Thursday 12 March 2009

Quantitative what?




Do any small biz people believe that Quantitative Easing will help them in any way? I think I get the idea. You make money cheap and banks will lend it more freely. But as far as I can tell there's a heavy dose of human nature at work in the behaviour of our illustrious lending institutions at the moment. When something is in short supply and you're worried about how much of it you're going to need in the near future, you get your hands on as much of it as you can, as cheaply as you can, and horde it for as long as you can. So, as before, if SMEs need credit they're going to be in trouble. And nothing HM Treasury or the Bank of England do will change this Darwinian situation until an appropriate number of weaker businesses have gone under.

Businesses that have no debt and low costs should be fine in the long run but have no incentive to expand right now until the storms look like they're passing. In the meantime we mend nets and hold tight.

No comments:

Post a Comment