Obama and Geithner Announce Plan to Stimulate Small Business

Yesterday was a big one for the American small business community.  Facing declining sales and a tightening credit market, small business owners have struggled since Wall Street crashed in October.  While the Recovery Act and new federal budget provided some help to small business owners, they ultimately left both small business loan lenders and borrowers wanting more.

Realizing the importance small businesses play in the American economy - they account for up to 70% of the new jobs and are a vital source of market innovation - Obama and Geithner announced a big plan to stimulate the small business community.  What follows is an overview of the plan and how each action point facilitates small business stimulation.

Small Business Week in Review: 03/16/09

Economic News Roundup

AIG made considerable noise this past week.  The first point of content came from the company’s disclouse that it made mult-million dollar bonus payments to executives in the company’s financial products unit, the very until that caused the firm’s insolvency.  Angered and dissapointed by the news, The Huffington Post writes:

Recall that these bonuses are going to executives at AIG’s financial products division — the very unit that wrote trillions of dollars of “credit-default-swaps” that insured investors against defaults on bonds backed by sub-prime mortgages. The problem was that AIG used a loophole in the law to argue that the “credit-default-swaps” were not really insurance, so they weren’t required to abide by insurance laws which would have assured that they had the capital on hand to pay claims when defaults actually occurred. That caused AIG to collapse and helped precipitate the global financial crisis. Seven of these executives get from $3 to $6.5 million. So much for responsibility.

Small Business Week in Review: 03/09/09

Economic News Roundup

ADP Unemployment figures for February came in worse than expected at -697,000 versus the consensus figure of 630,000.  The numbers for Janaury were also revised downward from -522,000 to -614,000.  Job loss continues to accelerate.   Stories of job applicants were both disheartening and diconcerting.  A public school in Ohio received 700 applications for 1 janitorial position.

Evidence of the slumping economy is stacking up at an Ohio school which has nearly 700 applications for one open janitorial job…

…Superintendent John Richard says many applicants are laid-off workers with heart-wrenching stories about the tough economic times.

Forty-nine-year-old Donna Croston says she applied after losing jobs at two nearby factories that closed.

Small Business Week In Review: 02/16/09

Economic News Roundup

I absolutely hate being the harbinger of doom and gloom, but events in the corporate sector warrant concern.  Several large firms have started paring business relationships with companies deemed to be unstable. Yves at Naked Capitalism writes

One sign that conditions are worsening is that major companies are cutting their exposures to business partners they deem to be in peril. This is a corporate version of the paradox of thrift. While this activity may seem laudable as far as each actor is concerned, it will have the effect of pushing some enterprises over the edge. And those failures feed the downspiral of activity and psychology.

Merrill Lynch: “We are likely enduring a depression today”

There’s not a lot of good news coming out these days regarding the economy.  Even President Obama’s press conference yesterday was marked by a profound sense of danger.  And while President Obama isn’t yet using the big bad D-word, others, including investment firm giant Merrill Lynch, are: in an economic commentary released 26 Jan 2009, Merrill Lynch summed up the current economic environment with the title ‘Some Inconvenient Truths’.  Given the introduction, you’ve probably already concluded that the news isn’t good.  Yet, we should confront what Merrill Lynch has learned to properly plan for what lay ahead.

In short, the commentary can be broken down into the following talking points:

1. Current events will develop into a long depression marked by deflation
2. The spending era is over - households will become serious savers of cash
3. The global economy will rebalance and the US is not well positioned to lead the post-depression economy

Let’s break this down and look at a few specifics from the report.

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