As you read this today, President Obama will be signing the $787 billion stimulus package. For boating, thereís not much good news and some bad.
The good news is it contains the net operating loss carry-back provision that, among other things, NMMA, MRAA and others worked hard lobbying for. The bad news is the carry-back provision ended up being limited in the stimulus plan to companies with sales under $15 million. While overall disappointing at this reduced level, it will still likely help a lot of our dealers. But, unfortunately, it falls too short to be good for most of our manufacturers.
If youíre holding out hope that some other goodies for boating still might be discovered buried in the 1100- page package, forget it. Moreover, let’s forget about debating whether this stimulus package is good or bad, or that it will do better than the plethora of other government actions weíve seen since 2007 Ė all of which have bombed so far.
Hereís the simple fact: the biggest economic issue facing the nationís businesses today is obtaining credit. Last week, Treasury Secretary Timothy Geithner told us the credit noose has tightened. Wow, that was a revelation! Letís hope Geithner and Obama have more insight than that, as well as a convincing banking program to undertake soon.
Maybe Iím not seeing things clearly but it seems ever since the banks were told that the federal government was planning to buy up their rotting assets Ė you know, the ones they should never have gotten into in the first place — they’ve been hoarding money. Itís been reported that banks have been holding onto their bad assets, even turning down bids from investors offering to buy at deep discounts, waiting for a better deal from the government. Moreover, government officials have apparently nodded in agreement if the hypocritical Senate Hearing with major bankers is any indication. Seems they want to live on government life support!
The result is banks trigger a cycle. Businesses need operating capital but find banks unwilling to expand credit lines or, worse, pulling them. This forces the business to cut costs (layoffs). Higher unemployment could mean less business. So, the banks tighten the credit even more based mostly on their perception of what might happen. Repeat cycle.
If our new President really wants to move this economy forward, the Obama team should address the credit crunch now and, hopefully, with a better idea than building a train from Harry Reidís Las Vegas to Nancy Pelosiís California!