What Is Obama Going To Do?
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According to the National Federation of Independent Business, the ”optimism index” plunged to the second lowest level of the last 35-years. The NFIB Chief Economist, William Dundelberg, stated in the accompanying report: “Business owners are coping with slow sales by liquidating inventory, deferring capital investments and slashing staff.” The report confirmed that the average number of employees cut in the past three months is the largest in the survey’s history.
The point is, the far right wants to bail out big businesses that have operated irrationally and unprofitably. The far left wants to boost various welfare programs to those who were foolish enough to borrow what they couldn’t afford or could repay. What about those of us who are caught in the middle and paying for both sides? Where will it stop? Everyone talks about small business being the backbone of the economy, but no one is doing anything about it.
Statistically, depending on whose statistics you follow, small businesses in America produce 72% of the jobs. That’s including the proprietors as employees themselves. If this is the case, we’re destroying the foundation of our economy. Each of you has to ask the question; how am I interwoven with small business? Are you employed by a small business? Sell merchandise do small businesses? Rent space to small businesses? Service small business’ needs? There is a whole host of revenue producing activities encompassing small business. If we let small business go by the wayside, we all go with it.
I personally know optometrists, dentists, chiropractors and a plethora of other small business owners that can no longer get loans against their receivables to operate. Something that has been a standard practice for decades. I’m a small businessman in the field of transportation and I have a small business loan with Bank of America for $185,000. The loan needs to be restructured in order to stay in business, troublesome I know. There was no problem two years ago originating the loan for $243,000, but now that I have given them (the banks) my tax dollars, via the government’s TARP program, I can’t even get anyone from Bank of America to return my calls. I have reduced my staff dramatically in an effort to ”cope” with the problem, but if something doesn’t happen soon, I assure you, there will be many more people on the dole.
I own a home with no mortgage and have tried to secure a loan against it to support my business. Guess what? I can’t get it done. Bank of America, once again, has drug their feet to the point of no return. They are charging higher fees, which I understand since they have to make up for their losses, but they aren’t coming through with the funds. They most assuredly lend to those who can’t afford their mortgages, and to those who want new homes. From what the bank’s executives told me, those are the “government’s guidelines” and they are being followed to the letter. They’re lending to the same ones I lay off. The one’s I can’t afford to employ because I can’t get my business loan restructured. Or secure a loan against my home. I wonder, what is Bank of America is going to do when those they refinance get laid off and can’t afford to repay the new loan? Hmmm, that scenario sounds sane and logical to me.
Enough of my rant about Bank of America. Once again, the point is, what can we do about it? Write our Congressman, our President. Tell them what they are doing isn’t working and if they don’t change their course we’re smart enough to know that we’re all going down. If I go down, a dozen more go with me. If you go down, I’m sure you’re taking some with you as well. According to this report and a myriad of others, that’s exactly what’s happening. Right now, with Obama’s agenda, there’s no end in sight.
Comment by TALF on 14 March 2009:
Obama will keep on spending everywhere he can and as long as he can, to advance his ideological agenda first while providing a little for infrastructure, hoping to keep things from getting worse in the short run all the while promising a quick return to fiscal responsibility when the economy stabilizes.
IF or when we get to that point, he would lose his popularity fast among his working constituents because he would need to create at least an old fashioned Fed induced recession because the Treasury and the Fed will be raising interests rates by taking money back out of the system. They will have to do that to try to slow down re-emergent inflation by “unwinding the extraordinary measures that were necessary”. That will be just as the velocity of money starts to increase as money flows in the now defunct secondary market, which is the objective of TALF.
That secondary trading of various Asset Backed Securities, a market of dozens of acroynyms probably provided half of all lending in the recent years, ironically a scenario many dreamsof returning to. Imagine, dreaming of returning to the Bush years. The only happy ones, if we get there, will be Obama’s intellectual constituents who will have locked in government funding for their University jobs, their lobbying jobs for green/health care industries, their foundations, their law firms, liberal public policy institutes and of course more regulators.
The regulation will cost more but will not be better because this regulation will be even more politicized in the future, the original curse.