The $787 billion Stimulus bill (including the restoration of higher conforming loan limits and the inclusion of a modified homebuyer tax credit) has been signed. The President is rolling out a $75 billion plan in an attempt to stem foreclosures. And GM is looking for another $16.6 billion to keep it afloat.
Through the eyes of one plugged-in Bay Area banker:
What I see as a banker really scares me. We are working with several exceptional technology companies (based in the valley of course) with excellent, cutting edge products that are very profitable. Many of them are running on fumes in terms of cash, and need money to invest in sales engineers, inventory, and development and test equipment (i.e. fund their growth). Us bankers are finding it nearly IMPOSSIBLE to find them even a small, conservative amount of financing they need to achieve their growth goals (including hiring [actual] employees at ~$100K/year). It is unprecedented. I’m talking about potential category leaders with a global market that runs into the billions who cannot get a few million dollars to fund some necessary investments. And yet there is somehow $800 billion dollars about to be pumped into propping up housing, backing bad debt, bailing out xyz, etc. Yet, the very engines that provided so much of the valley and American wealth are literally dying on the vine now.
It is a sad state of affairs and it has really [been] hitting home for me that the true engines of our economy are dying in front of us, yet all the media and politicians ever talk about is bailing out legacy auto companies that lost to Asia long ago and bad mortgages. Doesn’t anyone remember how beneficial science, technology, innovation, and investment in advanced research and product development brought us so much wealth in the first place? Have we all given up on learning real skills and doing real work? (And before I get ripped for being a banker, I was an engineer and computer scientist who did primary research earlier in my career – paid my dues there.) This is a clear sign to me that both the Bay Area and the US in general is clearly in a great decline… How depressing.
Food for thought, ideas for debate, and if nothing else a framework to discuss the bailout dollars allocated to date.
∙ $15,000 Homebuyer Tax Credit Cut, Conforming Loan Limits Restored [SocketSite]
∙ Obama Sets $75 Billion Plan to Stem U.S. Foreclosures [Bloomberg]
∙ GM Seeks as Much as $16.6 Billion in New U.S. Aid [Bloomberg]
∙ SocketSite’s San Francisco Listed Housing Update: 2/17/09 [SocketSite]