Loss of Trust and the Impact on Small Business
Saturday, October 4th, 2008 Posted in Management, economy | No Comments »Markets are tumbling. Numbers are crumbling. And everybody is running for the exits thanks to a whopper of an economic crisis that’s gone global from its U.S. birthplace.The complexities of the problem are mind-boggling even to experienced, studied economists so, understanding the minutia of this economic tsunami is far beyond my skill set. Even the highest level officials in Washington admit that they don’t know how to solve the problem.
When asked if this Congressional buy-out of garbage paper generated by the likes of Goldman, AIG, Fannie and Freddie would solve the problem, not even the U.S. Secretary of the Treasury knows. He was asked if this is “the last wrench in the tool box” by Senator Chris Dodd (D,CT), head of the Congressional Subcommittee on Banking. The Treasury Secretary replied that, “Yes, it is the last wrench.” Dodd, mildly shocked, asked, “Well, what if it doesn’t work?”
The Treasury Secretary of the U.S. stated simply, “It has to work.” Hardly an answer that fills me with the warm fuzzies. If the U.S. Secretary of the Treasury doesn’t have a Plan B, C, D right on down the line, I’m buying gold and burying it. the economic world is on the verge of collapse. Or is it?
Small Businesses Feeling the Credit Freeze
Just last week I ran across an article in the New York Times that exquisitely describes the problem, not in terms of numbers, predatory lending and failed mega-lenders like Bear-Sterns, AIG, Fannie Mae and Freddie Mac – all non-commercial lenders that have been pumping garbage paper into the sub-prime market. Why?
One word: greed. The Times piece explains the dual nature of the current “credit crunch” – the genesis of this domino effect we’re seeing in almost every market sector on a global scale. This isn’t a liquidity problem, even though the U.S. Congress is ready to pump up the world economy with an infusion of USD$750 billion that will now be loaded on to the backs of U.S. taxpayers.
The problem is one of perception – the perception of trust.
Read the whole article here
