom expressed frustration at government intervention. "I'm still confused -- or maybe upset is the better word for it -- that it appears the government will bail out all of these investment banks that made their bed and are now begging for someone else to sleep in it," writes one member on the website's Marketing Talk forum, identified as GoredHusker. "All we've really learned from all of this is in order to survive get as big as you can. Get so big that the government can't allow you to fail." (Read more)