Lehman Collapse Felt from Wall St. to Peachtree St.

The bankruptcy of Lehman Brothers could further hurt Georgia's woeful economy.

Emily Sanders heads Norcross based Sanders Financial Management, and she calls the collapse a "crisis."

Sanders says ”The structure of the financial system in the United States has been shaken to the core. And things won't go back to where they were previously.”

Sanders believes the collapse-along with the sale of Merrill Lynch and liquidity problems with AIG-could hurt Georgia because the state is heavily dependent on the real estate sector. Several reports show lending has dipped, and the news from Wall Street could keep credit and new loans from being issued, although that could change if the Fed lowers interest rates.

Recent revenue reports from the state show new car and home sales have fallen dramatically the past five months. Georgia state revenues are short some one hundred eighty million dollars this year. State officials are counting on an economic pick up to lighten coming budget cuts.

However, with credit and liquidity troubles associated with this collapse, Alan Essig says it’s “almost impossible” to see Georgia pulling out of the current economic downturn without larger cuts to services. He heads the Georgia Budget and Policy Institute, and warns lawmakers that a special session is needed by the end of the month to address the growing fiscal problems.

Sanders warns even more job losses could come as major companies try to balance their budgets to compensate for losses related to the bankruptcy.

Georgia’s current unemployment rate of 6.2 percent is currently above the national average.