The Small Business Blues

Published on May 2016 | Categories: Types, Business/Law | Downloads: 42 | Comments: 0 | Views: 344
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A Diary I wrote a few weeks ago on Daily Kos describing business experiences during the last few months of the great recessions with some choice tidbits from outside sources/ A wrap up with a back of the napkin save the country plan

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The Small Business Blues
Tue Feb 23, 2010 at 01:21:24 PM EST Some time in the second week of December , my business went from ok to zero in a week. Still, I was hopeful. I was thinking it was the holidays and that my business doesn't participate. So I blew it off. Then January came and incredibly we had a doughnut for the month. That means zero sales. February has passed so far with two tiny orders. Amazingly enough we are now 90% off from last year. "JHC, is this me?" I checked my breath, looked carefully to see if there was some disgusting pus wound leaking anywhere. Nope Nothing. So I called a few friends who have small business's and I tenderly explored the issue with them. Small Business people really get freaked when they call another small business and hear "things are great , never better". They get freaked even worse when they hear "Two months, two doughnuts, Can't pay health insurance and I'm living on $20.00 a week." Mass lay-offs are back to July 2009 levels. July 2009, was a month where things were on the upswing. There is an expression that I use that is applicable: "Be careful how you treat people on the way up as you will meet them on the way down." That could easily apply to statistics too. Be careful about end zone dancing about recoveries as those numbers you saw on the way up, can be real negative on the way down. Being a perma-bear and owning a small business is a real problem,. In order to survive as a small businessperson, you have to maintain a minimum level of optimism, yet if you have been through multiple business cycles you can't ignore macro indicators that cause the press announced recovery to make alarm bells go off in my head. ( I'm pretty sure I didn't see any bats either). Once I measured how far off we were from the lows and how far we had to go just to get to lowest levels of the last recession, I knew we had a greater than 50% chance of seeing January 2009 again but much worse. Usually during a recession, I'll pick up two extra jobs. This time there are none. I watched the tech listings drop like a rock in the last few weeks. So , I promised myself at the end of March, it was decision time. For me, I always move fast once I see a situation deteriorating. It is much better to stay in control of the situation then letting the situation control you.
The BLS has reported Mass Layoff Statistics for January 2010 - the result is plain ugly, and kills any hope for sustained improvement in unemployment data. Not seasonally adjusted Mass Layoff Events (defined as at least 50 persons being laid off from a single employer) surged in January to 2,860, from 2,310 in January, from a 12 month low of 1,371 in September 2009. This is the biggest monthly surge since July when the Mass Layoff Events hit a 12 month high of 3,054. In terms of actual workers, January saw 278,679 initially laid off people. The deterioration was mirrored in the much less credible seasonally adjusted data. Obviously companies were waiting for the end of the year to dump as many people as they could.

Then as more confirmation I see this:

The FDIC is getting much worse as it is in the red by 20 Billion. That is a concern despite the 500 Billion promised by treasury, one has to wonder how many banks are still operating that are bankrupt and simply haven't been seized because the FDIC is in deep shit itself. It's also an election year. You have to wonder if this is part of the problem. How long does this kind of information take to hit consumers before they lose confidence in the banks?

The U.S. banking industry continued to struggle in the fourth quarter, as the number of banks on the brink of failure continued to rise and the government's fund to protect deposits fell sharply into the red. The Federal Deposit Insurance Corp. said Tuesday that its deposit-insurance fund fell to $20.9 billion at the end of 2009, a $12.6 billion drop in the final three months of the year, as bank failures continued at a pace not seen since the savings and loan crisis. The fund's reserve ratio was -0.39% at the end of the quarter, the lowest on record for the combined bank and thrift fund. The deposit insurance fund is unlikely to soon see a respite from a decline in the number of failing banks: The FDIC said the number of banks on its "problem" list climbed to 702 at the end of 2009 from 552 at the end of September and 252 at the end of 2008. The number of banks on the list, which have combined assets of $402.8 billion, is the highest since June 1993. "The continued rise in loan losses and troubled assets points to further pressure on earnings," FDIC Chairman Sheila Bair said in a statement. "The growth in the numbers and assets of institutions on our 'Problem List' points to a likely rise in the number of failures."

What about consumer confidence? It absolutely plunged. Ok so now I know why business has fallen off to nothing. It also tells me that I have a few options. I can hold on, knowing my competitors have huge lease payments and high overhead to meet and hope they fail, or I can take a serious look at a program I just read about where people are taking their small RVs and staying at National Parks for free in exchange for working 20 hours a week. I'm single. No major roots. Sell off the printing equipment trade in my cars, I could get a hell of an RV for cheap and have plenty of food money left over for years. I can program so I can pick up lose bucks here and there. Hmmm, starting to feel the itch to move. I've been in one place for 30 years. Business is horrible and those few who know me here know that I am a perma-bear on the state of the economy. Why not?

Looks like the ABC Consumer Comfort Index was right all long US CONF BD: PRESENT SITUATION INDEX LOWEST SINCE FEB'83US US CONF BD: JOBS, EARNINGS CONCERNS LIKELY TO CURB SPENDING CONF BRD:PLENTIFUL LESS HARD-TO-GET 44.1% FEB V JAN 42.1% US CONF BOARD: JOBS HARD-TO-GET 47.7% IN FEB VS JAN 46.5% US CONF BOARD: JOBS PLENTIFUL 3.6% IN FEB VS JAN 4.4% US CONF BOARD: CONS EXPECTATIONS INDX 63.8 IN FEB V JAN 77.3 US CONF BOARD: PRESENT SITUATION INDX 19.4 IN FEB V JAN 25.2 US CONF BOARD: JAN INDEX REVISED UP 0.6 (ORIGINALLY 55.9)

Indeed the consumers are People that are feeling what I am or are causing the feeling that I have. I know the political purists on the site will see this not as threat against their own economic situation but as an attack on Obama or Democrats. That is a stupid. I voted for Obama on a straight Dem Ticket. I believed in him. I had tears coming down my face in November of 2008. He looked so young, intelligent and full of the energy needed to tackle multiple massive structural problems. Imagine my disappointment when he didn't. He acts like he's still a Junior Senator. When I write about this, I've actually been accused of being a racist on this site. In one of my typically long comments, the only response I get was from a guy who accused me of being a racist. People need to stop playing that card and wake the fuck up . In doing so, maybe we can wake him the fuck up and instill in him the attitude I first saw in Risky Business in 1980 When Tom Cruise was 18 years old. "Sometimes you just have to say What the Fuck and go for it" It is now or never Mr. President. It's time to go for it. Don't leave anything on the table. Don't split the difference. You have one job only and that is to protect the helpless against the "vampire squids " You have to lay it on the line to stop 47,000 deaths per year at the hands of insurance companies. You have to let these big banks fail. Here is the back-of-the-napkin save the country plan: Since 4 Banks own 55% of all the assets in the US ( Loans) and another 7 have around 20%, I suggest you do this. Push FASB to put back Mark to Market. Take executive action if necessary to nationalize these banks. Then working with the community banking association sell of the assets at 10 cents on the dollar on a consigned basis. That means handing assets to community banks that are the weakest first, and giving them time to sell enough of the assets to raise the cash to pay for them. Then watch their capital grow. At the same time, we will do something for the rest of us, as community banks decide to keep certain assets, the loan balances must be cut by a minimum of 50% and payments and equal amount. Community banks will have time limits. If they are unable to do anything with the gifts, they are shifted to small banks that can. If you take 13 Trillion in personal debt and cram it down by taking over the big banks, you will see at least a trillion in stimulus that doesn't cost the taxpayers a dime and doesn't add a thing to the deficit. As the US gets paid for the assets and the deposits, the deficit goes down. Just enough for a real meaningful Health Care reform Imagine this if you can: Cut debt payments by 50-60%, cut Health Care costs by 50-60% on a personal level and then watch how doing the right thing makes the economy come back stronger than ever. People lose creativity when they are under negative stress. We need American Ingenuity and creativeness in peak form to come up with a answer to the question: what will our new economic engine be composed of? Two Big steps : No more coddling of the banks with FASB 's return of mark to market. Then take them over and strengthen the banking system in this country at the same time you cut the debt load of Americans . You have to say " WTF, I'm going for it" . Then you save the lives of

10s of thousands, create new jobs by the millions, unleash America's creativity and let your DOJ do their job and show no one is above the law, starting back from 10 years until now. Do it now. There is no time left.

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