credit crunch

What is the State of Credit Availability for Small Business?

Contained within the Obama administration's Jobs Program Redux, we have a policy proposal to give $30 billion in TARP funds to community banks, on the premise they will lend to small businesses.

The questions become, what is the true state of credit for small business and is the premise that community banks would loan out these funds to small businesses valid?

There are two reports out on the state of credit availability for small businesses.

The first is this study from the NFIB.

First is this bit of bad news, where most economists agree, unemployment is not going to improve:

Credit Crunch is Intensifying

In the debt-based currency system of today credit is the life-blood. Without credit the economy has no money and nothing can grow.
That's why all this talk about economic recovery is puzzling. There is no talk about more jobs, higher incomes, or more paid working hours. So any recovery must come from credit. Yet it is credit that is lacking.

Professor Tim Congdon from International Monetary Research said US bank loans have fallen at an annual pace of almost 14pc in the three months to August (from $7,147bn to $6,886bn).

"There has been nothing like this in the USA since the 1930s," he said. "The rapid destruction of money balances is madness."

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FDR's solution to the Banking Crisis - a model for Obama

Despite a $700 Billion Wall Street Bailout, despite the Federal Reserve scooping over a $Trillion of questionable bank assets onto its balance sheets, despite an alphabet soup of new programs designed to aid the banking system, and despite -- or perhaps in part because of -- the almost-daily rule changes in the banking system I have dubbed Global Financial Calvinball; the economy and the financial emergency continues to worsen.
This is imho precisely because, as Jim Kunstler puts it: