Oregon Public Broadcasting

The financial rescue package signed into law last Friday assures help not only to Wall Street, but to regular people trying to buy homes and send kids to college. 

It's meant to loosen up credit.  Kristian Foden-Vencil looked into the effect the market turmoil is having on businesses. He found many local executives who don't see a turn around coming any time soon.

Portland is known as a city of readers. And even tourists often have Powell's Books on their list of places to visit.

The store's owner and founder, Michael Powell, says he can't overstate the importance of access to cheap, easy credit.

Michael Powell: "Anytime you can't have access to the funds that are necessary to move your business forward, you make decisions about what to spend your available resources on."

Number one on his list is meeting payroll every month. Second comes inventory: you can't run a bookstore without books.

But he says, if he hasn't got the money to do those things he has to borrow from the bank. And the credit squeeze is making it exorbitantly expensive to do that.

So a company that doesn't have a decent sum of cash sitting around, either has to cut staff or reduce inventory.

Medford Fabrication in Southern Oregon recently had to lay people off because orders for their big steel building parts started to decline.

CEO Bill Thorndike thinks that happened because the credit needed to build those buildings, has frozen up.

Earlier this year Michael Powell was considering expanding one of  his stores. He's pleased at the rescue package signed into law last week, but he says, he's not about to start building any time soon.

Michael Powell: "I will wait to read in the papers that these credit markets are working, I'll wait to read until the bank failures have stopped and that people are expressing confidence in the future...until my customers tell me that they're in the mood to buy books, I'm not going to be in the mood to make major investments in capital."

The trouble is, that concern -- and even fear -- is contagious. ItÕs a vicious cycle.

Debbie Kitchin runs a nine-employee business -- remodeling homes in Portland. She says her company was also thinking of expanding a few months ago. But she kept hearing a familiar story.

Debbie Kitchin: "People were contemplating some work on their home, They decided to pull back and just wait and see what's going to happen with the economy. They were nervous about spending money there's a lot of fear and uncertainty and I think that's impacting peoples' decisions, both customers and small companies on how they want to respond to the current situation."

She says each company that decides not to expand; each family that decides to hold onto its cash instead of spend; contributes to a cascading effect, which all conspires to slow the economy.

But Malia Wasson, the president of U.S. Bank in Oregon, says there is hope. 

Malia Wasson: "Oregon is very strong. We as a state have not been overbuilt. We have not had the housing issue that other states have had. And our companies fundamentally are stronger."

She may be right. She may be wrong.

The next few months should reveal who will be in charge for a while:  the bulls or the bears.