tag:blogger.com,1999:blog-3002038439593481614.post993979275362642598..comments2014-03-24T08:38:41.241-05:00Comments on OFI/OFO: BailoutArticulateDadhttp://www.blogger.com/profile/08407769773596623808noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-3002038439593481614.post-14780828150091889352008-09-29T21:24:00.000-05:002008-09-29T21:24:00.000-05:00Well, I've got a little bit of experience as a sma...Well, I've got a little bit of experience as a small business. In fact, I've worked almost entirely for myself or under contract for most of my life.<BR/><BR/>When I had a landscaping business in the early 1990s (that paid for my undergraduate studies), it started with a $60 used lawnmower in the back of a 1982 Honda Prelude, and ended (when I went to graduate school) with 6 part-time employees, a brand new Ford F-150, and some $10k worth of gardening equipment and supplies. I took the truck under lease, and bought a $3500 walk-behind mower with credit, that was paid off in under a year. Otherwise, I spent the money I had already made.<BR/><BR/>The point is: businesses should not routinely need to borrow money to make payroll or pay their bills. Now, there are some needs, like building inventory for a retail business, which require a large outlay of cash, which a small business often lacks. But, if they have a proven track record, they ought to either qualify for a loan (here is a place where government intervention makes sense) or credit from their suppliers. Tightening of access in this arena makes it harder to start or run a small business, but not impossible. Frankly, too many businesses fail in the first two years anyhow. Maybe this would simply cull out the weakest before they start.<BR/><BR/>But the bailout of lenders by buying up bad debts from the past (rather than simply insuring future access to credit) doesn't make any sense. If the government really has $700 billion to spend, that'd make a handsome reserve for providing credit to small businesses. Think about it. This far <B>FAR</B> exceeds government set asides, grants and contracts for small businesses. If that's really the motivation behind present actions, then why not attack that issue head-on. It'd be like direct student loans. They just simply make sense. They bypass costly and ineffective handouts to intermediaries, and they have strong potential to actually make the government money while doing a good service to society.<BR/><BR/>Why prop up confidence in the irresponsible folks who got us into this mess in the first place? Are they really worthy of our trust that they'll suddenly have sense about how to properly manage loans? I don't think so. It's time for some fresh ideas, and some new blood. It's time for change.<BR/><BR/>And one of the first places to change, is the assumption that a healthy economy is based on consumer spending. It's simplistic, and wrong. Spending does not create wealth. Wealth is created by innovation and production. Why is Wal-Mart the largest retailer in the world? Because society has valued consumer spending, and we've put a priority on price, regardless of the impact on quality (or quality of life).ArticulateDadhttps://www.blogger.com/profile/08407769773596623808noreply@blogger.comtag:blogger.com,1999:blog-3002038439593481614.post-12449761449252904512008-09-29T20:40:00.000-05:002008-09-29T20:40:00.000-05:00There's also the issue that if businesses can't bo...There's also the issue that if businesses can't borrow money, then they can't pay their bills, then they need to reduce costs, and labor is usually the first thing to go. So, you are right, a downturn is what is needed to "correct" the market, but as the market is correcting, it will mean hard times for many US workers who will be laid off as the business figures out how to operate in the "new", more conservative, economy.Anonymousnoreply@blogger.com