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Tuesday, 25 September 2012
DR CABLE'S BAD MEDICINE FOR SMEs
LOANS AND CAPITAL FOR SMALL BUSINESSES
Small “family” private businesses, some of which are quite large, form the backbone of all national economies. SMEs (small and medium enterprises), owner-managed by 12% of the workforce, employ and self-employ about 60% of workers; while large organizations including government departments (500+ people) employ about 40%. A nation’s SMEs are the stable, staple, necessary, risk-taking, reliable foundations of commerce that have traditionally been supported by local banks. They work on slim margins, usually making a good-enough living for the owner-managers, but often running continually on the edge of insolvency. SMEs – High Street shops, farms, manufacturers and offices, hold in stock the majority of the day-to-day goods and services any community needs for survival. In turn the communities, via local banks, continuously lend some of their savings to these vital SMEs.
But not any longer in the UK. Despite being licensed and owned by a government pledged to expand SMEs, the banks are not lending to them. The traditional relationship has broken down – with tacit government approval. Why are governments intent on ruining the small business sector?
The answer is that all OECD governments are committed to restricting cash and SMEs are an easy target. They are too small to fight back. It is a period of “economic retrenchment” – following a few years of low interest rates. It used to make sense, and may still do today, to shut off the lubricant to the engine of the real-economy, to stress the machinery of commerce, and shake out the sillier, useless, self-indulgent whims and fancies of overweight consumers. Restricting cash, which is the permission to trade, flushes out our real values – identifies what we are prepared to fight for – and restores reality. This is a good thing.
But today, ranged alongside merciless national Treasuries, there are gigantic forces of super-rich companies, international banks, criminals and individuals, globally withholding $21 trillion tax-evasion-capital-flight cash, gouged from national economies, who simply want the cash they hold to effortlessly increase in value. The easy way is to restrict it; to close off all routes to cash for SMEs and the next generation. So “they” refuse to invest it back into their home-nations and governments refuse to collect the enormous taxes from the tax-havens, consigning 50% of 15 to 25 year olds to joblessness, unable to join the money economy. This cash starvation drives down wages, creates chronic poverty and makes all things on Earth cheaper for the super-rich to acquire.
If you have any sense and no morals, you will join these big battalions and also sit on your savings to screw your friends,neighbours and countrymen. Why risk investing when, like the rich and powerful, you can get richer by staying in bed and doing nothing as prices tumble and homeless beggars fill the streets?
Mockingly – knowing that $21 trillion has been siphoned out of world circulation – UK Business Minister Dr Vince Cable, today cynically offers to inject $1.3 billion in 2014, via the very same banks that currently refuse to invest. $1,300,000,000 is a tiny 0.006% of the withheld $21,000,000,000,000. He could and should repatriate the UK’s $4 trillion share of the $21 trillion funny-money funds. Dr Cable is offering so little that he insults business owners.
If OECD governments will not unlock the World’s liquidity before our SMEs collapse – those governments will have to be replaced.