A More Positive View On Economic Recovery
Bill Warner Monday, March 16, 2009
Well, Ben Bernanke is speaking out. This is a very unusual thing for a Fed Chairman to do. Bernanke is being widely quoted and did a piece on 60 minutes as well, where he is carefully projecting that the economic turnaround could occur later this year.
Balanced view of the potential recovery
Bernanke is careful to say at the same time that it depends on “getting banks to lend more freely again and getting the financial markets to work more normally.” It would seem that it is very important to know that our tax dollars for these bailouts are really going towards the improvement of lending and not for international expansion, acquisition of other banks and funding executive bonuses. Bernanke is particularly irked by the recent announcements of $165M in bonuses to AIG executives. Bernanke does also explain that unemployment will probably go to a double digit percentage before this is over, but once the financial system is working, we should recover. He also confirms that the Fed is printing a lot of new money. It has risen by three trillion dollars since December 2008. Bernanke recognizes that he is playing with potential inflation, but also says that the plan is to reduce the money supply once the financial system is working again. He never said how that would be done, but it sure does seem to be a crucial action in order to avoid rampant inflation next year.
Keep this all in perspective
Keep in mind that most of our regional banks are doing just fine. The only things we seem to read about are the few very large banks that unfortunately represent a large chunk of our economy, and how bad off they are because they bought into the toxic securities created by the sub-prime lending disaster. As business owners, you are quite safe and quite frankly acting responsibly if you are working with local banks that did not get themselves into this kind of trouble. When approaching a bank for credit or a loan, simply ask them what their financial position is and make them explain in quantifiable terms that they are comfortably solvent and are in a positive lending position; that is, their balance sheet is not full of junk.
We are all getting tied up by what is going on nationally and the federal level. For business owners, it comes down to running your companies with sound judgment and keeping your eye on the ball of the basics that make any business successful. If business owners employee solid business practices in the execution of their business operations, they will survive this recession and come out of this even stronger.
Filed Under: Business Operations, Managing Business Financials, Starting a Business
Bill Warner is the Managing Partner of Paladin and Associates, a business consulting firm in the Research Triangle Park area of central North Carolina, and is the Chairman of the Triangle Accredited Capital Forum, an angel investor network with over one hundred members throughout the southeast.
Bill Warner is the Managing Partner of Paladin and Associates, a business consulting firm in the Research Triangle Park area of central North Carolina, and is the Chairman of the Triangle Accredited Capital Forum, an angel investor network with over one hundred members throughout the southeast.
TgfEX3 <a >grxhrtxtcryf</a>, gocwlzgbszof, [link=http://exakhoxnbahk.com/]exakhoxnbahk[/link], http://cgwjplkbnkrr.com/
