Anyone counting on a meaningful economic recovery will be greatly disappointed. How do I know? I follow credit, and credit is contracting. Access to credit is being denied at an accelerating pace. Large, well-capitalized companies have no problem finding credit. Small businesses, on the other hand, have never had a harder time getting a loan.
Since the onset of the credit crisis over two years ago, available credit to small businesses and consumers has contracted by trillions of dollars, and that phenomenon is reflected in dismal consumer spending trends. Equally worrisome are the trends in small-business credit, which has contracted at one of the fastest paces of any lending category. Small business loans are hard to find, and credit-card lines (a critical funding source to small businesses) have been cut by 25% since last year.
Unfortunately for small businesses, credit-line cuts are only about half way through. Home equity loans, also historically a key funding source for start-up small businesses, are not a source of liquidity anymore because more than 32% of U.S. homes are worth less than their mortgages.
Why do small businesses matter so much? In the U.S., small businesses employ 50% of the country’s workforce and contribute 38% of GDP. Without access to credit, small businesses can’t grow, can’t hire, and too often end up going out of business.
and there’s more:
unemployment highest since 1983: http://finance.yahoo.com/news/US-Sept-nonfarm-payrolls-rb-589941939.html?x=0&.v=1
Banks With 20% Unpaid Loans at 18-Year High:
http://www.bloomberg.com/apps/news?pid=20601087&sid=aXZinRhF5tlA
I am trying to reconcile this (the last 12 months, basically) with our Christian beliefs; is the capitalist system just not compatible with those beliefs? I am not a fan of Michael Moore and his hypocrisy, but he has a point: this amalgamation of big business and government is leaving the rest of us (consumers and small businesses) in a world of hurt. I can’t help but think we may be on the precipice of large societal fissure between the two groups, it could even lead to anarchy…..