Stormy Weather

It is still too early to gauge the exact impact of the world-wide financial meltdown on the laboratory sector. What has emerged thus far is a mixed picture based on industry and type of laboratory.

Written byBernard B. Tulsi
| 7 min read
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What Does the Economic Downturn Mean to Your Lab?

Even before the precipitous meltdown in global economic markets earlier this month, laboratories affiliated with the U.S. federal government, academic institutions, a range of industries and non-profit entities were battling a constellation of woes inextricably linked to an economy that was losing steam.

Now, in the overall economy, the staggering financial implosion has created a veritable crisis in confidence and has choked off credit, the lifeblood of modern commerce. Largely attributed to an inadequate regulatory regimen, this downturn, and the excesses that led up to it, has roots that can be traced back to the once booming housing market, which fueled a remarkable period of consumer spending as the major economic growth engine.

But the housing boom itself was built on the decaying foundation of subprime lending to eager homeowners, many of whom would eventually prove not to have the wherewithal to repay the loans on their pricey homes. The result has been record increases in home foreclosures and a mounting inventory of toxic debts on the books of banks. This has devastated the credit markets and undermined confidence despite aliant government efforts globally to provide respite with several huge, multi-pronged bailouts.

Even so, the financial markets are far from calmed. Their uncertainties are on display in the erratic daily gyrations on any major stock market index. Former Federal Reserve Chairman Alan Greenspan told the House Oversight and Reform Committee recently, “We are in the midst of a once-in-a-century credit tsunami.” He expressed shock that the financial system had broken down to these levels and conceded that he was mistaken in assuming that lenders would more capably safeguard their finances than government-appointed regulators. “I still do not understand exactly how it happened,” Greenspan said.

It is still too early to gauge the extent of the impact of the worldwide financial meltdown on the fortunes of the laboratory sector. What has emerged thus far is a mixed picture based on industry and type of laboratory, which may in fact have been created at a time when the economy was already showing signs of slowing—the beginning of this year or even earlier.

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