Now is the winter….

Sharemarkets are up, there are some signs of confidence creeping back… so what to make of all the different signs in the global financial turmoil?

More gloomy news I’m afraid. Every smart company will be appreciating the phrase- “Now is the winter of our discontent, made glorious summer by this sun of  (New) York” as we see the stock exchanges of the world rise on a tide of taxpayer-funded stimuli.

And this is only the beginning of an unsustainable rise as business and consumer confidence are being pushed up by the financial megaliths negotiating to pay back the US Treasury so they can go back to paying obscene salaries to executives.

At the same time, six large US banks are cutting their lending to business but stand to pocket $US10 billion in federal subsidies if they modify home loans to mortgagees who failed to plan ahead appropriately.

Obama might be saying differently, but the largest bank recipients of US Government aid are offering less credit to businesses and consumers, reflecting and exacerbating the tenuous state of the current economic environment. 

The proof? In a monthly snapshot of lending by the 21 largest banks receiving troubled asset relief program (TARP) funds, the Treasury reported credit being offered fell 2.2% across all commercial-lending and consumer-lending categories in February, compared with the prior month.

Goldman Sachs is so confident that its rapid rise in earnings (reporting a $US1.8 billion first quarter profit) will succeed that it wants to finalise out-of-court cases in Australia and be able to escape executive salary caps around the globe to protect their access to executives being taken up by other institutions.

How many SMEs can look back to paying their executives $200,000 to $400,000 base salary and a bonus of up to three times the base for advising business how to cut staff and close down unless they are bailed out?

The reality is that the household sector is being asked to accept massive job losses along with the tourism, hospitality, retail, airline and forestry industries so that taxpayer stimulus packages can be used to provide bridging funds for the very players who manipulated markets to make these incredible personal payouts, and want to be able to get back into that pool again.

And while the Federal Government is willing to provide guarantees to the banks, it is not insisting that the banks lend to small business.

The small business community must surely ask why it is being asked to keep on keeping on employees for whom there are declining prospects while the people who make nothing and say anything are rewarded.

In the next month we will start to see this surge of discontent begin to erode the stimulus driven myopia as rising unemployment (more than 100 million job losses around the world) start to show what the IMF is starting to admit – the recession is going to be long and severe.

Maybe it’s time for a massive movement of smart companies to the offices of every MP with a demand for a share of the action, along the lines of the jobs, jobs, jobs call from Malcolm, so that the budget is not another stimulus for those that have profited from cuts, cuts, cuts.

Dr Colin Benjamin is Entrepreneurship and Strategic Thinking Consultant at Marshall Place Associates, which offers a range of strategic thinking tools that open up possibilities for individuals and organisations committed to applying the processes of innovation, creativity and entrepreneurship. Contact: CEO Dr Jane Shelton. 

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