Friday, October 09, 2009

More on small businesses "hunkering down" 

Following up on TH and my comments about strangling the economy, here's a nice summary from the Atlanta Fed of how small businesses have contributed to job creation.  The article postulates that the restricted availability of credit will serve to dampen job growth from the small business sector.  This is no doubt true, but our view is that mandates, new regulations and cap'n'tax may be an even larger headwind to regaining the 45% of employment loss contributed by evil capitalist sources of revenue smaller businesses.


By Anonymous Anonymous, at Sat Oct 10, 07:42:00 AM:

This is what "going Galt" means in real life- though the lefties promoting American decline as a positive "good" won't acknowledge it.  

By Anonymous Anonymous, at Mon Oct 12, 02:21:00 PM:

Small business is in a rapid decline, one that started when it became clear Obama would be elected and the Democrats would take decisive control of the Congress. From Paychex' 4th QTR (ended 5/31/09) conference call:

"Our served payroll client base declined 3.1% to just over 554,000 clients. It was difficult to watch our client losses due to companies going out of business or having no employees rise by 17% over the prior year. At the same time, our new client sales from new business formation declined by 19%. We believe both conditions were the worst in Paychex's history, which explains our experiencing negative client growth for the first time in our history."


And now it's obvious: anyone investing is better off not starting an American business, but instead investing their capital in Norwegian kroner or Aussie dollars, or any resource based non-US dollar economy. Spengler's recent column illustrated beautifully why this is so (read the whole thing, but pay particular attention to his chart on the trade-weighted US dollar chart and his explication of the rate over time of Fed intervention in the Treasury market), as both the Treasury and the Fed have drained private capital out of the economy and spent it on government salaries. Unless one can totally finance a start-up on one's own, it's unlikely an entrepreneur will be able to find capital to fund a business, so trying to start one is economic suicide.

Until we allow massive oil drilling in America and simultaneously agree to reduce US government spending significantly, our economy will not recover. Adding new taxes right now means we will be seeing economic devastation. This prospect should by rights render arguments over silly dreams of "Cap and Trade" carbon taxes and "ObamaCare" moot.

What's really frightening is that the reality is just the reverse.  

By Anonymous Anonymous, at Mon Oct 12, 02:42:00 PM:

Veronique de Rugy writes today concerning the WSJ front page piece on "panic setting in at the White House" as policy makers are daily forced to learn about the economic cost of their dreams.

"I wonder what level of unemployment Democrats need before they start considering actual rate cuts. A cut in the payroll tax would stimulate the economy instantly by cutting the cost of employing people. Is that really too hard to understand?"  

By Anonymous Anonymous, at Mon Oct 12, 04:00:00 PM:

From today's FT:

"The US economy has hit a debt iceberg. The resulting gash threatens to flood the economy’s stabilising mechanisms, which the economist Hyman Minsky termed “thwarting institutions”.

The destruction of household wealth means many households have near-zero or even negative net worth.

Lastly, the US continues to bleed through the triple haemorrhage of the trade deficit that drains spending via imports, off-shoring of jobs, and off-shoring of new investment."

The financial crisis created an adverse feedback loop in financial markets. Unparalleled deleveraging and the multiplier process have created an adverse feedback loop in the real economy. That is a loop which is far harder to reverse, which is why a second Great Depression remains a real possibility.

By Anonymous Anonymous, at Tue Oct 13, 05:38:00 AM:

Frightening. The worlds central banks are beginning to shun the dollar, after suffering a six month rout. That won't just hurt small employers, it'll hurt the lifestyle of every American.  

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