Some baffling comments by President Obama in today's press conference.
Asked how how and why small business loans would help small business, President Obama replied:
"If [small businesses] can get the bank loans to boost their payroll... they will do so." He further claimed that in his "travels" he has spoken with small business owners nationwide, and they see optimism and new customers.
This guy has no clue about how banking and the business world actually operates.
First, businesses don't just increase payrolls for shits and giggles. They increase payrolls because there's an increased demand for their goods and services. Banks don't create that increased demand.
Second, when businesses go to a bank, banks looked to be repaid. If you walk into a bank to borrow money to cover payroll that's indication number one that you do not have a going concern (a long term viable business). For sure, there are times when companies need short term working capital for orders in the pipe line. Again, see #1.
Third, at least 75 - 85 percent of bank financing is for the purchase of equipment and/or fleet vehicles. You know what happens when businesses buy equipment and/or vehicles? It creates jobs for people in those businesses. Do you know why businesses buy equipment. Again see#1.
Prudent banks are not welfare depots. They loan money with the intent to be repaid. Just loaning money on the fly is exactly how our mortgage industry became such a mess; loans to people with no real ability to repay just a speculation that property values would increase.
But the obamunists have no clue because not one of them have ever run a business with a true profit motivation. So that's how we end up with dumb ass comments from a dumb ass.
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