Someone in the White House should tell President Obama that every time he speaks on television about the economy or some new government program to artificially prop it up, the stock market tanks. Today he did it again.
Obama has determined that the government via the Small Business Administration (SBA) is now going to guarantee small business loans up to $5 million. Those loans can be used not only to purchase inventory and equipment, as was the typical limitation in the past, but also now to finance real estate.
So, now the government can stick its fingers into another potential real estate rathole which hasn't worked in the past. Obama again has the uncanny knack of devising "solutions" that will end up socializing loan losses and privatizing business profits.
How is the government going to determine who qualifies for new SBA loans when banks are unwilling to lend to small businesses themselves? Perhaps the banks have good reason not to lend given the current uncertainties in the economy. Perhaps banks have learned their lesson that lending to questionably capitalized and non-creditworthy borrowers carries consequences.
Regardless of the lessons to be learned from the financial crisis, Obama is either oblivious to them or simply ignoring them for political expediency. His rationale for doing so is that since the banks won't loan to small businesses the government must do so instead. Is that a new form of underwriting standard: banks won't lend to prospective borrowers so the government should or must lend. Seems unwise and fraught with risk.
As a consequence, Obama is not allowing the free market system to function. In difficult economic times, unfortunately, lenders are forced to tighten lending standards and many businesses cannot obtain funding. But to put taxpayer money at risk when private lenders are unwilling to underwrite the same risks that the SBA will surely undertake sounds like a repeat of the Fannnie Mae/Freddie Mac debacle admittedly on a smaller scale.
While small business is usually the biggest generator of new jobs, the vast majority of small businesses fail with a few years. Government should recognize as private lenders do the risks inherent in lending to most small businesses and act in a prudent manner. The government has an incredibly poor track record of managing loan portfolios (again I note the above-mentioned GSEs). Why is it that Obama now believes that government will do a better job as the risk profile for many SBA loans and the potential for significant losses continues to increase? And why does Obama believe that companies formed as a result of SBA loans will actually generate sustainable job except in very limited instances, consistent with the average life cycle of such companies.
Showing posts with label Obama. Show all posts
Showing posts with label Obama. Show all posts
Friday, February 5, 2010
Obama Tanks Stock Market Again on SBA Plan
Someone in the White House should tell President Obama that every time he speaks about the economy or some new government program to artificially prop it up, the Stock Market tanks. Today he did it again.
Obama has determined that the government via the Small Business Administration (SBA) is now going to guarantee small business loans up to $5 million. Those loans can be used not only to purchase inventory and equipment, as was the typical limitation in the past, but also now to finance real estate. Brilliant idea. Not!
So, now the government can stick its fingers into another potential real estate rathole which hasn't worked in the past. Obama again has the uncanny knack of devising "solutions" that will end up socializing loan losses and privatizing business profits.
How is the government going to determine who qualifies for new SBA loans when banks are unwilling to lend to small businesses themselves? Perhaps the banks have good reason not to lend given the current uncertainties in the economy. Perhaps banks have learned their lesson that lending to questionably capitalized and non-creditworthy borrowers carries consequences.
Regardless of the lessons to be learned from the financial crisis, Obama is either oblivious to them or simply ignoring them for political expediency. His rationale for doing so is that since the banks won't loan to small businesses the government must do so instead. Is that a new form of underwriting standard: banks won't lend to prospective borrowers so the government should or must lend. Seems unwise and fraught with risk by me.
As a consequence, Obama is not allowing the free market system to function. In difficult economic times, unfortunately, lenders are forced to tighten lending standards and many businesses cannot obtain funding. But to put taxpayer money at risk when private lenders are unwilling to underwrite the same risks that the SBA will surely undertake sounds like a repeat of the Fannnie Mae/Freddie Mac debacle admittedly on a smaller scale.
While small business is usually the biggest generator of new jobs, the vast majority of small businesses fail with a few years. Government should recognize as private lenders do the risks inherent in lending to most small businesses and act in a prudent manner. The government has an incredibly poor track record of managing loan portfolios (again I note the above-mentioned GSEs). Why is it that Obama now believes that government will do a better job as the risk profile for many SBA loans and the potential for significant losses continues to increase? And why does Obama believe that companies formed as a result of SBA loans will actually generate sustainable job except in very limited instances, consistent with the average life cycle of such companies.
Obama has determined that the government via the Small Business Administration (SBA) is now going to guarantee small business loans up to $5 million. Those loans can be used not only to purchase inventory and equipment, as was the typical limitation in the past, but also now to finance real estate. Brilliant idea. Not!
So, now the government can stick its fingers into another potential real estate rathole which hasn't worked in the past. Obama again has the uncanny knack of devising "solutions" that will end up socializing loan losses and privatizing business profits.
How is the government going to determine who qualifies for new SBA loans when banks are unwilling to lend to small businesses themselves? Perhaps the banks have good reason not to lend given the current uncertainties in the economy. Perhaps banks have learned their lesson that lending to questionably capitalized and non-creditworthy borrowers carries consequences.
Regardless of the lessons to be learned from the financial crisis, Obama is either oblivious to them or simply ignoring them for political expediency. His rationale for doing so is that since the banks won't loan to small businesses the government must do so instead. Is that a new form of underwriting standard: banks won't lend to prospective borrowers so the government should or must lend. Seems unwise and fraught with risk by me.
As a consequence, Obama is not allowing the free market system to function. In difficult economic times, unfortunately, lenders are forced to tighten lending standards and many businesses cannot obtain funding. But to put taxpayer money at risk when private lenders are unwilling to underwrite the same risks that the SBA will surely undertake sounds like a repeat of the Fannnie Mae/Freddie Mac debacle admittedly on a smaller scale.
While small business is usually the biggest generator of new jobs, the vast majority of small businesses fail with a few years. Government should recognize as private lenders do the risks inherent in lending to most small businesses and act in a prudent manner. The government has an incredibly poor track record of managing loan portfolios (again I note the above-mentioned GSEs). Why is it that Obama now believes that government will do a better job as the risk profile for many SBA loans and the potential for significant losses continues to increase? And why does Obama believe that companies formed as a result of SBA loans will actually generate sustainable job except in very limited instances, consistent with the average life cycle of such companies.
Tuesday, February 2, 2010
Reid Suddenly Cares About Individual Liberty When Vegas Is Concerned
Harry Reid is a stalwart liberal progressive, willing to lead the charge for massive government expansion and intrusion into individual affairs except, apparently, when that conflicts with political reality. As reported in Politico.com, Reid chastised President Obama for suggesting that Americans "... not blow a load of cash in Vegas when you're trying to save for college." And a fellow Nevada Democratic Congresswoman, Shelley Berkley was even more direct: "Enough is enough!" she said. "President Obama needs to stop picking on Las Vegas and he needs to let Americans decide for themselves how and where to spend their hard earned vacation dollars. (Emphasis supplied.)
While I agree, in this instance, with the sentiments expressed by the now conveniently one-issue libertarian Nevada politicos, it is difficult to reconcile their view that "hard-earned vacation dollars" should be spent by Americans at they see fit, but the same control over their finances does not apply to the rest of their money. The difference is merely provincialism. Reid and his aforementioned cohort understand that tourism is the business of Las Vegas and any effort to derail it will hurt their constituents and their respective reelection bids. But why is this obvious, especially to Majority Leader Reid, only when his own political interests are affected? Why isn't this basic American concept that people should be able to spend their money as they choose not equally relevant to decisions regarding healthcare and education and government bailouts?
Either Reid is oblivious to the inherent contradiction in his political views over the nature, extent and application of individual liberties of Americans or he is intellectually dishonest and, even worse, a hypocrite. Do as I say and not as I do should be Reid's campaign slogan as the Majority Leader's power or the fear of losing it has gone to his non-thinking head.
When are liberals like Reid going to realize that in all aspects of their financial and personal affairs, Americans should be of the same dominion? I fear not soon or never because Reid doesn't have a consistent political viewpoint other than trying to shove an ulta-liberal, progressive agenda down the collective throat of the electorate without regard for the Constitution and individual rights and the limits of government.
While I agree, in this instance, with the sentiments expressed by the now conveniently one-issue libertarian Nevada politicos, it is difficult to reconcile their view that "hard-earned vacation dollars" should be spent by Americans at they see fit, but the same control over their finances does not apply to the rest of their money. The difference is merely provincialism. Reid and his aforementioned cohort understand that tourism is the business of Las Vegas and any effort to derail it will hurt their constituents and their respective reelection bids. But why is this obvious, especially to Majority Leader Reid, only when his own political interests are affected? Why isn't this basic American concept that people should be able to spend their money as they choose not equally relevant to decisions regarding healthcare and education and government bailouts?
Either Reid is oblivious to the inherent contradiction in his political views over the nature, extent and application of individual liberties of Americans or he is intellectually dishonest and, even worse, a hypocrite. Do as I say and not as I do should be Reid's campaign slogan as the Majority Leader's power or the fear of losing it has gone to his non-thinking head.
When are liberals like Reid going to realize that in all aspects of their financial and personal affairs, Americans should be of the same dominion? I fear not soon or never because Reid doesn't have a consistent political viewpoint other than trying to shove an ulta-liberal, progressive agenda down the collective throat of the electorate without regard for the Constitution and individual rights and the limits of government.
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