Small Businesses with fewer than 500 employees account for 60% of all employment. Include businesses with less than 1,000 employees and you are looking at 70% of the employment in the USA. Virtually none of these businesses are publicly traded with access to the Federal Reserve’s various $Trillions in bailout programs.
In all, the Coronavirus Stimulus package earmarks a total of about $375 billion in loans and grants to small businesses and non-profit organizations. Compare that number to estimates that the federal government may need to supply up to $1.5 trillion in liquidity to businesses that employ 500 or fewer people if the coronavirus emergency lasts three months. To complicate matters the SBA is not set up to get the money into the hands of businesses that need it in a timely manner. 25% of small businesses hold fewer than 13 days of cash in reserve. 50% have a cash buffer of less than a month. We are about 30 days away from financial Armageddon with half of US jobs at risk. The majority of small businesses will run out of money long before SBA loans and financial assistance can come to the rescue.
At $13.54 trillion, consumer debt today is $869 billion higher than its 2008 peak of $12.68 trillion. That was before the Coronavirus. Years of rising income inequality and wages not keeping pace with rising productivity has resulted in consumers increasingly relying on debt to maintain their living standard. The majority of Americans are living paycheck to paycheck and carrying a large debt load. The one time payment and extended unemployment benefits in the stimulus package is going to prove to be less than a drop in the bucket.
Meanwhile Wall Street has been very busy since 2008. It has created for the economy another gargantuan toxic debt bubble bigger and more dangerous than the toxic mortgage bubble that froze credit markets and tanked the global economy 12 years ago. Last time it was toxic mortgages, now it’s toxic corporate debt.
The U.S. Is Experiencing A Dangerous Corporate Debt Bubble
The stress that the Coronavirus has put on the global economy has exposed it’s rotten over-leveraged core. Once again the Wall Street sociopaths that created this mess are demanding a blank check from the Fed to save them from their high risk hare-brained financial scams. The Fed has responded with a virtual blank check and Congress has been blackmailed into signing off on it to get some relief to Americans who desperately need it.
How the Fed’s Magic Money Machine Will Turn $454 Billion Into $4 Trillion
The Fed Goes All In With Unlimited Bond-Buying Plan
Anyone making $4 Trillion in loans and guarantees available to you to pay your mortgage or rent or keep small businesses that account for most of the jobs in America afloat?
Is the Fed going to buy the toxic debt you accumulated lining your pockets by borrowing to buy back stock, hike dividends and engage in bone-headed mergers and acquisitions instead of making long-term business investments? Oh wait... working people and small businesses didn’t engage in any of those high risk activities that now threaten to take down the global economy.
As in 2008 our priorities are upside down. We are going to protect the 1% from the consequences of their sociopathic behavior and obscene greed and we will leave Main Street to fend for itself and pick up the tab.