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Have TARP's Executive Compensation Limits Doomed The Small-Business Bailout?
Tweet Share on Facebook March 31, 2009 Comment (3)According to a new article in American Banker magazine (available online to subscribers only), Obama's plan to end the credit crunch for small businesses is "in jeopardy." (To get some background on that plan, click here.)
Treasury is using $15 billion to fund new SBA-guaranteed loans. What's the problem? It seems that the most important SBA broker-dealers don't like all the strings attached to the money--most prominently the executive compensation limits:
The conditions have already spooked the four large private SBA broker-dealers - Cantor Fitzgerald LP, Vining Sparks IBG LP, Coastal Securities Inc. and Shay Financial Services Inc. - which, according to sources, have all indicated they have no plans to participate in the program.
"I don't think anyone's going to do that," said Scott Taylor, a vice president in Memphis for Shay Financial Services.
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Guitar Hero, Metallica, And NCAA Coaches: Together At Last
Tweet Share on Facebook March 31, 2009 CommentBecause I've blogged about Guitar Hero in the past, I feel obligated to link to this video.
Also, it's really, really funny and awkward.
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Detroit Free Press Going Digital
Tweet Share on Facebook March 30, 2009 Comment (4)Here's another reason to reconsider the newspaper bailout:
The Detroit Free Press and The Detroit News will announce today (Monday) the implementation of a sweeping set of strategic and innovative changes with emphasis on digital delivery and the introduction of new, compelling, easy-to-use editions of both newspapers available at nearly 18,000 locations throughout Michigan, in an era in which digital delivery is revolutionizing how people get information.
The changes include first-in-the-nation moves as part of its bold leadership to strengthen and ensure continued publication of two strong and independent daily newspapers in Detroit and Michigan at a time when newspapers around the country are filing for Chapter 11, going to digital only operations or closing outright.
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Business Advice From The Mayflower Madam
Tweet Share on Facebook March 27, 2009 Comment (3)Entrepreneur has an interview with the notorious (former) madam Sydney Biddle Barrows. She is transferring her sales skills to the world of marketing at-large, and so she has a new book where she talks about what she's learned that can help even less lurid businesses. An excerpt from the interview:
One of the things that I really do want to point out--and I mention this in the book, too--is when it comes to the sales presentation, when it comes to how you talk to the customer about buying your thing, business owners really, really have to do it themselves for a while. Because it's one thing to sit down and write a script, "This is the way you should do it." But until you have actually tested it and seen how the customer responds [you have no idea if it works]. One of my perfect examples was, in the very beginning, when I booked a call and the man would choose the young lady and I would say, "OK. What's your name?" And we would lose the call. So I figured out to ask, "What name are you registered under? What name is your phone listed under?" It's the same question, but when you ask it that way, it makes all the difference in the world.
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Newspapers Going The Way Of The Dodo? Maybe Not So Bad
Tweet Share on Facebook March 27, 2009 Comment (2)This is certainly the comment of the week, from one Nicholas Taylor of Texas:
Capitalism is survival of the fittest. If a product or a company can't compete it goes the way of the dodo bird and the dinosaur. If the newspaper industry can not change and adapt to people's changing ways of obtaining information, they too will find themselves experiencing this same fate.
How many people still use 35mm cameras? How many people still use typewriters? Companies such as Kodak and Polaroid have abandoned their old products and are now focusing entirely on digital cameras and other electronic media devices. When typewriters started to become obsolete, such companies started to produce word processors, electronic calculators, PDAs, and other devices.
The newspaper industry is not any different from any other industry that exists under our capitalist system. It must either adapt or die. People's ways of obtaining information is changing. There are now 24 hour cable news networks and the world wide web has democratized information. Anyone can become a reporter of sorts by blogging about a event or "Twittering" about it. CNN has even capitalized on the ability of the common person to produce news with their iReport.
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Unemployment Up To Almost 20 Percent In (Parts Of) The US
Tweet Share on Facebook March 26, 2009 Comment (3)Via Fark, I see that unemployment in Tunica County, Mississippi is up to 19.5 percent, over 11 points higher than the national average. That's pretty depressing. But to put things in perspective, Mississippi is our poorest state (although West Virginia often holds that position), and Tunica County is apparently one of the poorest counties in the poorest state. In 1933, at the height of the Great Depression, the national unemployment rate was nearly 25 percent. So some of the worst job conditions found in the entire country still don't compare to the average across the country in the Great Depression.
Looking at this New York Times map from earlier this month, I can only find three counties worse than 25 percent: Mackinac County, Michigan, Colusa County, California, and Perry County, Tennessee. (Please let me know if I missed any).
That doesn't mean the situation isn't bad, but it does mean we should pause before making grandiose comparisons.
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Obama: Marijuana Legalization Not Good For The Economy
Tweet Share on Facebook March 26, 2009 Comment (271)The legislative battle to legalize pot in California has gained so much attention that President Obama can no longer ignore it. In an online town hall meeting Obama rejected the argument that legalizing, regulating, and taxing marijuana would be a good way to raise money in this recession (See my previous post explaining that argument.)
And what was Obama's reasoning? Well, there wasn't any. He just stated in direct terms he does not think legalizing pot "is a good strategy to grow our economy." Read more about the town hall meeting here.
Does that mean he thinks it's not a good strategy because it would not actually grow the economy? Or does he think legalizing pot would have other costs that would subsume any economic benefits, thus making it not a good strategy? We don't know, but they are questions to ponder.
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Recession Not As Bad As 1980, Says Small Biz Economist
Tweet Share on Facebook March 26, 2009 Comment (1)We hear constant comparisons between today's economy and the 1930s. But it's not apt to compare this recession to the one just 29 years ago, says William Dunkelberg, chief economist at the National Federation of Independent Business. Read on here:
While the economic indicators are now hovering near the low levels we saw nearly three decades ago, Dunkelberg isn't panicking and doesn't think small business owners should be fearful either.
"We'll get through this year as always," he said. "It's the private sector that will save itself, not the government." -
Newspaper Bailout Seriously Considered
Tweet Share on Facebook March 25, 2009 Comment (23)While there have been serious proposals for a bailout of the ailing journalism industry, I never thought such a bailout would be taken seriously politically. I'm proved wrong by yesterday's news:
With many U.S. newspapers struggling to survive, a Democratic senator on Tuesday introduced a bill to help them by allowing newspaper companies to restructure as nonprofits with a variety of tax breaks.
"This may not be the optimal choice for some major newspapers or corporate media chains but it should be an option for many newspapers that are struggling to stay afloat," said Senator Benjamin Cardin.
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Obama Op-Ed Shows He Won't Embrace Protectionism
Tweet Share on Facebook March 24, 2009 Comment (1)Barack Obama's op-ed in newspapers today--running in 30 papers around the world, and only a handful in the US--doesn't say much that is new. But what is significant is what he doesn't say. Namely, there is little indication that Obama will embrace a protectionist stance in reaction to the recession. A Smoot-Hawley 2.0 seems highly unlikely (many economists believe that the Smoot-Hawley tariff turned a great recession into the Great Depression.)
While people in his party are talking about the importance of "buying American" only, Obama in this op-ed is actually emphasizing the benefits of exports:
A crisis in credit and confidence has swept across borders, with consequences for every corner of the world. We have learned that the success of the American economy is inextricably linked to the global economy. If people in other countries cannot spend, markets dry up—already we've seen the biggest drop in American exports in nearly four decades, which has led directly to American job losses. And if we continue to let financial institutions around the world act recklessly and irresponsibly, we will remain trapped in a cycle of bubble and bust. That is why the upcoming London Summit is directly relevant to our recovery at home.
