Banks have been paring back lending for the past 12 months, and venture-capital money and equity issues have all but dried up. But the collapse of telecom giant WorldCom Inc., coming on the heels of a record number of corporate bankruptcies, threatens to throw the credit markets into a new tailspin. Institutional investors such as insurance and pension funds now face huge losses from $32 billion in WorldCom debt. That's on top of $40 million wiped off the value of WorldCom's equity this year as well as losses from Enron, Kmart, Global Crossing, and others. They swear they aren't going to get stuck again. And, because of the way credit markets now work, that could have a dramatic impact.
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