As the government (read: Obama Administration) continues to work on the economy, the most recent pronouncement is that they are going to begin buying "securities" backed by small business loans. Presumably, this is going to enable the Small Business Administration to make (or guarantee) more small business loans... except, the Small Business Administration really doesn't do what they say they do, make or guarantee small business loans.

Here's the way it works. A small business goes to a bank to borrow money. The bank says that if the small business provides collateral and personal guarantees, in excess of the amount of the loan, the bank will make the small business an SBA Loan. There is lots of paperwork, and when the loan is approved, the small business pays a fee to the SBA to "guarantee" the loan. In my experience, the loan was for a company I was an investor in, the loan was $135,000, and the fee was about $4,000.

Now, one would believe that, when one party pays another party (sometimes called a "counter party", a fee for insurance (is this a credit default swap?) on a loan, one would thing that, if the company defaulted, the insurance would step in. Nooooooooo. First the bank goes after the collateral, and then the bank goes after the guarantors, and then there is a lawsuit, or threat thereof, against everybody (officers, guarantors, investors), and then, if everyone is wiped out, the "guarantor" pays the bank. SO, this is another bank bailout deal. This has nothing to do with helping small businesses borrowing money. The bottom line is that the investors could have simply guaranteed the loan for the company without the SBA, and saved the $4,000 "insurance premium". It is just another tax on small business (read: $4,000 fee), it is more bureaucracy, and, as far as the small business is concerned, it is a scam. The small business gets nothing for its money.

So, another month goes by, and nothing is being done about the significant loss of jobs (about 1 million a month) and nothing is being done about the plummeting value of real estate, in general, and homes, in particular. Why is that? Well, the people who are losing their jobs are, for the most part, not members of labor unions, so there are no negative political ramifications for the administration or congress for the job loss, and (it is my guess) most small business owners and operators are nose-to-the-grindstone moderates or conservatives who are trying to build wealth, and these folks just don't fit the profile of people deserving to benefit from the "stimulus".

Unemployment is now above 8%. By July 4, it will be above 10%. However, being INDEPENDENT from a job is not much to celebrate. Chairman Bernanke stated the other day that the recession could end in 2009. There are two ways that can happen. One is for the economy to begin growing to a level above a recession. The other id for the economy to drop to a level below a recession to a D....