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: 03/02/09

Economic News Roundup

Nationalization of Citigroup and Bank of America took center stage this week.  Shares of Citigroup (NYSE:C) fell below $2.00 a share on Friday and were trading below $1.50 in the pre-market this morning.  Economists Nouriel Rubini and Paul Krugman advocated temporary nationalization of the banks.  Former Federal Reserve Chairman Al Greenspan also suggested that a temporary nationalization of the banking sector might be appropriate.

Speaking to the FT ahead of a speech to the Economic Club of New York on Tuesday, Mr Greenspan said that “in some cases, the least bad solution is for the government to take temporary control” of troubled banks either through the Federal Deposit Insurance Corporation or some other mechanism.

Current Federal Reserve Chair, Ben Bernanke however rejected nationalization as an option, favoring taking substantial ownership in the companies through common stock purchases and other debt instruments instead.  Executing upon this strategy, the United States Government took a 38% stake in Citigroup by converting its preferred shares into commons shares.  The deterioriate in Citigroups shares since the converstion to common stock led to a mult-billion dollar loss on the investment overnight.

Small Business Week In Review: 02/23/09

Economic News Roundup

Paul Volcker, former Federal Reserve Chairman, gave a talk on the economy at Columbia University.  Instead of providing a set of links & associated commentary for this weeks addition of the Small Business Week In Review, I suggest our readers click on the image below to watch the talk.

(image from the Associated Press)

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