Michael Barone has a piece in the Washington Examiner asking this question. The responses reflect the absence of much adult, knowledgeable thought. No surprise as the internet allows anyone to spout off and demonstrate their wisdom. America has been known throughout our history as a place where the "yahoo's" and loudmouths are free to babble whatever they wish. Often, like the innocent lad watching the parade who asked "Why is the Emperor naked-?" the scales fall and we see our leaders revealed as mere mortals and not very respectable, honorable, wise ones at that.
Here is my view of the present economic situation....yes, it like everything on this blog or the internet is "For What It's Worth"...
I was hearing about Obama in the 4th quarter of '07. I was doing an acquisition and speaking to finance people-mostly high-net-worth-individuals. They were heading for the bunkers. stopping and unraveling their small business ventures. They foresaw a rise in taxes, capital gains and regulations. Since then, most small-mid-sized owners have felt that their government has drawn a gun and is using smoothing talk to make everyone ignore it. The rise in regulations, potential regulations, changes in law interpretations of established practices all make us uncertain.
Banks and lenders are all facing unknown regulations and capital reserve requirements. It is cheaper and safer to borrow at close to 0% and lend via T-bills. Balance sheets look safer and no questioning the lenders creditworthiness. They are raising what fees and charges they can as often as they can. Nobody knows what the rules will be in 2-3-5-10 years.
This is first time in over 40 years I have no payroll to meet. That is uncomfortable as a changed habit. However, I cannot see placing any resources at risk in this environment. We simply have no clue about what the rules will be, how much we must raise prices to pay for compliance, what changes in equipment will be, whether the consumer or buyers will pay the increased prices.
High risk for low or modest reward is a fools game and very likely criminal. Low risk for high reward is a lottery ticket. Most of us seek a modest/manageable risk with a slightly higher foreseeable reward. we manage risks and provide our personal bond to guarantee the trust a buyer places in us, lenders and suppliers place in us. This climate is fraught with too many variables that are simply unknown and unknowable.
"Fundamentally Transforming America" is something that we cannot quantify or evaluate and respond to. Profits are great, but losses are personal. We pledge our property, our name and our honor behind our ventures.
Who chooses risks their reputation in this climate-?
Who accepts our personal bond, in this climate-?
It is better to sit and watch, awaiting a clear path than to risk so much for so little.
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These times are scary. We have never been business people so have our safety nets. Dad worries he might outlive his money. Although, brothers at the luxury end are doing great. Hard to understand.
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