Circuit City was the latest bankruptcy domino to fall last week. Andrew Snyder says more big-name retailers could soon follow. But this is just the economy working as it should. The weak fail and the strong just get stronger. Andrew says the fall of Circuit City is great news for Best Buy (NYSE:BBY), who will become clear market leader once this crisis is over.

This from Today’s Financial News:

They are falling like dominoes these days. Without help from Uncle Sam, many of the nation’s top businesses do not stand a chance. They are taking investors with them.

When Circuit City ( filed Chapter 11 bankruptcy in November, investors believed there was an opportunity to restructure. They thought if they could find temporary protection from their creditors, holiday sales just might bring their company back from the brink of total collapse.

It didn’t happen.

Holiday sales across the board turned out to be as dismal as expected and today, Circuit City is paying the price. It is liquidating its assets and disappearing for good.

A short circuit blows the fuse

After negotiations between two potential buyers, creditors and what was once the second-largest specialty electronics retailer in the country failed, 30,000 employees are left without a job and four liquidation companies are charged with unloading the company’s inventory and assets spread throughout the 567 stores that remain open. The company already announced closures of nearly 160 of its outlets.

The New Year is just over two weeks old and the list of companies that will not see the year through is growing longer by the day. Earlier this week,  and Gottschalk’s entered bankruptcy protection.

Who is next is anybody’s guess.

I would keep a close eye on Bon-Ton Stores (NASDAQ:BNT). Since its headquarters is about four miles from my front door, I will let you share my front-row seat. Another company to watch is Borders (NYSE:BGP). Its debt load is starting to shake the company’s foundation. A lot of analysts are wondering how long it can take the stress.

What does this all mean? How are investors to react?

In the short-term, not a whole lot. You would have had to been living in an underground bunker to have not seen these headlines coming. The long-term outlook is where the big money will be made.

Over the last five years, “Big Box” retailers have been popping up one after the other, sometimes within a few miles of one another. In my home town, for instance, a new Best Buy (NYSE:BBY) was literally built right behind a Circuit City store, which was right beside an older family-owned electronics shop.

What this mean (or exemplifies, really) is the fundamental rules of economics and business are still at work, no matter how hard Washington tries to eradicate them. The strongest will pounce on the weaklings and dominate the marketplace.

Mother Economy will take care of business

A bubbly economy may have allowed the weak to thrive for a few years, but when things got tough, their lack of strength became obvious and now they are dropping one after the other.

For the companies that survive, today’s news is fantastic. Imagine what power Best Buy will have with one of its major competitors out of its way. Sure, the next few quarters are going to reek of decaying corpses as Circuit City’s inventory floods the market, but after that, I would love to see the competitor that can knock Best Buy off of its leadership perch. There is nobody in sight.

No matter how hard we try to force the rules of economics in our favor, Mother Economy always wins. She told us months ago things were getting too big. Instead of forcing consolidation ourselves, we waited until the economy did it the natural and most painful way. Now we are paying the price.

The situation will get better and the pendulum will swing in the opposite direction. They always do. When it happens, the survivors of this retail death march will be sitting atop a big pile of profits. Make sure you are one of them.

Source: Mother Economy wins: Another one bites the dust