MS. CARLY FIORINA: …I think all of those statistics are an important reminder. While we have been focused in Washington on big companies…
…the Detroit automakers, and big unions, the truth is we’re not as concerned, and we should be, about the hundreds and thousands of small businesses who actually create two-thirds of the jobs in this country. Which brings me all the way back to the original problem. We have a recession, a deepening recession right now because credit is unavailable. Credit is unavailable to small businesses so they can’t hire. When hundreds of small businesses can’t hire 10 and 15 people, over time that creates big unemployment numbers. They may not have big unions to represent their interests in Washington. They’re the little guy, but the little guy matters. When credit isn’t available, consumers don’t have the money they need to spend. So I think we have to go back to the root of this problem, ultimately, which is credit is still unavailable. And that is despite massive bailouts of big financial institutions who are still not lending (my emphasis).
We should keep in mind the important part that consumer confidence, or rather the lack of it, played in the Great Depression. No money=no buying=no jobs=no money=no buying… It’ll be telling to see what the economic data shows come March or April.
Kendall,
Exactly how much more debt do you want businesses and individuals currently drowning in debt to take on? Do you realize how much all this credit that has been sloshing around the past two decades has distorted the economy? That is why this correction is particularly painful: the Fed has kept the price of credit artificially low for such a long time and now economic reality is asserting itself.
In uncertain economic times, this is exactly what should happen: banks should shore up their reserves, businesses should scale back operations, and consumers should trim discretionary spending.
[i] When credit isn’t available, consumers don’t have the money they need to spend.[/i]
This makes no sense. Borrowing to fund consumption just means people will be poorer in the future.
[blockquote]Borrowing to fund consumption just means people will be poorer in the future. [/blockquote]
It can mean that depending on what one is consuming. But if I were looking to fund my education or training or to start or expand an entrepreneurial idea and needed a loan or bridge loan to do that, then it is the lack of credit that makes me (and us) poorer.
Balance is a good concept in credit as it is in so many other things.