It is dreadful to acknowledge how far America has drifted away from
capitalism. America has partially nationalized some of its largest companies
through the federal government's recent investments in GM, Chrysler, and
almost every major financial institution.
The unemployment rate is 17 percent higher today than it was when President Obama signed that $787 billion dollar stimulus in February, 2009. The government and the media have hailed the partial payback of TARP, the bailout of our financial institutions and other assorted large industrial companies, as a victory. But the idea that the TARP bank bailout has been repaid is a farce.
TARP has merely been refinanced in one of the largest accounting scandals in American history.
Banks have repaid the nominal dollar value of TARP only through profits made possible by an all you can eat buffet of government subsidies to banks.
To finance these less well-known subsidies, the government floats Treasury
bonds, which means more debt stashed away to burden our children and
children's children. And despite this, banks continue to tighten lending standards for commercial real estate according to the July 2010 FRB lender survey.
The plan to rehabilitate bank lending in this country has been a debacle. As Ronald Reagan said so eloquently, "the government is the problem." But my lack of confidence in our government has been ameliorated by my new found confidence in good old-fashioned American capitalism.
Just when government proves incapable of reviving bank lending, the private
market gets to work to solve the problem.
The distress in the capital markets and the contraction of traditional credit has given rise to many online financial solutions aiming to help return liquidity to the capital markets. To do for America what our government has not.
New online solutions include The Receivables Exchange, which creates an electronic market for small business to access investors willing to finance their receivables and inventories, and Second Market, which helps investors and individuals obtain liquidity by selling illiquid assets such as bankruptcy claims and shares of private companies.
Companies like Reliquid Capital Network, www.reliquid.com, founded by Marcus J. Mollmann, combine technology with the power of networks to finance commercial real estate. Reliquid has created a virtual marketplace for
owners to access debt and equity for commercial real estate by aggregating
many different capital sources willing to lend and invest in real estate
into one central location.
Such is the spirit of America's entrepreneurs and the resolution of our
entrepreneurial spirit that these new ideas and technologies may help in the
rebuilding of our economy.
How do we get back on the right track? Let's leave it to our entrepreneurs to lead and encourage our government to get out of the way.
Bradley A. Blakeman served as deputy assistant to President George W. Bush from 2001-04. He is currently a professor of Politics and Public Policy at Georgetown University.
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