Two Very Important Sentences:
Fred Wilson of AVC posted my favorite line from the president’s press conference yesterday; and the whole post — brilliant blogging, in my opinion — was this simple quote:
At the same time, the rest of us can’t afford to demonize every investor or entrepreneur who seeks to make a profit. That drive is what has always fueled our prosperity, and it is what will ultimately get these banks lending and our economy moving once more.
Good point. Thanks Fred, and thanks Mr. President. Somebody should say it.
A Catch 22 on Banks
Talk about on again — off again — on again:
- They wrote all those banking laws back in the first great depression when banks were caught speculating with depositors’ money. So banks weren’t allowed to invest in, say, a good business plan. Instead, they had to have collateral. The world wanted banks to play it safe.
- Then in the great boom days of the last 10-15 years, banks were set free and they started using “yoopeee” as their philosophy of loan management. And we loved it. We said “Yoopee” too. That is, until they crashed and burned. And got bailed out with our money.
- Now there’s a credit crunch and we want the banks to lend again. So do I. But do we want them to make bad loans, or risky loans? Isn’t that what got us into this mess.
And How Did Bonus Become a Bad Word?
OK I know the answer; anybody who hasn’t been living in a cave knows how bonuses got a bad name: excess and greed in large business. Bailouts and bankruptcies and lavish bonuses don’t go together. Thank you, big business, thank you, big banks, and, specifically, AIG; but they’re not alone.
But what about the rest of us, in small business, where a bonus is a reward for a job well done? Where people get an extra month or two of salary if — and only if — the company makes a profit? Bonus isn’t a bad word, or shouldn’t be. No profits, then no bonus.
This isn’t lavish excess. This is sharing profits, working and thinking as a team. And it’s a good thing, not a bad thing.
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