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It’s Good To Be Big, Bad To Be Small

9 February 2010 No Comment

From my perspective, the “recovery” seems to be confined mostly to the large Corporations.  Companies like Cisco (CSCO), McDonalds (MCD) , Pfizer (PFE), etc. all are coming out with decent earnings.  Furthermore, even companies that have major issues ahead (in my opinion) such as Brunswick Corporation (BC) (boat manufacturer) and Simon Property Group (SPG) (commercial real estate) are able to stay afloat due to their ability to get financing.  You can also add a number of large U.S. banks to such a list.

Large Corporations are able to sell shares to the open market in return for much needed cash.  By manufacturing a large increase in the stock market through zero percent interest rates, the government essentially enabled many companies to raise money by selling equity.  I’m not arguing against this.  It is the purpose of the capital markets (at least when they really are markets).

The problem is on Main St. or small business, which is why we’ve seen the political rhetoric shift away from Wall St. and move towards Main St.  I work for a company with 5 employees.  While we’re moving forward and surviving, we’re by no means thriving, and are not moving towards hiring new people.  Instead, the owners are simply doing more and working harder instead of bringing on additional overhead.  I wonder how many small businesses are doing similar things?  I would guess a lot.

Small businesses are still very cautious.  Yes, some tax breaks for small businesses are great – even though they might be offset by allowing the Bush tax cuts to expire on individuals making over $250k (many small business owners).  But, the problem isn’t really taxation.  It’s the economy.  There just isn’t much business to go around.  It’s a shrinking pie with the same number of hands fighting for a slice.  How do you fix that?  Is there even a fix?

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