What The Future Looks Like For Small Business Financing In Greece and the US

Recently the markets have been very volatile due to scares about the Euro in Greece as well as American credit worthiness. During the last financial crisis, Greek banks had to help the government rather than the government helping the banks, as was the case in the U.S. But now, as restructuring seems imminent, banks are worried their balance sheets may burn.

Withdrawals are rising and deposits are down; Greeks would rather stuff their Euros underneath their mattresses. The bankers have to reassure them all is well. They are loathe to the idea of default. But the top bankers recognize that the threat of default is enough to allow further restructuring. It’s not necessarily the bankers who could stand to profit by another bailout, as much as it is the average Greek. At present, more thought is being paid to not losing money instead making profits. It’s a long road ahead. At home, when it comes to small business financing, capital is continuing to bunch together. Take New York City for example. The business firms that have merged over the past five years are more productive than they were before. This means that New York has become more competitive as a global city over the past few years. No competing firms would want to leave, thereby opening up their place for other firms from abroad. So agglomeration is a good thing for small businesses and large. Unless transportation costs drop so much that it doesn’t matter whether a firm is in a centralized area; they can find cheaper labor elsewhere and continue to export their product the way they have.

But with most human-capital intensive industries centered in large cities, such as finance, management, and systems design, it stands that they will not be going anywhere soon; transportation and global society is a long way away from being at the point where it doesn’t matter where a production center and a client are in relation to each other. In order to keep these agglomerations where they are, however, it’s important that specific restructuring be implemented: investing in research and education, infrastructure, growth, as well as the loosening of immigration laws.

These issues are governmental and will be mostly resolved over the next election or two. In the meanwhile, it’s important that small business financing continue, both abroad and at home. The more confidence people have in their business, the more they have in their national market, and the stronger a national market, the stronger the global market.