I occasionally broker commercial loans between finance companies and small businesses. It gives me a lot of pride when I bring together an American entrepreneur who is ready to risk all his assets on his own business, with a finance company that sees a way to help that businessman and make a profit himself.
For the past month, I’ve been working with a financier to bring funding to 30 entrepreneurs, eager and ready to start up their businesses. Yesterday I had the most dis-spiriting conversation of my professional career with my financier, whom I’ll call “Joe”.
Joe has a credit line with a Gigantic American Bank. The Federal Reserve has slapped the Bank, and all other banks big and small, with new regulations regarding how they loan their money, who they loan it to, and issued a mountain of compliance rules. The Bank cannot rely on their internal compliance auditors any longer, either. They must use independent auditors.
The Bank, in order to remain in compliance, must shove all these same regulations and compliance rules onto whomever they loan money to, including Joe, who also must engage an independent compliance auditor. Joe must shove all these same regulations and compliance rules onto whomever he loans money to, including these entrepreneurs, who also must engage an independent compliance auditor.
The cost of all these regulations and compliance audits, at the entrepreneur level alone, is $30,000. It costs a heck of a lot more as you move up the chain.
The entrepreneurs cannot afford this.
As a result, the entrepreneurs’ dreams of starting their own businesses die on the vine. They now must go back into the depressed job market to (not) find a job.
Sixty other jobs that would have been created by these entrepreneurs never get created.
The money these employees would have spent never enters the economy.
The commission I would’ve earned by brokering the deal is never earned, so that money never gets spent into the economy.
Joe never earns the interest he would have earned on the deal, so that money never gets spent into the economy, or invested in any other businesses.
The Bank never earns the interest it would’ve earned from the financier, so it has less money to grow, return to shareholders, or to hire other people to work at the Bank.
The independent auditors don’t even get hired because no deal exists to audit.
Does anyone — anyone at all — see a winner in this scenario?
I do. It’s anyone who calls Barack Obama a “Socialist”, a “Marxist”, or “anti-Capitalist”.
I have to be honest, until today, I never branded President Obama as any of these. I merely regarded him as misguided, foolish, and just economically clueless. But not anymore. Here’s why:
I asked Joe where this set of regulations come from, and why were they put into place. He replied:
“Barack Obama created these regulations by Presidential fiat. They are unrelated to any form of legislation. They have nothing to do with bank solvency. They have everything to do with his anti-capitalist ideology. This is the mindset of the current Administration: kill American business.”
Now, consider that this is just one story of one bank, one broker, one financier, and one set of entrepreneurs. Now extrapolate this to every American bank, broker, financier, and entrepreneur.
And is it any wonder — any wonder at all — why unemployment remains high?
Is it any wonder — any wonder at all — why Liberals complain about how workers are being trampled on, when it is their own policies that are trickling down to keep people on the unemployment lines?
I’ve been writing articles over at SeekingAlpha.com and InvestorPlace.com. Lately I’ve been doing a series on the Dow Industrials, and discovered that every company I was writing about had billions of dollars of cash on their balance sheets. In some cases, it was tens of billions. Why, I wondered, isn’t that money being spent?
My old high school math teacher taught me that if one uses reason, no question can go unanswered.
The answer is apparent. American businesses have no idea what to expect from an anti-Capitalist President. What regulations will he impose on businesses? They have no idea what’s coming down the pike. Why spend billions on some new initiative, some new invention, some expansion, some hiring, when it all may yield nothing because some regulation kills it? What costs will be imposed by Obamacare? How much will it cost to pay for a new employee’s health insurance? Will the GOP take over Congress and the White House next year and repeal Obamacare? They don’t know. So they don’t hire. Will the economy fall into a double-dip recession? Well, with anecdotes like mine, it sure as heck seems like it will! So why spend money to expand and hire? So they don’t.
I really, really want a Liberal reader to try and justify this course of action by the government. And I want it to lack schadenfreude. Because if it doesn’t, all it does is confirm the stereotype of the anti-profit Liberal.
Then I want that same Liberal to justify voting for Obama again next year.