How the crunch hits us at home; With the credit crunch continuing to plunge the world economy into crisis, Greg O'Keeffe asks how the collapse of major banks could affect Merseyside's prosperity.
IT WAS the collapse of a bank previously unheard of to most of us, thousands of miles away.
But Merseysiders are being warned that the bankruptcy of Wall Street's Lehman Brothers could affect them too.
The so-called 'ripple-effect' of the crisis has already sent share prices in London plummeting, and is causing UK banks to further tighten their belts and cut lending.
Analysts have also insisted that banks collapsing does not just hit highly-paid bankers, but also the car dealers, shop assistants, restaurant staff, cleaners and others whose employment has relied on the wealth generated in the markets.
Although the collapse of Lehman Brothers is not thought to be a direct risk to the average saver in the UK, it could make it even harder to secure a first-time mortgage.
We asked local experts how the loss of the US bank could hit the region?
RETAIL and business in Liverpool are continuing to buck the national downturn, according to bosses at Liverpool chamber of commerce and industry.
Newly-published figures for the early part of 2008 suggest there has been no major impact on employment in the city.
And chief executive officer Jack Stopforth said early sales figures from Liverpool One are encouraging despite the credit crunch.
"I think there are some factors peculiar to Liverpool which are helping enormously," he says. "All the new shops, restaurants and apartments which have opened in 2008 will still be there in 2009.
"But, at the same time, companies are hurting. There is no question about it. Investment plans and cash flows for companies are on a downward trend because of the unease caused by the crisis.
"The banks see the cause of the credit crunch in the property sector, and they are looking very critically at property development and businesses whose past borrowing have been based on property assets.
"We have seen the collapse of Vermont property in Merseyside and the current problems of Urban Splash.
"But, more generally, the impact on individual Merseyside people is relatively mild - unless they are first- time mortgage hunters."
THE high-profile downfall of Britain's third largest tour operator, XL, left thousands of holidaymakers in the lurch - some 75,000 of them while they were abroad.
Other travel firms finding it difficult to continue trading in the current economic climate include budget airline Zoom, and Italian airline Alitalia, which is on the verge of collapse.
The picture is not so bleak at Liverpool John Lennon airport, although the airport's general manager of corporate and community affairs, Robin Tudor, admitted it was "a challenging time".
"Yes, it is a difficult climate at present," says Robin. "But the good news is that our scheduled traffic for the year from January to the present date is up some three percent.
"Compared to the vast majority of airports nationally that is good. We are coping well. At the same time we have not got the Flyglobespan route to New York anymore and the Euromanx airline which operated to the Isle of Mann had to be stopped.
"We are under no illusions but our head is above water. Fortunately we have strong links with easy Jet and Ryanair, budget airlines who are well-positioned to ride this very difficult time out.
"It has not been as tough for these because they are in the low-cost market. The decline in the package tour market has been offset by people increasingly booking just flights with budget lines, then hotels online."
Mr Tudor says that although the credit crunch will lead to cautious spending, he does not foresee consumers abandoning holidays.
"Holidays are precious to a lot of people. Maybe they might tighten purse strings and not buy that wide-screen TV or new car but they will not give up their two weeks holiday abroad.
"Only a few weeks ago Ryanair announced some new routes from Liverpool."
THE timing of the down-turn is particularly cruel for Liverpool's previously under-revival construction industry.
Capital of Culture and NWDA investment ensured scores of major projects have been completed during the last four years, particularly the Liverpool One development.
But rocketing steel prices worldwide will inevitably slow the UK's, and Liverpool's, construction market.
Already, north-west property developer Urban Splash decided to slash jobs to cut costs. On Monday the firm - which is leading contractor for converting the former Littlewoods HQon Edge Lane into apartments and offices - announced it will have to cut its 280-strong workforce.
Some speculation suggested those cuts could leave half the jobs at risk.
The firm, also due to transform Lime Street's ABC cinema into a New York-style supper club, approached its banks 12 months ago to discuss refinancing but the credit crunch prompted an unfavourable response.
Urban Splash is the most high-profile but certainly not the only construction company in the region to have to cut costs.
Campaign for real ale (CAMRA) spokesman Tony Williams said the administration plight of Cains brewery is the most saddening effect to Liverpool breweries.
"The government should support small breweries more by allowing them to have tax differentials - paying less, and impose higher tax on supermarkets who sell alcohol very cheaply, sometimes at a loss.
"This is having a big effect on the pub industry and pubs are at the centre of many of our communities."
WALL STREET CRASH: Traders around the world panicked as Lehman's bank went under