One
year ago, in response to a Treasury Plan to rescue large banks without mandate
for lending, I rose defiantly from my comfort zone below the radar screen to
speak my mind and deliver “truth” to America. My fears, unfortunately since confirmed, was that
Tarp-infused banks would use Treasury-injected capital to heal internal wounds
left by lax controls, leverage upon leverage and abuse of synthetic
instruments, leaving small and middle market businesses without resources for recovery.
I argued that financial engineering had long
distorted the value of our markets and seduced Americans into a false security
of increasing GDP, dismissing the need for value creation through production of goods
and delivery of services. I foretold
that middle market manufacturers, the unsung heroes and hope for this nation,
would be rendered prime casualties of the credit crisis and appealed for a
national commitment to sustain the nation’s core economic base. At the time, I had proposed a
Provisional Federal Bank to lend directly to deserving businesses. My call was early, my premise sound, my
concerns verified but my solution ideologically rebuffed. As such, unemployment became the
defining force of our nation leaving the engine of job creation without fuel
for production.
Amidst the unraveling of the American dream in its sudden transcendence to
nightmare of foreclosures, layoffs and the destruction of our financial
institutions, never once did I witness the direct delivery of truth to
Americans. The potential damage to Main Street and warnings of expected job
losses were quashed under the guise of containing fear. Truth, albeit cold and hard, is the starting point on the path to
recovery and renewal. With truth, the
unknown vanishes, panic and fear subside and the long journey home can
begin. In contrast, Americans were
left to believe that they could sit back confident of receiving the
trickle-down benefits of financial institution salvation and stability. But banks
never lent, much of our SME community did not survive and 26 million Americans
are unemployed. Many Americans remain shocked and stunned by the precipitous
unraveling of their family lives—no clarion call was sounded for them.
On Thursday of this week, the markets and the White
House celebrated the end of the worst recession since World War II. The
American government reported that GDP, a broad measure of the U.S. economy, had
risen 3.5% on an annualized basis in the third quarter of 2009. However, any analysis of the variables
readily highlights the potency of temporary government stimulus in that growth,
with largest components of spending strength reflected in car purchases and new
home building, two agendas broadly supported by federal programs. But before we commence any celebration,
it should be clearly noted that consumer confidence declined in October and
that unemployment continues its rise with no anticipated immediacy of relief. Christine
Romer, lead White House Economic advisor, warned on Thursday that unemployment
will remain “severely elevated” throughout 2010.
Main Street Americans remain confused by the
conflicting data, seeking answers to the timing and type of recovery that
brings relief to their despairing lives.
It is impossible for Main Street to unravel the data, signs of recovery
or actions best taken to share in the relief that envelops Wall Street and corporate
America. And so I return to my
entreating treatise of last year and ask again, when will we deliver truth to
Americans? When will we accept
that people are paralyzed by the “unknown” and seek to fully understand the
dichotomy between the recovery they hear and desolation they recognize?
We are living in “interesting times” and the road to
resurgence will be long and fraught with obstacles. A plan for economic recovery that comforts and assuage fears
will necessitate focus on job creation and available credit to small and mid-sized
enterprises. To bridge the great divide- the casualty of last year’s TARP
focus- we will need honest assessment of damage, executable solutions that defy
political objections and a clarion call for patience and discipline among Americans
who must slowly rebuild their lives.
This passage starts with delivery of “truth” so that jobless and hopeless
Americans clearly understand their long hard journey just now begins.
This country has long been a meritocracy founded
upon education and work ethic, a nation in which each one of us could overcome
the circumstance of birth to live the American dream. This is not a time in our
nation’s history for panic, self-pity, entitlement or complacency; it is a time
for discipline, hard work and cooperation. But it is also a time for truth, change
and recognition that we cannot leave Main Street America behind.
In the words of Winston Churchill, "In war as in life, it is often necessary when some
cherished scheme has failed, to take up the best alternative open, and if so,
it is folly not to work for it with all your might." We must never forget the inextricable link between great power and great
responsibility; when much is given, much is expected. The path to economic
recovery begins with truth.
To read the Clarion Call……http://www.patriarchpartners.com/Lynn_Tilton_WashPost_NYT.pdf