With 2010 finally over, everyone seems to feel the need to look back over the year that was. Here at Kamatoy Media Group we are no different, and because of our strong connection with small businesses we decided to go to our own small business and SBA loan expert, Craig G. Francis, for his thoughts on this very busy year. We wanted to know what he thought about the year in business, politics, and the economy, and Craig was more than happy to oblige. In our first post we talked about the top small business stories on his list; our second post was devoted to the economy. Today we finish with Craig’s thoughts on politics in 2010 and what he sees ahead for 2011.
David Kamatoy: Last year was a banner year for political speculation, with the rise of the Tea Party, the seemingly unending contentions in Congress, and the results of the midterm elections. Out of everything that happened in Washington and across the political landscape, what three events would you rate the most important?
Craig G. Francis: The midterm elections were certainly a major story. The House is in the hands of some allegedly mature people who've committed themselves to repudiation of the worst of the last two years. It is going to take years and a full change-out of the present political culture to realize these able politicians’ best hopes. And that is if they can keep their heads in the middle of the Beltway mentality. Few politicians can resist drinking the Kool Aid of power.
We do not have much wiggle room or time given the fact that our national debt is approaching $15 trillion dollars and growing by $1.2 trillion a year. If our national debt exceeds our GDP we will face a Greece-like debt burden that will change everything we know today. Interest rates will skyrocket. Loans will be prohibitively expensive. Tax revenues will plunge. Business sales and profit margins will evaporate and unemployment will rocket upwards. We will yearn for the days of financial malaise that characterized the Carter presidency. At least we had Reagan to help us out of that mess.
Inflation could easily hit 10-15% as we print increasingly devalued FIAT CURRENCY with Quantitative Easing II, IV and V, while inflating ourselves into insolvency. EVERY country in the history of mankind that debased their currency created the double barreled blast of inflation and economic ruin. Google that and see what comes up.
Even with the changes in the House of Representatives we are not in safe waters. Congress and the president have not done anything in the last 2 years to help with the job situation or programs to allow business owners some certainty in the years ahead. The best we can expect from a divided government is gridlock. In these fiscally uncertain times, this is not a healthy situation.
The Tea Party is a growing force in the political landscape but the changes needed to make inroads to fiscal responsibility will require draconian measures. This will require a complete change of power in the House, Senate and Presidency plus a fiscally responsible cadre of citizen politicians at the state and local level.
If this scares you, so be it. I'm also scared by what I see and am not confident that the Tea Party candidates can reverse our present course in short order. My business and financial well being is as much on the line as anyone else’s. It will take enormous courage and will to make progress in this present time of troubles.
David Kamatoy: Now that we have survived 2010, most of us are looking ahead to 2011 with at least a modicum of hope. Where do you see things going in the new year? How much of an impact will the Republican majority in the House have on the direction of the government and the economy? And do you think the economy will make as much of a recovery as the President seems to believe?
Craig G. Francis: You posed the question with the wording “survived 2010.” Yes, we survived. And we will survive the economic problems that will certainly occur without stringent and harsh measures needed to get our fiscal ship back on course. We will survive into the future. We are not going to die and eat worms, but it will be bleak. But survival is not the optimum strategy, since entrepreneurs are by their nature optimistic, nearly at a myopic level. And we need optimism from the small business owners community.
So here is what I have to say to business owners anywhere who are reading this.
I think we are in for a long period of economic stagnation with little hope for business owners, either budding or established. I am NOT optimistic, and this is due directly to the government policies of the last 4 years and longer. We hired these jackwagons and they have given us what we have now. Unless we are willing to remove them from office, we will get exactly what they are providing us today and that is outlined in previous discussions.
David Kamatoy: So to sum it up, what do you say to small business owners and entrepreneurs on the climate in general in the new year?
Craig G. Francis: Well, David, here is what I expect.
Some business owners will accept what I say and not start or grow their business. And that is probably wise since they should not bet their farm on a "land of Oz” optimism of improving business environments. They will not have the financial OR emotional resources to deal with the rough parts that they will inevitably face in the next 5 years. Stay the course and wait for the right time to start your business or expand the company with debt and new employees.
Some business owners, card-carrying members of the starry-eyed school of entrepreneurial optimism, will tell me I am full of beans. And I hope I am wrong in my prognostications. I take no pleasure in saying what I have outlined already. I have an overabundance of optimism because I have run my business successful and profitably through the best and worst of economic times from 1981 to the present day. And I have NOT given up hope. But I will not delude myself into thinking it is going to be easy. It is going to be a hell of a slog
I spend most of my days studying and reading the economic tea leaves and I am not left with an abundance of confidence that we can work our way out of this fine mess without measures so severe they will make the Great Depression look like a cake walk.
But I am also a Reaganite sort of business owner and think and hope our best days are ahead of us. We have always worked our way out of our self-made messes and moved onwards and upwards. So I say to the optimistic entrepreneurs among us, “Slog on and take those challenges.” No one said it would be easy. It won't be. It is never easy for the business owner. But it is worth it!
David Kamatoy: Craig, thank you for your time and your insights. Best wishes to you in 2011.
Craig G. Francis: Thank you, David, and the same to you.
Craig G. Francis is the owner of Francis Financial and The SBA Loan Store. He has been a top producer of SBA Loans since 1981 and has worked with Dun & Bradstreet and Bank of Commerce. Craig Francis has the expertise to steer clients through the often confusing rules and regulations associated with SBA Loans, having helped over 2,000 businesses acquire over a billion dollars in loans. He can be contacted through CraigGFrancis.com, SBALoanStore.com, on LinkedIn, or at 888-666-9722.