Small Business Being Strangled; Imagine That?

I spent a few minutes today explaining to my 9 year old the Prince John School of  Economics currently being employed in our country right now.  It is called taking from the producers and giving to the consumers…in this case, the big banks, etc.  We all know the story because it has been going WAY TOO LONG.   We have given trillions of our childrens’, grandchildrens’, and great-grandchildrens’ tax liability to this government to give to the sharks on Wall Street and foreign banks, and to the car companies and politicians; in hopes that the blackmail to the banks would easy the credit crunch.  Has it?  BBBWWWAAAHHHHHHHH!!!!!!!!!!!!!!!!!!!!!!!!!!!!!  Are you freakin’ kidding me?  We are up to 98 failed banks since last Friday, the FDIC is broke, and I joined many of the newly unemployed in September during the green shoot recovery while Bernanke continues to state that the recession is over!  The recession is still in full swing since small businesses and small business start ups are continuing to be strangled by this administration and congress.

But I digress…The numbers do not lie.

U.S. small business loans in arrears rise: PayNet

CHICAGO (Reuters) – Delinquencies among small and medium-sized U.S. businesses on the loans, leases and lines of credit they use to finance investment in capital equipment rose in August, PayNet Inc reported on Thursday.

Accounts in moderate delinquency, or those behind by 30 days or more, rose to 4.40 percent in August from 4.36 percent in July, said PayNet, which provides risk-management tools to the commercial lending industry.

Accounts 90 days or more behind in payment, or in severe delinquency, improved modestly, slipping to 1.51 percent in August from 1.52 percent in July. But those that were 180 days behind, or considered to be in default, rose to 0.81 percent in August from 0.78 percent in July.

The report is the latest to suggest the U.S. economy, which slipped into recession in December 2007, is experiencing a patchy rebound.

“The recovery that seems to be under way for large corporations and the stock market and certain parts of the economy doesn’t seem to have arrived yet for these companies,” said Bill Phelan, president and founder of Skokie, Illinois-based PayNet.

Separately, PayNet said its small business lending index, which had risen in June and July, fell at an annual rate of 20 percent in August. (emphasis mine)

“It’s too early to call it a trend,” Phelan said. “But it’s a little disheartening because this kind of activity is a leading indicator for gross domestic product.(emphasis mine)

When are the tax cuts on the middle class and small business going to be implemented to get this economy back on it’s feet?

With Obama, Harry, Nancy, and the rest of the aristocracy in Washington, D.C. at the trough; I’m not holding my breath.

21 thoughts on “Small Business Being Strangled; Imagine That?”

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  5. sorry to hear about the job loss….

    those that are trying to “fix” the economy have no idea how to do it. they have no idea what the small business owners need to get the economy moving again. none of them have ever had to meet a payroll or keep a business afloat by robbing peter to pay paul.

    all of the bailouts went to the “supposed experts” in the financial fields. they took risks, which is what one does in a capitalistic system. the only problem is that when their “risks” didn’t succeed, they didn’t lose out….they turned to the “friendly taxpayer atm” to save themselves…..

    so much of the bailout money went overseas to pay off their obligations to foreign banks. we have also sent $$$$ to the imf to prop it up. when will the feds realize their job is to protect the rights of the American citizen, not save the world.

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  7. The clowns in Washington D.C. are not trying to fix anything IMHO. They are trying to put a patch on the problem so that they can point to some slight improvement here and there and claim that things are all better now.

    Except for that pesky unemployment thing. And the problems that small businesses are having. And the fact that those of us that own homes have watched their value plummet. And except for a host of problems that I personally, am not qualified or educated enough in that area to understand.

    I do know that when my nose tells me something stinks, I believe my nose, not some lying pol telling me nothing to smell here folks, move along, move along.

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  10. DT- you asked “When are the tax cuts on the middle class and small business going to be implemented to get this economy back on it’s feet?” The answer is unfortunately, no time soon. In fact it is quite the opposite. Not only are “THEY” not going to cut taxes, THEY are going to raise them, and tax us for health care, and tax us for carbon emissions, and tax us for “value added taxes”, even though there seems to be no value in the Federal Reserve Notes we will have to pay those taxes with. The future doesn’t look too bright kids, not as long as the clowns in DC have the control of the tax implementation powers.

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  12. As a small business owner myself, I totally attest to this strangulation. Small business can’t even afford to pay taxes any more. This is by design–Obama’s attack on production and the middle class.

    Thanks for this analysis

  13. I think a lot of small business owners are in limbo at the moment because they don’t know what the eventual outcome (specific impact on them) is going to be with all the cap-n-tax, health care mandates, expiration of the Bush tax cuts, etc.

    As a small business owner, who in their right mind is going to hire with all that uncertainty and potential for new expenses? I think many small businesses are going to “Go Galt” here before long. We are already seeing many people “going Galt” by retiring earlier… why should they continue to work and have their income taken from them?

  14. Dug – it’s much more than limbo, the whole system has frozen. Nobody is buying goods and services and small businesses are being choked. My former boss had 35 employees 2 years ago – now he has 3 because he can no longer afford to have more than that because he no longer is getting the contracts. It’s much bigger than just choosing not to hire.

  15. Diamond… well, it’s kind of a chicken and egg, self-perpetuating kind of thing. People aren’t buying because a) they do not have jobs that allow them to buy, or b) the ones that do have jobs are either afraid to spend in fear they may lose their job soon and/or they are maxed out.

    Banks are not doing as much short-term lending that typically finances payroll and provides needed short-term working capital, etc. and the government is piling on more expenses. With small business, cash flow is King. Without it, they start shutting down. Until small business is given both the liquidity and the tax incentives that allow them to operate profitably and produce hiring, it’s only going to get worse.

    The choosing not to hire and releasing people they have is a symptom, not the cause. Small business is gone into survival mode. I’m not surprised at your former employer’s stats… it’s pretty typical of what I am seeing here, too.

    But this current crop of idiots we have in Washington would not understand the small business model and entrepreneurship if it came and bit them in the butt.

  16. Diamond Tiger, my daughter, a real estate appraiser, lives in Captain Cook, HI. She is raising three of her grandchildren and feels very alone as a conservative in a very Liberal state. She would love to talk with you. I will try to get her signed into ASAMOM.ORG. We had an appraisal business in Kailua-Kona for many years and Christy, my daughter is still in the business. Because Hawaii gets hit economically after the mainland, we are watching closely.

  17. Suzanne – tell your daughter to come on down! As for hawaii getting hit after the mainland, I would respectfully have to disagree; I got my hours cut the first time 3 years ago and have been watching the slow slide into economic depression since that time. I always thought it happened here first and lasted longer.

  18. Diamond Tiger – I know what you mean, my daughter in law works for the Co. Planning Dept. and is worried that she may be one of the first ones cut. She has been taking tests and getting on every list of jobs the Co. of HI has.

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  20. While I totally agree that small business is taking a huge hit (used to be self-employed and I know what a mess that is), I think we’re ignoring another large indicator; big business. Anyone that is still employed by a company pulling in over #250,000 a year can tell you that things are not pretty. The employees that are left are being asked to do the job that 2 or 3 people used to do; they are not being given the tools needed to do their jobs; they are now expected to work between 60-80 hours per week with no overtime; they are being asked to do things that are borderline unethical (if not actually over that line); vacations are rarely taken because there’s an unwritten rule that your job may not be there when you get back; got a kid sick at home? better call Grandma ’cause you’re not staying away from the office – and what is their reward for all this extra pressure and stress?

    You get to keep your stinkin’, miserable job! And you’d best be kissing the boss’ ass and act thankful to have it! Because as the Boss will be happy to tell you on a daily basis – there are 500 people sending in resumes every week for your job.

    And contrary to what dim CFR-bulbs like Janeanne Garofalo think, this is why Americans are going to Tea Parties. This is why the sleeping giant is awakening. Of course the reason the Hollywood and Washington, D.C. elite can’t see this is because they don’t have to work for a living and never will as long as the current Oligarchy remains in power (and I ain’t talking about Barack)!

    One by one Americans are joining the Tea Party movement as they slowly come to the realization that the pretty elitist picture that Hollywood and the media paint of the American Dream is something they can no longer hope to achieve, nor can they offer it to their children or grandchildren!

  21. Diamond Tiger – I know what you mean, my daughter in law works for the Co. Planning Dept. and is worried that she may be one of the first ones cut. She has been taking tests and getting on every list of jobs the Co. of HI has.

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