Wednesday, March 25, 2009

Credit Crunch or Business Expansion Loans Not Needed?

The New York Times has an interesting piece on businesses that cannot get a loan due to the "credit squeeze" on Main Street vs. not needing a loan because no expansion of their business is needed. David Leonhardt says the lack of need for business inventory is the problem and that few needing a business loan have been turned down - but rather, businesses do not need a loan. Leonhardt points out that "No large company has failed to meet its weekly payroll, as Obama warned last year might happen." His local Toyota dealership has no problems securing loans:

Indeed, if you try to come up with a single prominent victim of the credit squeeze on Main Street — as opposed to victims of the recession — you will have a hard time. This creates a big political problem for the Obama administration and the Federal Reserve. Policy makers are deeply worried that public opinion will eventually cause Congress to abandon the rescue plan. That’s why they keep trying to connect the financial crisis to the day-to-day Indeed, if you try to come up with a single prominent victim of the credit squeeze on Main Street — as opposed to victims of the recession — you will have a hard time. This creates a big political problem for the Obama administration and the Federal Reserve. Policy makers are deeply worried that public opinion will eventually cause Congress to abandon the rescue plan. That’s why they keep trying to connect the financial crisis to the day-to-day.
Leonhardt examines "just how the financial crisis is - and is not - affecting Main Street:
There is no doubt that the economy is in terrible shape. The overall volume of loans is, in fact, falling. But is that because banks won’t lend? Or because businesses and families don’t want to borrow?
Just one more example of Obama et al creating a false perception of the economy.

©2007-2012copyrightMaggie M. Thornton