Thursday, January 14, 2010

Small Business: Customers First Please

We keep hearing from the President that banks have got to make credit available for small businesses. We keep hearing the banks say they've got the money to loan out. So what's the problem? It's fairly simple, small business doesn't need credit - they need customers first.

No one is buying. If the inventory already on the shelves isn't selling then it doesn't make much sense to take out loans to restock. Why is no one buying? Lack of jobs or more importantly lack of job security. Currently 20% of men ages 24 to 54 are out of work. That's unheard of. If it weren't for a substantial number of women in the workforce this would be a national crisis by any standard.

The New York Post's Charles Gasperino tells us how President Obama's agenda is routing the nascent recovery.

But owners of small businesses -- the usual engines of economic growth -- are still refusing to hire back workers as they normally do when the economy turns up from a sharp decline. Talk to them, and they'll gladly tell you why: Having weathered the recession, they now fear the administration will choke off the nascent recovery and increase their costs through higher taxes to pay for the myriad of programs President Obama has in store for us, including the hyper-expensive health-care overhaul. If the president wasn't so busy looking to score cheap political points when he met with the heads of the big banks last month, he'd have listened to their warnings on this very issue.

Watch out next year when the Bush tax cuts expire any semblance of a sustained recovery will disappear.

Again FTA:
That's what stock analyst Peter Sidoti is discovering. Sidoti's firm supplies research on so-called small-cap companies, ones the stock market values at $300 million to $2 billion.

With typical payrolls of 100 to 2,000 employees, these are the very definition of the "small businesses" that provide many if not most of the nation's new jobs.
Of the 600 companies Sidoti and his team cover, "There hasn't been one bankruptcy," he tells me. How did they survive the recession? By cutting costs and hoarding cash, not expanding their business and hiring more people, even as the economy now is starting to recover.

Knock Knock pudding head, how many ways do they have to explain it? Until the uncertainty of what this Administration and this Congress is doing gets settled we won't see a return of a robust domestic economy. If people think China can float the global economy by themselves they have another thing coming...