As the slump in consumer spending crushes one retailer after another, Circuit City has been widely considered the next victim as its liquidity position worsens.

Scrambling to avoid bankruptcy, the electronics chain has announced that it will close 155 stores in the United States and "aggressively" renegotiate leases on some of the remaining 566 stores with the aim of lowering rents. The closings mean that it will cut its workforce by 17 percent.

The chain is buffeted not only by a weak economy but also by increased competition in electronics from Wal-Mart and Best Buy.

"Since late September, unprecedented events have occurred in the financial and consumer markets causing macroeconomic trends to worsen sharply," said James Marcum, the chief executive of Circuit City. "The weakened environment has resulted in a slowdown of consumer spending, further impacting our business, as well as the business of our vendors. The combination of these trends has strained severely our working capital and liquidity, and so we are making a number of difficult but necessary decisions to address the company's financial situation as quickly as possible."

Compounding the chain's liquidity problems is its inability to collect a tax refund of $80 million from the federal government. In its September conference call, the company said "an unexpected and frankly disappointing administrative issue" was delaying the refund.

It's strange that at a time when the federal government is handing out billions of dollars to other industries, it may be dragging its heels in returning millions of dollars to another troubled business.