This Skin We're In by Dale Beermann

Why aren't we more scared of the financial crisis?

Honestly, I'm starting to get worried. A lot of people are trying to stay positive.  I just don't think we can afford to.

Retirement accounts have lost $2 trillion. 
Consumers can't buy cars without forking over more cash.
Britain, Spain, and Iceland are all trying to instill life in their respective economies.
California and other states can't pay their bills.
Asian markets are down.
The DOW hasn't been this low in four years.
And Obama and McCain are continually bickering with each other about it all.

I don't want to promote the hysteria.  I want to understand what's going on. 

Baby Boomers

The retirement accounts that are losing all the money aren't held onto by Generation Y, and probably not Generation X.  So as our parents are retiring, or putting off retirement, what kind of pressure does that put on Social Security?  What pressure will it put on us if there isn't enough money there?

Education

If states can't pay their bills and it's going to take some time for the bailout to kick in, does that get passed on to the taxpayers at the state level as well? If the credit crisis is getting so bad and government agencies are seeing budget cuts, how are people going to be able go go back to school? 

Foreign Debt

If Russia is lending money to Iceland, and Russia's markets are taking a hit, where is the money coming from?  If we spent all of our money, and everyone else needs it as well, who will lend to us?

The Election

With the incredible amount of lies being flung, from both sides, who do we look to?  If one person can have this big of an impact on our economy, why do we allow them to continue without accountability?

Where do we go?  What do we do?

We need to take a deep breath.  We need to take a step back.  And we need to do our research.

The worst thing that we can do is try to ignore the current situation.  We have to stop being complacent.  We need to do the grunt work ourselves because, honestly, it seems that trusting others to do it for us is what has got us in this mess.  To answer the question that is the title of this post: We, as a nation, aren't more scared because we remain ignorant of the magnitude of what we're involved in.

I don't have the answers myself.  All I can say is that I'm going to try to figure them out and I'm probably going to be skeptical of any information that's fed to me.  I hope this post convinces one or two other people that they should be as well.

How the Credit Crisis Could Affect Young, Aspiring Entrepreneurs and Business Owners

Warren Buffet is a smart man.  I think that it's a good idea to pay attention to what smart people are doing.  This particular person just invested $3 billion in General Electric.  His return?  Guaranteed dividends of 10 percent. I think my savings account gets 0.5 percent.

The Credit Crisis

I was at a talk last night by Greg Valliere.  The big takeaway was that the credit crisis really is a problem.  There were a lot of other important points (the talk was fantastic) but as a co-founder of a small startup this has a direct impact on me.

We're in the middle of the largest credit crisis since the great depression.  It seems to me that if one of the most stable blue-chip companies in the world can't find money at a better interest rate, the rest of us have a little more to worry about.  Granted, $3 billion is a lot of money and 10% is probably a fair price for putting GE's shareholders at ease. 

Small Business

I'm no economist but I do have an interest in small business.  I understand that small businesses comprise a large portion of jobs in the United States.  As Mom and Pop shops are seeing their lines of credit dry up, this becomes increasingly worrisome. 

If you happen to be a budding young entrepreneur or business owner this might hit you even harder.  As younger individuals, even if our credit scores are fantastic, banks may be unwilling to lend money to us.  After all, some of the things that make it easier for us to start a company, such as the lack of a house payment, comprise the collateral that banks are concerned with when lending.

Investment Capital

I wonder if this trickles through to the decisions of angel investors and venture capitalists.  Some believe that they are buffered from the current economic downturn.  There are others that don't think so, mainly because the IPO market is in pretty bad shape.

Yet, I can't imagine that it makes them any more willing to invest in younger entrepreneurs while knowing that banks may not be there if they're needed.  This is a gut feeling but, considering the general state of fear of the economy, I think that it's probably going to take a little longer to raise money than usual.  If that's the case then it's also more likely that a startup will need a loan to tide them over while they close a deal.

Bottom Line

What does this all mean?  For the young and able, it means that bootstrapping might be your only option.  If you have friends and family who are willing to help, that's another great option. 

And what happens when your company needs to take on money to continue?  You better have a solid business model, a solid team, and the ability to impress anyone you talk to.  In addition, your expense sheet better be extremely lean.  When you do take on money make sure it's enough to ride out the storm.