Here is a quick post from an East coast airport. I am traveling today.
In response to $30 Billion Offer No One Wants – Small Businesses Hit by Deflation I received this email from the owner of an e-commerce business.
Danny writes …
I enjoy your blog very much. I thought I would take a moment and let you know what is happening in the “real world” – and why QE one, two or five hundred and two will not help small businesses like ours.
My partner and I own a successful e-commerce website. We started it in the late 1990’s by ourselves and now we have five employees. Our growth came from personal resources, as well as credit card lines. Each year we saw sales increases of at least 10-20%. However, in late 2008/early 2009, we started seeing our sales slipping. As a result (and watching our competitors) we lowered our on-line prices to continue to drive sales. As of today, our prices are 40% below where they were in 2008. However, we have the same number of customers – we just work a heck of a lot harder!
On the negative side, we saw all of our credit card lines cut, so we can no longer use them. Bank financing is completely out as we have no business assets so to speak (our business is online – not manufacturing). We have cut costs by moving to a cheaper office location, letting one employee go and demanding lower prices from our own suppliers (mostly successful). As a result of our cost cutting, our bottom line has only slipped 10%. We feel very fortunate in this regard.
As to what would help our small business grow and hire people again – simple; more sales! We do NOT need to borrow more money as we already owe enough and our capacity is only at 50%. So what would we borrow money for? More production? We don’t have the sales.
So QE actions by the Fed have no effect on us. Interest rates could go to zero and it still would not matter. What we are NOT seeing are credit card rates going down – now THAT might help us somewhat. Regardless, it seems that the economists in charge are playing from the old handbook of everyone borrowing money to spend money. Needless to say, it’s not working – but you already knew that. Thanks again and keep telling the truth.
Retired Teacher Supports Christie
Joan, a retired teacher writes …
I’m a retired teacher, who remembers all too well the teachers who were completely incompetent in math skills. They may have been poor at reading too. I used to fancy an education methods course entitled: “How To Teach Without Knowing Nothing”.
Schools of education at the college level were complicit in supporting this scandalous incompetence, at least according to what I experienced. Governor Christie hit the nail on the head, I believe.
Joan was writing in response to Governor Christie to Test Teachers in Reading and Math
Thanks Joan and Danny.
Mike “Mish” Shedlock
Click Here To Scroll Thru My Recent Post List