Category Archives: Business

UPDATED: Big , Bad Business Generates The Jobs

The Economist: “It is true that small companies create jobs, especially when they are first born. And small companies destroy millions of jobs when they die—which is often. In fact, only a small fraction of smaller enterprises are capable of generating sustained growth of very many jobs. Yet lawmakers of both parties fall over themselves as the protectors of small business, creating programmes that often help big corporations (and wealthy hedge-fund managers) as much or more than favoured smaller enterprises.”

The Economist’s statement, being the Economist, is somewhat incoherent, at least in its tenor. The writer editorializing, being of the Left, wants the politicians to help small business, even though his facts tell him the returns on such assistance are minimal and that small business is not necessarily the engine of economic growth.

Of course, contra the SE Cupp cool model of “capitalism,” helping big business is as capitalistically crony as helping the smaller concerns.

UPDATE: To Robert G.: Yes, indeed, and WHAT IS AN OPEN ECONOMY?

“The voluntary free market is a sacred extension of life itself. The free market—it has not been unfettered for a very long time—is really a spontaneously synchronized order comprising trillions upon trillions of voluntary acts that individuals perform in order to make a living. Introduce government force and coercion into this rhythm and you get life-threatening arrhythmia. Under increasing state control, this marketplace – this magic, organic agora – starts to splutter, and people suffer.”—ILANA (April 23, 2010)

True too is that Big Biz was once small biz.

UPDATED: Production Depends On Pressing Flesh In Washington (Big Biz Was Once Small, Dah!)

Business, Democracy, Economy, Healthcare, Political Economy, Regulation, Science, Technology

As discussed over these pixelated pages, the effects of the Obama healthscare are percolating down. Now the EETimes reports that, “As many as three-quarters of venture capitalists are exiting the health care field as the total pool of venture capital decreases and regulatory hurdles increase.”

Medical electronics companies face increasing hurdles getting funding and regulatory approval to bring new technologies to market, according to executives at a medical device event here.

“We’re in a bit of a perfect storm right now with some of the worst things I’ve seen in 30 years,” said Eamonn Hobbs, chief executive of DelCath Systems and chairman of the Medical Device Manufacturers Association (MDMA), host of the event.

As many as three-quarters of venture capitalists are exiting the health care field as the total pool of venture capital decreases and regulatory hurdles increase, said Kevin Wasserstein, managing director of Versant Ventures (Menlo Park, Calif.) which focuses on health care.

“Even entrepreneurs have started to retreat from pursing big ideas [in health care], and we risk as an industry evolving to incrementalism and safer projects,” said Wasserstein.

Some of the about 100 medical devices executives gathered here complained about what they said was an increasingly conservative and slow-moving U.S. Food and Drug Administration. The chief executive of one medical device company said his product is approved for sale in Europe, but is still waiting on an FDA OK to begin clinical trials.

UPDATED: (Sept. 21): Big Biz Was Once Small, Dah! What do you know, Bernie Marcus, Home Depot co-founder, was once the owner of a small business. How can that be? (Yeah, Obama … and the Republicans are idiots).

Yes, big business was once small. Through the democratic vote of the consumer, a small concern grows and grows to become a big, invariably, bad business. (Irony alert.)

Democracy practiced in the free market is the only democracy worth a dime. Let’s destroy the only honest democracy we have: the free market.

Paying Freddie & Fannie To Hoard Homes

Business, Debt, Government, Political Economy, Socialism

If there’s one thing you need to know about President Barack Obama so-called financial-regulatory overhaul it is that, predictably, it didn’t touch the Freddie Mac and Fannie Mae money pits. Freddie, a government owned mortgage-finance company, has cost taxpayers (or China) $63.1 billion, and it has “asked the U.S. Treasury to provide [it with an additional] $1.8 billion infusion.” “Fannie last week asked the government for $1.5 billion, bringing the total tab for the companies’ rescue to $148 billion.”

You will recalled that in May of this year, the thieves in charge of the Treasury handed over another $8.4 billion to “Fannie Mae and sister company Freddie Mac.” And that “The Obama administration had pledged to cover unlimited losses through 2012 for Freddie and Fannie, lifting an earlier cap of $400 billion.”

WSJ:

The U.S. took over Freddie and Fannie two years ago through a legal process known as conservatorship and has pledged to inject unlimited sums of aid over the next three years to keep the companies afloat.

Freddie is being propped up by taxpayers (read China) until eternity or until the US collapses, whichever comes first. This, despite the fact that these mortgage sinkholes should have long since been liquidated.

As a bankrupt and bankrupting state-run entity, Freddie and Fannie are responsive to political masters, not to markets. This would explain why these entities are hoarding houses when they should be getting rid of them at fire-sale prices.

As political players, they are expected to avoid “putting further pressure on home values.” “The inventory of homes owned by the companies has doubled over the past year, to a combined 191,000, up from 97,000 a year ago.”

Freddie and Fannie forever.

Demographic Diversity In Borrowing, Again

Affirmative Action, Business, Economy, Journalism, Multiculturalism, Racism, Regulation

Building On yesteryear’s willful errors, the Orwellian named “Restoring American Financial Stability Act of 2010”—“the 2,300-plus-page conference bill which is designed to protect households from predatory practices by banks, subprime lenders, brokerages and other financial intermediaries”—entrenches yet more affirmative action in lending, the kind that contributed to this depression.

The fecund female who has set-up the same pigment-based privileges that guided state lenders Freddy and Fanny is Rep. Maxine Waters, D-Calif. Carl Horowitz’s Townhall column is extremely edifying (this is the kind of comment I will read on Townhall because it does vital shoe-leather journalism. Ditto Malkin’s work; she does the footwork. The punditocracy’s ignorant opinions I don’t bother with):

“… The measure, in addition to giving the U.S. Treasury the authority to liquidate banks that pose a threat to financial stability (a mixed blessing at best), all but exempts lenders from shutdown if black and other minority borrowers account for high portions of their loan portfolios, especially in minority neighborhoods. The bill states: ‘The orderly liquidation plan shall take into account actions to avoid or mitigate potential adverse effects on low-income, minority or underserved communities affected by the failure of the covered financial company.’ In other words, federal bank examiners should make every effort to keep a failing institution open so long as it underwrites lots of mortgages to the kinds of borrowers instrumental to the disaster in the first place!

There is more. The amended bill would create a Financial Stability Oversight Council headed by the Secretary of the Treasury to consider a struggling financial institution’s ‘importance as a source of credit for low-income, minority or underserved communities’ before any takeover. The measure also would establish an Office of Minority and Women Inclusion within each of the Treasury Department, Federal Deposit Insurance Corporation, the Federal Housing Finance Agency, the Securities & Exchange Commission, and the Federal Reserve System. Rep. Waters’ amendment is explicit: ‘Each agency shall take affirmative steps to seek diversity in the workplace of the agency, at all levels of the agency.’

All of this looks like quota legislation, even if Rep. Waters can’t quite bring herself to admit as much. And although these diversity-or-else offices wouldn’t be vested with formal enforcement powers, one can be sure that the Justice Department, the Equal Employment Opportunity Commission and other agencies with a civil rights mandate will find every pretext possible, however flimsy, to crack down on lenders whose practices create disparate impacts by race.”

MORE.