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Monday, May 2, 2011
May 2, 2011 - Hal Row's First Talk - Mayor & Hickory Hound - Microlending
Microlending has become a focus of many people living in our area since 2008. It is an issue that Harry Hipps ran on during his campaign for Hickory City Council in 2009. It is his baby in relation to the Hickory area. Microlending was first established in Third World Emerging nations, such as India, as a way to facilitate entrepreneurship amongst the poor. Harry first addressed this issue, because we have seen the lack of a credit function in this community and in many ways this relates to the grass roots business development we have seen in these emerging nations.
This issue was also was carried forward by the initial Small Business Task Force and research was executed to establish its legitimacy as a viable economic/financial function in relation to small business start ups. When this issue was brought forward at the City Council retreat of December 2009, our City Manager Mick Berry stated that it was illegal and would not let the presenter even address the issue to the City Council. Our City Council and Mayor's subservience to City Manager Berry stifled the ability to even broach the topic and this was done without question (not a peep). First of all, I have no clue where the City Manager is getting his information, but Microlending functions have been established in Charlotte, NC and San Francisco, CA and various other communities in this nation, which proves that the premise of his information is 100% false.
The most egregious issue is that the Microfinancing wasn't even allowed to be addressed to the Council and therefore no dialogue was allowed to take place related to this Microlending function. That is where I have a BIG problem with Hickory's governance. Most of the time they will listen, in this case they didn't even go that far, but 99% of the time that is all they are going to do. They have made up their minds about processes before they have even been initially discussed. Once again No Communicado - No Comprende!!! That is not open mindedness and that is not leadership. What human is going to truly support that kind of leadership? Other than gullible sheeple.
You have seen me espouse this issue many times before related to the duplicity on the issues that face the community. The Mayor in this presentation talks about needing to know a little more. He had the opportunity in December 2009 to hear a lot more about MicroLending/Microcapital/Microfinancing, but he chose to allow the City Manager to take charge and not allow the issue to be addressed. How sad that a couple of years have wasted away. This issue, by the way, had been discussed a lot by the Task Force that Mayor Wright personally created earlier that year.
I have been told personally that a Microlending function would be very helpful to Innovators who have had contact with the Manufacturing Solutions Center. Dan St. Louis, the head of the center, said that sometimes these people might only need a few hundred or a few thousand dollars. These people are usually working full time jobs and have families. In this economy, their personal budgets are stretched and they don't have money laying around to help with their side venture, so it is put on hold. So our economy is put on hold by the shortsightedness of a leadership looking to protect some theoretical interest that may not even exist.
What do I mean? Well, I have three friends that are in the Multimedia business. Alan Jackson does marketing research at The Jackson Group, Houston Harris does website development at Pixelspace, and Pat Appleson has his own multimedia studio called Pat Appleson Studios. In some areas, all of their businesses overlap and they can all do one another's core business model tasks. They don't cry about competition, because they know that their businesses can feed off of one another. I have never heard one of these guys crying about competition and worrying about someone eating their lunch. What they talk about is the need to get this local Hickory economy rolling again. What they are talking about is the slow velocity of business in our local community. What they are talking about is the lack of turnover of business activity.
In my opinion, the Mayor is only looking at ways to split up the existing pie and make sure that the CLUB is protected. That is what runs Hickory is a Club and you need to fit into that Club and its mentality to move forward in this community. They are always saying that we need to bring our ideas to them and they are looking for the "Right" investment. Well, with the stodgy, risk averse mentality of a lot of the Old School boys that I have had the privilege to know, they are going to constantly harp on why something won't work and if its a good idea they might find a way to steal it from you. That is the dilemma we face in this community.
The Banks in this community have pulled back on their lending and that is understandable. We have seen one local bank that lost their A-double-you know whats playing the Credit derivatives game on Wall Street and they are merging with a bank that settled a huge fine for participating in a Ponzi Scheme. I can assure you, that bank isn't going to be making any bold lending moves. They will be lucky to survive. I haven't seen these so called investors that the Mayor speaks of stepping up to the plate.
That is the reason why we need alternative sources of capital, and microlending is a good start. All anyone wants is the City to be supportive of this process. No one is looking for a handout. No local government official can give you a valid reason not to try this. We have got to do something. We have got to try some things. The Mayor was throwing around a $20 million figure. Well, if you've got $20 million, then I'll call your bluff and I won't even raise the stakes. Put $1 million into a Microlending trust. Draw up contracts to get the money back and eventually you can decide after ten years whether you want to leave that money in there for the public good or take it out and use it for something else for the public good. But, make no mistake, that is not the government's money. Any money the City of Hickory has is not the government's money. That is the people's money and it is a lot more valid to use it for this purpose than to put up another awning or facade Downtown. These little renovations will give some person a job for a day or two; this Microlending function can change the economic environment around here and create jobs that will last a lifetime.
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4 comments:
The thing that strikes me about the comment that the Mayor made about microlending and not wanting to get the government involved in this is that the City has loan programs for first time home buyers and home repairs. Many loans go to relatives of council members and somehow this is a legitimate use of the taxpayer dollar but helping someone with a business idea is not. Many of the loans made to the home loan crowd get behind and the City works with them. Where is the same thinking with the small business guy?
It's amazing whose wheel gets greased around here and who gets left to fend for himself.
A repaired floor is kosher in the City's eyes and a chance at a living is not. Go figure.
Quite a concept, microlending. Insofar as legality is concerned, I’d refer you to Chapter 158 of the North Carolina General Statutes. If the authority exists for this type of venture by local government, it will be there. It is not provided for in the Local Government Budget and Fiscal Control Act. My questions and thoughts though, are these. First premise, if the City of Hickory has a theoretical 20 million dollars to bankroll enterprise ventures, why aren’t they giving their employees raises? This is the 3rd year that employees have been without a raise. The more asinine among you may very well be mouthing the words, “they should be thankful they have a job.” Perhaps. But when the skyrocketing costs of fuel and food take more and more away from those people, how is that beneficial for the local economy? And the Mayor wants to whine about unions and negotiations. He’s already alluded to the fact that City workers are underpaid, at a minimum of 5% of what other workers make, since that is the amount he forecast costs increasing to the City in his scare tactic propaganda. But like every other wealthy overlord, the City has theoretically 20 million to bankroll entrepreneurial venture, but not give raises to the people who do the work. Real smart. The other aspects are these, in no particular order. I think you asked and then answered your own questions as to why microlending won’t get off the ground. The ‘old guard’ can’t get at that money, unless they start a new enterprise. Well, we can’t have that. Next, it’s their money the City would be lending. If you don’t think so, ask them. Hickory has all the money flow it wants, which is one way and it flows to those old guard big club members. So in that regard, I fear microlending is a dead proposition. Not to mention, that I did a little research prior to writing this. I found 2 studies, one from M.I.T. and one from Yale that quantifies the position that microlending has little, if any, actual benefit to the overall health of the local economy. It was found to be effectual in small pockets, but as a general tool of benefit, the results were negligible. There may be other provisions of the two studies, but I skimmed really quick and am only stating a broad and general overview of the conclusion. If this notion came to the forefront of consideration, those studies and probably some more hyperbole like how India is having problems with its microlending program as told by the Wall Street Journal would make it’s way to the forefront as, “why we can’t do this….”
The problem I have is that this issue won't even be allowed to be debated. Maybe the Indian model isn't the right fit, but some form of a Financial Union arrangement is definitely feasible. Like Catherine Austin Fitts has stated, we need to keep local money in our community.
We have dopes with money that will put it into a Ponzi Bank that pays 2% interest and they are so gullible that they have no clue that the American Banking system is bankrupt. Go read those Economic Relevance articles I have been pasting together. Check out the pattern.
I will digress. History is about patterns. I believe in Master Capacity Building, but I can't work together to build a capacity, capability, foundation, or structure with people who refuse to work with me. I have proven my patience time and time again, but patience can easily turn to procrastination and it is time for some action.
I have shown you patterns and I have laid solutions at your feet. Inaction is an action. Sure, the local Club seems to have control of the Useful Idiots (Check out the Vladimir Lenin quote) right now, but there is no guarantee that they will be able to always keep the intellectually lazy gullible. And think about how angry they are going to be when they figure out they have been duped.
No one around here understands a lot about finance the way that I do. They understand about their personal business and the finances related to their Day-tight Compartment, but people compartmentalize issues and cannot see the forest from their personal trees.
DoGood, where I disagree with you is your belief that the implosion of the local economy won't take down the Club. We will have to agree to disagree, because I believe that it will. Owning a lot of zero is zero. I believe that we have passed a point on a downsloping parabolic curve to where this lack of financial investment action we have seen in this community is going to begin to feed off of itself. It is going to be hard to virtually impossible to right this ship and the clock continues to tick. There is no sense of urgency amongst the decision makers. They've got Harley festivals and bluebirds
and roses to fill their time and minds. The rest of us have to make financial ends meet.
The people of this community have an us versus them mentality and no propaganda is going to hide the mess. Us versus them leads to a rats on a sinking ship mentality. People are going to start leaping and statistics already show that process has begun with the sad shape of our young demographic.
The fiddlers keep pushing the retiree angle. Even if they push that "active experienced" angle, it does not solve our community's issues without that young demographic coming back into line. All it would mean is that 50 somethings temporarily come here and partially fill a gap and soon they become inactive, but then there are no young people to do the work that is a product of young people. That is what has happened in aging communities in Florida and that is what will happen here.
When an elderly person needs to sell their house, who are they going to sell it too? Burger flippers aren't going to be able to afford it, that girl working as a nurse's aide at the eldercare facility isn't going to be able to afford it, and the dwindling population is going to leave a whole lot of supply with a lot less demand. So does this help paint the picture.
We have to do things to get industry moving forward again in our community and the pattern shows that our local government isn't going to be much help. All they care about is small town political games.
I think you may have misunderstood me or perhaps I have not stated my position as lucidly as I could have. Devil’s Advocate that I am, doesn’t mean that I find breaking the stranglehold of the current power elite undesirable or unnecessary, just unlikely. The local business model of controlling the land and access has worked for generations for that central core of elites, why change now? But you know what? I’m glad that someone has the wherewithal to do what you do and I hope like hell I’m wrong in my analysis and conclusions. You have the ability and the capacity to make a strong showing. The unfortunate part is, it’s here. Because you speak against the status quo, I fear that you will not be allowed the success you should have, simply because you fail to conform to their notions of propriety. The sheer insolence, the arrogance…I salute you!
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