Spiritus Animalius

Everyone agrees that helping small business is crucial

The senate is debating a bill that would create a $30 billion government fund to help small banks lend to small firms. Negotiations played out while President Obama visited a New Jersey sandwich shop and plugged for the package of loan guarantees and tax breaks designed to encourage small companies to hire.

It’s well-known that small businesses and new businesses do most of the hiring in a growing economy. That’s part of the reason America has always had such a dynamic economy: the rate of new-business formation is higher here than just about anywhere in the world.

But what’s really needed to get small businesses going again isn’t loans but animal spirits—a sense of optimism and élan that encourages individuals to risk their capital, their time, and their reputations on a new venture. Keynes coined the term 75 years ago as a way to describe how sentiment affects economic decisions

Without animal spirits, enterprise would collapse. Policy-makers debate how to encourage them, but if you really want animal spirits, you need animals: visionaries like Sam Walton or Sergey Brin to start the next Wal-Mart or Google. How to help? The best idea is to just get out of the way.

Douglas R. Tengdin, CFA
Chief Investment Officer
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By | 2014-09-05T19:58:11+00:00 July 29th, 2010|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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