Thursday, December 13, 2007

A New Market Crash

I don't pretend to be a financial wizard, or someone who follows the market on a daily basis. I rarely watch C-Span and occasionally login to my Ameritrade account.

However, I do have a point to make about markets and how it relates to the small (new) business of entrepreneurs.

About six years ago, when the technology market crashed, it was a tough time for a lot of entrepreneurs, and in looking back a lot of good things came out of the boom that changed the world (Google, eBay, etc), but a lot of entrepreneurs sufferred tremendously and many lost everything.
Now we are looking at the same type of impact on the economy with the recent Real Estate crash, but for some reason it feels different to me.

When innovative (small) businesses die - the best an entrepreneur / Investor can hope for is a write-off on their taxes. When the real-estate values drop the entire government mobilizes and tries to find ways to reduce the burden on banks and the overall market by lowering interest rates, writing off loans and shifting policies. It seems a little odd, that our "innovation" economy doesn't get the same type of attention when markets dip?

I know what you are thinking "Its different... because starting a new business is part of capitalism and there is assumed risk - the government should not be there to bail you out"

I agree - starting a new business is risky, and the governement shouldn't bail out the entrerpreneur - but in the same breath - realize most of the real estate crash is due to "investors buying over-valued real estate". How is this different? It is still buying stock in an asset, and trying to profit from the sale. Sounds like a business to me.

Don't get me wrong, I am not asking the government to bail failing businesses out - but what I am asking is for entrepreneurs and early-stage investors to be given the same level of relief that we are seeing in the Real Estate aftermath.
What about finding ways to encourage more early-stage investment in companies and ways to offer "relief" through taxes for entrepreneurs who risked their money and lost it in a new venture.

What about lowering the tax burdens of entrepreneurs who provide a sole income to their family, or invest in new companies to grow the economy?

I am not claiming to have all the answers - but I find it a little odd that when the real estate market crashes the President and Congress get out of bed the next day and scramble to find a way to lessen the burden on Corporate America - but when the Innovation Market crashes - they let the entrepreneur and small business owner take the hit.