The news has been deafening these few weeks for investors, individuals, the world, and we small businesses. Deafening and frightening. The unknown is enough to dampen the best of spirits, and the waiting game will kill us. The volatility for no reason except for panic about Europe (and perhaps the fiasco that is the U.S. Congress?), has done nothing to ally our fears.
Kraft Foods spent $19 billion to buy Cadbury PLC last year, and now it’s splitting in two. It is scaling back the merger of a high-end luxury item with every-day lunch meat to better compete in the global economy. Meanwhile, ground turkey is infected with salmonella and killing people. And, that behemoth Google is purchasing Motorola Mobility (yes, that kind of money is alive and well in this stinkin’ economy).
Banks are now going to charge huge-scale investors a fee to stock pile large sums of cash apparently pulled from the too-risky financial markets. Shall we small businesses be following suit? Do rich investors know something we don’t? But, too much cash is not what banks want; in fact, they have to pay interest on that and with the truckloads of greenbacks pouring in…that means money is going back out.
Individual investors have money stuck in the markets, and we’re subject to the high risks of the fluctuating volatility. Where else shall we put our money? The FDIC only insures up to a certain limit, and not all vehicles, money are insured! If a bank goes belly up, and you have more than the insured amount sitting in the bank, you lose (the traditional amount is $250,000). In our lifetimes, we need to have eight times that amount to comfortably retire. Can any of you say you’ll make it?
Shall we buy gold? It’s a bit too late with the price sky high (now trading at $1600+), and you can bet people ran to melt their gold jewelry for an instant fix. Stories are all over the news with families forced to trade in family heirlooms and wedding rings.
Shall we invest in real estate and hope the market turns? Real estate agents have been saying “there’s no better time to buy a house than right now” since 2006 believing the market to be at bottom, but they don’t really know. How about investments in rental units? Apparently, rental vacancies are low in some regions, like near military bases where there is higher need.
Our financial advisors have never seen markets like this, so they tow the company line and say “ride the wave, you’re in for the long term!” Except, the graying of America has 50 percent of the nation’s population suffering from the demise of their portfolios. And, the wild ride is expected to remain volatile through 2013, say economists.
I knew with absolute certainty the market would crash again; I rode the wave and the uptick felt good for awhile. For young peeps with the income to consistently invest, the markets are still something to consider. With the global economy now dictating market fluctuation (something the U.S. markets were not affected by eight years ago), no one can assess the health of their portfolios by looking at the U.S. economy only.
What does this mean for us small business owners?
We hire contractors; we hire service vendors; we purchase technology and services to run devices; we service clients; and we manufacture and sell products. Jobs? Yes, we create jobs, but these may not be full-time positions. What if our clients look to saving money and decide not to need contract work or decide to forego partnerships that have been in place for decades? These are the questions small-business owners are faced with in light of the current debacle that is the U.S. economy and economic future.
While the news of late has been oriented to banks not lending to small businesses, the news today is that small businesses don’t want to add to their debt burden without comparable or higher sales to offset the debt.
This roundup all came from one day of news stories in the Wall Street Journal. I’m a bit un-nerved for the first time about all this and wonder today about filling the queue for the coming year. We’ve been through a recent recession that we never really came out of healthily, but this time? We’re royally screwed, and I encourage small businesses to shore up and brace for the worst. It’s going to be a long haul, Friends.
