Small business is crucial to the American economy. These businesses have helped kick start our economy after the past several recessions. So why is this not taking place now? What has affected the make-up of our economic machine? It could be many reasons – the recent scandal in the mortgage industry with foreclosures is now leading the way to a apparent downfall, one that could send the whole economy reeling again to the likes of what we witnessed in 2008. Also contributing could be all the government tinkering over the past decade and a half. It is quite possible and very apparent that we simply broke it. We allowed greed to let the government make decisions that essentially broke our capitalistic economic machine. A machine that had run well for us over the past hundred years or so.
Several years ago when so many businesses – large and small – were making money like gangbusters, we all got greedy. Housing prices were skyrocketing, people were spending freely and everyone was buying things they really could not afford trading away a future. Credit was handed out like free candy at a record breaking pace. People were buying homes and getting loans on things they could not afford and should never have been able to obtain. Homes that really should have been worth about $200,000 were now selling for $350,000 or more. Interest rates were kept artificially low and so even more credit was handed out. Hell – money was being thrown around so much some people were really starting to believe that money was growing on trees. Everyone was getting credit, credit for everything they had dreamed about. If someone didn’t qualify, the banks created new ways for them to be able to get credit. We allowed our government and corporations to break the machine – we broke the machine!
Then when everything came crashing down – no one was spared. We all in some way contributed to the mess because we allowed our government and ourselves to fail. When the machine broke this time, there were not any spare parts to fix it. There was no way to put a band aid on this. People lost their homes – many who should have never owned them in the first place – people lost their possessions, businesses began to fail due to lost sales, mismanagement and bad loans and so many people lost their jobs – jobs that will take many years to recover. What were we all thinking? We listened to a government tell us things were fine, they said inflation was in check (that was minus food and gas, two items that skyrocketed in this timeframe). They said look – People can buy overpriced homes and cars and get credit for them.
Think about this now – how can family of four, making about $70,000 per year total income afford a $400,000 home, two car payments and all the other associated family expenses? This was happening all across America. Back in 1999, I bought a home in Las Vegas for $108,000m sold it in 2002 for $149,000 and as I followed is it sold again in 2005 for $350,000 – at one time the value had shot up to $400,000. Then what happens – the machine starts to make rumbling sounds and finally breaks down – crashes! That home now has a value of about $100,000 – 11 years later it is worth less than what is was brand new. It should have never been worth $350,000, Las Vegas’ economic make-up centered on tourism and the casinos, the city could not sustain that. But we let our government tell us different. We did not pay attention to what the politicians we elected were doing because we were greedy. We trusted the people we elected – yet we did not pay attention to what they were doing once they got in office.
So why is small business not pulling us out of this mess this time? It is because we broke the machine, we abused it, we did not take care of it, we allowed others to borrow it, tinker with it and they abused it. We messed it up pretty good. Now – we really need to face the facts – we can no longer fix it, we don’t have the right parts available. We need to build a new machine and learn to take care of it, put it on a maintenance schedule to keep it running smoothly.
There are so many people out of work, unemployment continues to hover around 10%. No one has cash to spend. We were all dependent on credit. People out of work, pay raises are slow to come or still non existent, hundreds of thousands lost their homes and jobs and businesses. Now we are also looking at a Mortgage Industry that has foreclosures on hold and many possible lawsuits lining up due to the crisis. Small businesses thrived on people being able to spend. Small business is now stuck in a rut along with many larger businesses.
President Obama has come up with many short term ideas but unfortunately his administration and the congress as a whole can not come up with the necessary solutions to get the economic machine back on track. They are unwilling to face the fact that we as a whole actually broke it. The government broke it, corporate America really broke it and we as Americans broke it. The bail out money given to all these companies did not help – the corporations used it to clear the red ink from their books and invest it in higher yielding shares and reaped the profits. With the profits, they did not invest it in hiring but are holding it within. Sure, now some of these corporations are paying back the money but we as Americans are the losers in this process. They borrowed our money, they made profits off it and they keep the rewards of those profits. Tell me – how did this help the economy? It didn’t not one bit, unemployment rose and is still hovering near 10%.
I still applaud Ford Motor Company. They did not take any bailout money, they went back and figure out what they needed to do and turned things around and made a profit at doing it the right way. Sure car sales went up at some of the other car manufacturers once the cash for clunkers was in place, but as soon as it expired, sales slowed again. The same happened in the housing industry, once the incentives were removed housing sales slumped. To top it off the government and the economist wondered why this happened – are you sure we have the right people running things?
The process is a simple one, the answer is not so simple. To keep business growing and to sustain that growth, people need to buy your product, your sales have to keep growing. At issue is the fact that so many people are out of work and so many people have less money that no one is spending. It used to be we spent more than we saved in this country – now we are saving more and there is less to spend. Credit is harder to come by and people are buying more with cash. All this contributes to lower sales. This all should be common sense to our government officials – we elected them in part because we believed they had some common sense. So to tackle this whole issue we all have to start with common sense. We first have to face the fact – We Broke the Machine.
Now – we faced that fact. Unfortunately so many of our elected officials have not. We have to face the fact that this will be a long process – not good news but it is a fact we need to face. So far our elected officials have not faced that fact. We also need to face the fact that we need to build a new economic machine – one we all agree we will take care of and nurture – many of our elected officials refuse to want to do this.
Some things are starting to turn around, but not enough to help us out of this mess. Several banks are still failing, some have seen the errors of their ways and have cut back on issuing credit, making it much harder to qualify. This is making it harder on many small businesses who rely on short term loans to stay afloat and other loans to expand. So many of these businesses no longer can qualify. They no longer have the sales to generate enough capital to show the banks they are able to repay the loans.
A big key to this whole process is finding a solution that will lead to middle class Americans increasing their spending. A substantial part of the process will also involve spending with hard cash and much less credit. Doing it this way is a longer healing process, but it would be more sustained and much more credible. This will be one of the pains of rebuilding the Machine. With so many people out of work we must face the fact that this process will be long and tedious. Many people will need to be retrained for new jobs and roles in other fields – a situation for which we as a country are simply not prepared.
The big fact we need to face is that we do not have the right people in power to take care of this job. We need to quit looking at which party is at fault – both parties help mess this up and neither seems to have the answers. The leadership is poor. We do not have a winning team in place and now the draft is approaching (election) a chance to get valuable replacement players that are willing to take us to the next level, willing to put in the true work it is going to take to get a new Machine built. This all starts in your own communities, with your local poloticians all the way up to the national level. Many localities are still run by the same families that contributed to this mess in the first place. People who are descendents of people who have been in power in some instances for a few hundred years, they are elected just because of their name. Not a good deal – this is not any better than voting along party lines. This country was not meant to be a two party system but we have now made it that way.
Further bailout packages to corporations is not the answer. We need to find a way to get money into the hands of the people so they can spend again and get companies to start growing. If we don’t build this machine correctly and maintain it, we are going to end up in this mess again. We need to build the Machine the right way, make it work and take care of it. It will be a long process for everyone, but working together we can do this. America was built on the backs of hard working Americans – we can not forget this. Hard work is what made us, hard work is what will get the Machine built and hard work is what will sustain growth.
With the elections coming up – remember this. Now is your opportunity to make a change for the better. Get people in office that will work hard for us, for the belief in America! Ignore the party lines, look at what each candidate has to truly offer. IT is our time to make a change and let our voice be heard. We must all remember that our government is – “By the people and for the people” it should not dictate to us, we should dictate to it. _ Just My Explosion of Thought!
