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Post a Comment On: Doug Ross @ Journal

"Ferguson schools Krugman: America's unsustainable debt -- 'world war finance without the war' -- can only be solved with regime change"

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Anonymous Anonymous said...

I can speak to this topic because my previous startup now employs 500 people and is a well known brand. By current startup is almost on hold because funding has dried up. While I am keeping it alive, venture capital is clutching its collective wallets because they fear the companies they already are funding may need more of their money and no new money is coming in.

But now the current "spread the wealth around" crowd of socialists in Washington thinks it is a good idea to raise taxes on venture capital. The primary effect is that VC must now have an even greater return on capital so that it can make a decent return given how many startups go bust. And more startups will go bust because they will be starved for capital and customers!

Even better, the SEC wants to raise the amount of wealth a person must have to be a "Qualified Investor", or a person the struggling startup's founder can even show his business plans to and offer to sell him shares. The new definition will disqualify about half of the people who typically make the very first round of investments, without which these business ideas get their first funding shot.

The proposal is right: the best way to create jobs is to cut taxes on startups. My business plan calls for 35 jobs at the end of year 2. No funding, no jobs and no taxes! But the socialist never sees that. He is green with sustainable envy; he sees the profits I might make, if I am successful, and he wants to spread my wealth around. So he raises the taxes I would have to pay, and in the process, he kills all the jobs my business might create.

Government cannot borrow us into prosperty. When it attempts to do so, its borrowing preempts and swamps the limited capital in the marketplace. At least some people with money know this and it scares them to clutch their wallets even tighter. My business is not suitable for finance by lending. I don't have any real assets upon which to base borrowing.

I read last week that at least for the first half of 2009, more money went into gold than went into S & P 500 stocks. That is the market telling us something urgently is wrong with the investment environment that government has imposed on us.

The current regime is not sustainable any more than Thelma and Louise's exit plan was. And that is exactly where we are heading: being taken off a cliff unless we grab the wheel and jerk it in the right direction. I fear it is November or never.

10:00 PM

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