I have been quiet on the blogging front lately because frankly, there haven’t been that many great things to write about.  However, one thing that has continued to bother me is whether our economy is able to be accurately assessed right now.  I say this because without the support of the recent government handouts, the economy doesn’t appear to be sustainable.  Here is what I mean.

I have followed the Small Business Administration and how it has assisted small businesses for many years and traditionally, it has been a great place for small business to go when a traditional lender might not want to extend a loan to that business.  It was a place that a business went when it wasn’t a great fit for a traditional loan and was accompanied by higher fees and a more complex process.   But it had a purpose - to fill a void/need in the market.  Well, every month now, it appears that another bailout is required for SBA to keep lending money to small businesses and now they removed the fees.   Businesses are getting the benefits of receiving money on a riskier loan wiithout any repercussions.  It almost seems like the SBA could become the “subprime” commercial loan marketplace if this trend continues…after all, who else guarantees at 90%?

As an entrepreneur, this is attractive.  However, as a citizen and taxpayer, it scares me. I don’t see anything else propping up the economy when the government doesn’t intervene.  In many ways, the Federal Government is “bailing out” small business with borrowed money of their own to try to increase employment.  Yet studies show that companies are not hiring until they are sure that the economy is fully recovered.  And many small business owners are now saying that the SBA should lend directly because the banks aren't lending the SBA allocated money to them.  My gut tells me that those businesses are not able to get loans due to traditional credit issues and are looking for a handout.

So my question is, where should money be used?  Should it be to sustain the things that we already traditionally allocate taxes for within existing budgets or should it be a pseudo "venture capital" fund to create new businesses that somehow aren’t qualified to get a traditional loan (using borrowed money)?  Either way, the money to pay for all of this will be coming from the remaining successful businesses and individuals via tax increases, as well as from a continued stream of loans to the government.  And many experts seem to think that China, the source of much of this borrowed money, is sitting on a significant financial bubble right now which might prompt them to look for a payout sooner than we expect.

So, my feeling is that if the U.S. Economy doesn't find a way to sustain itself, we will never really know where the economy truly stands.