Risk Rap

Rapping About a World at Risk

Minus 80,000 for March!

Maybe Mr. Bernanke will say the R word today.

It really doesn’t matter. What’s called for is how to get the economy back on track. Policy makers and market participants must come up with some creative solutions to address the new economic realities confronting our nation.

One thing is certain. Any governmental recovery program must squarely address the support of small mid-size enterprises (SMEs). SMEs are the principal drivers of job and wealth creation and economic development. This is a segment that must be viewed as too big to fail. And policy and programs must be at the forefront of any recovery package under consideration by our elected officials.

An interesting article by MR Pridiyathorn Devakula on government policy and support of SME financing provides some valuable clues to guide our policy. Writing for The Nation he outlines the inefficiencies of the SME State Bank as the appropriate credit channel to fund the development and support of SMEs. The interesting point he makes is that commercial banking sector is a more efficient credit channel.

There are many interesting corollaries with how the US banking and credit channel market is evolving.

We will explore them in more detail in future posts.

Cheers,

Risk Rapper

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April 5, 2008 - Posted by | Bernanke, recession, SME

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