Wednesday, December 23, 2009

(Really) Making America A Better Place

You've caught me in a weird combination of holiday spirit, patriotism, and orneriness. I've been thinking about some hardships I've been enduring recently with my business and it truly gave me pause for reflection I'd like to share, er I mean bore you with it.

How does someone like me make American a better place?

I adore my right to free speech. I further adore my right to free anonymous speech as a part of a rich tradition in this country but this dump of blog does little to make America better. I do the blog for selfish reasons.

I am a (very) small business man. I have put my capital at risk to grow and make this little business work and keep it going. It has been hard over the years. So what does all this really mean? For all you who are also small business owners you know. I know several small business owners read this blog (on occasion).

Like most not born to wealth, I borrowed money from banks leveraged against my personal financial worth and my good name with the idea I could provide a product to people who would benefit from it. This put my family at risk. I might make a small profit on this transaction, be a good steward of the assets and hopefully it would all increase in value as I make a living. In addition along the way I dutifully pay the bank back and they make a little money. I hire people to help me in my business and I treat them fairly and pay them fairly like I would want to be treated and they make a little money. I'll be honest that I take a little pride in knowing that either through the people I do business with or the people who work for me I know I'm helping others provide for their families. It isn't much. I know that my risk and success allows them to be successful as well. I take this responsibility seriously and they get paid before I do. I also take pride in providing a great product and service for my customers many of whom have been long term customers. Sometimes I joke that I'm a good guy but a bad business man because of the lengths I go for my customers and how on occasion I've let some of them slide on payments, etc.....especially during these tough times. I've had a couple months in a row here where the balance sheet has been negative. Customers don't deserve for you to cut corners when this is the case. Vendors and workers don't want to hear it when they need to pay their bills. You dig deeper. You do without. You make it work so you can honor your commitments. I signed my name to documents that said I was good to pay not that I was just good to pay just when things go perfectly. All this is nothing new to the loads of responsible people who own businesses.

So, as I've worked weekends and holidays to make it work and another year comes to a close I really, really reflected on my contribution, you know, America. Loads of people out there who do what I do are what makes America a better place, right? Even in the face of a government that makes the risk more and more difficult and the profit less and less still millions of us do it everyday. It is what America is built on. I'm not special. Truly. It is incredibly common.

I take a reasonable risk in the hopes of a reasonable profit. When does it stop? When the risk is too high for the return.

I learned in college there are 2 core laws of economics.

1. Goods and Services (wealth) gravitate to those who desire them the most.

2. Individuals will cease seeking goods and services when the sanctions or risk outweigh the potential gain.

When is it not making America a better place? The President has called small bankers to the WH to ask them to start lending to people like me so I'll be able to take more risk, grow my business, hire more people, etc. What he doesn't seem to understand is why he is out of line in asking them, er threatening them to comply. These banks are private businesses that generally follow the same ideals. The government doesn't own their businesses.....yet. Let me tell you something else. The "Bailouts" they gave to the big banks were nothing short of payday loans in every sense of the word designed to keep the banks under government control, ie pay czars, in just the same way a predatory payday loan keeps the poor down everyday. I assure you Obama was furious when most all of these huge banks already paid back the money because now he loses some control over them. That is what socialists want. Control over the means of production. Let me simplify it for you. I'm sick of the government perpetuating the lie that Wall Street alone caused this problem.

1.The Government starting back with GWB complicate with guys like Barney Frank makes home ownership for all a center piece of their fiscal and welfare policy with the resultant bad policies of a softening of lending requirements and even further the mandating of riskier loans to people with poor credit and/or with worse than no money down in financing closing costs and 120% loan to value loans.

2. People default on these loans in huge numbers.

3. Banks are in trouble and Government demonizes banks for making bad loans that they told them to make.

4. Government responds by telling banks not to make risky loans and requiring higher cash reserves or risk takeover.

5. The Fed lowers the rate that banks can borrow money to 0% to bail out homeowners. You know like nothing.

6. The Government then borrows, er prints money like crazy to pay for all these stimulus, er pork programs by issuing Treasury Bills which should be renamed Your Grandkids Money Bills and pays a +/- 4% return. The banks take the free money and take the easy 4% return instead of the 6-7% return they might make on a loan to a guy like me. Wouldn't you? 4% return with low risk or 6% and risk having the government take you over by calling you brainer really.

8. People like me see putting down 30-40% for a loan not to be a good use of capital (or simply don't have it) and decide not to play or go out of business. Are a bunch of small business owners getting called to WH next to be told we are now the problem for not taking these loans?

Common thread throughout? Government intervention and bad policy followed by more bad policy meant to fix the previous bad policy and then crappy Chicago style politics meant to bully everyone into Savior Obama's way of thinking.

I remember when you had to have a 20% down payment to buy a home. Why and when did that change? Government intervention. Then they created some first time home buyer programs with lower down payments and they worked really well but then they went really crazy. When will we freaking learn?

Dear Mr. President: Calling a bunch of bankers up to your office and then holding a press conference and telling the world they are bad people won't fix the problem. They aren't the problem. You and socialists like you are the problem.

Manage some reasonable regulation to keep the playing field safe and level and then get out of the way and let me and others like me really "make America a better place". It isn't just a goofy campaign slogan from a guy who has been running for Congress since 2005.
Brevity and other changes come to the blog in 2010.


PFL0W said...

1) The President threatened no one;

2) The President--whoever he or she is--has no tools to "threaten" bankers. No President uses even possible regulations as threats, unless there are gross abuses (like with really obscene pollution or some such);

3) A huge lack of deregulation led us to the mortgage/banking crisis we are currently in. It started with the Clinton White House and was followed up on in the G.W. Bush administration;

4) The President didn't call the bankers "bad people" or anything like that, even though people like the ones at Golman Sachs and Citigroup and a lot of others (Countrywide, etc.) deserve such treatment;

and finally,

5) As anyone in business or economics can tell you--and as I'm sure you know, since you're in business yourself--psychology plays a large and important role in the business world. This President is and has been trying to get everyone calmed down so lending and stronger business will resume, to all our benefit.

Think what you like--and you will, of course--but this is not a "bad President", bent on destroying the corporate, Capitalistic America you love.

He's really not.

Mo Rage

JOCOeveryman said...

Deregulation is an important part no doubt and while I thought of addressing it the post was too long as it was but it is only the obvious part. We all know that dereg and regs not keeping up with changing times played a big role. My points played a big role as well and anybody who misses it has their head in the sand. Srsly. You should research it. If you understood Fannie and Freddie's role in banking you would know.

Of course the President/Government uses threats of policy to threaten business. That is ridiculous or Pollyannaish to think otherwise. I could spend all day giving you examples.

He absolutely called out the bankers. We must be living in a different world. Look at the 60 minutes piece a few weeks ago and then you do it yourself in a backhanded way in point 4. Not unlike he and his advisors do when they go on TV.

I like how you use Corporate and Capitalistic like they are bad words. Don't think I didn't catch it. You and others like you are trying to make them evil words. They aren't. Talk about hitting the talking points. Well done. Straight from the memo.

So far he is just another typical "government is the solution" President. This President doesn't get it.

Anonymous said...

I actually agree with you on this Everyman. The government shares lots of blame for this and it isn't in their DNA to acknowledge it.

Anonymous said...

A good post/rant. Even a swipe at your good friend Tom.