From Wall Street to Main Street -- What Does it all Mean?

The impact of the financial crisis of the past couple of weeks has created lots of hyperbole.  With the quasi-nationalization of parts of the financial industry (and the auto industry is not far behind, by the way) we have become the "United States of France" according to an essay at Time over the weekend.  A caller to a radio show this morning said we've become the USSA -- The United Socialist States of America.

But what does all of this mean for the millions of entrepreneurs across the country and around the world?

Credit will become much harder to get.  In a statement released last Friday, Mike Diegel of the NFIB said "There is less for the Wall Street banks to lend to each other, and likely a little less for community banks to lend out."  But debt is the last thing any entrepreneur needs more of right now, so this is not as big of an issue as it may seem on the surface.

Credit will be harder to keep.  As I have warned for some time, banks will be setting higher standards for business loans and will start calling in loans from people who have never missed a payment.  Their businesses have just become too risky for the tighter standards the banks have to meet.  The events of the past two weeks will only make this worse.

Cash is King... and Queen, and Prince, and Princess and Emperor, and Ruler of the Universe!!!!  Need I say anything more??

Higher taxes will make all of this even worse.  Government seems poised to tax our way out of this mess.  We will have to if we have any hopes of paying for all of this mess.  The "soak the rich" strategy that is now gaining steam means that entrepreneurs will carry most of the higher tax burden.  Higher tax rates on entrepreneurs means less new businesses will form and our economy may stall.

Property rights are the hidden victim.  Layer the nationalization of our financial system on top of the Kelo Decision and we now have the most drastic weakening of property rights in the history of the US.  This will also dampen our entrepreneurial spirit.

This ride is only beginning, so hang on to your hats!