United StatesChange Country
Business Class

octubre 16, 2008

A Very Different Picture of Credit Markets In Fly-Over Country

Anita Campbell

CEO, Small Business Trends LLC

Summary

Throughout this entire credit crisis, I've had the bizarre feeling of being caught in a Star Trek episode. Like the episode of Star T

Throughout this entire credit crisis, I've had the bizarre feeling of being caught in a Star Trek episode. Like the episode of Star Trek where they're exploring the Delta Triangle (the deep space equivalent of the Bermuda triangle). Captain Kirk and crew happen upon an alternate universe containing a vast graveyard of space vessels and inhabited by the descendants of people from the original vessels. The starship Enterprise is caught there until they manage to generate enough power to pull the ship out of the alternate dimension back to the normal universe.

Just like Captain Kirk and crew, I feel like there are alternate universes out there as they relate to the current global credit crisis.

You have Wall Street, which has gone through some manic trading in the past weeks. Through a series of events that the average American hardly understands, the investment banking industry more-or-less disappeared from the American landscape overnight. Central Banks and government authorities around the world are meeting and working together in unprecedented levels. And we've seen the government intervene into the U.S. banking system in ways not seen in the better part of a century. With each passing day we look for signs that the world credit crisis is calming, but it's been a wild ride.

And over in Silicon Valley, the Wall Street mess finally popped the Web 2.0 bubble, according to some. Personally, I do not think this is the end of Web 2.0 innovation. But the mood in Silicon Valley is much more sobering from a money perspective. The free flow of money into tech startups with tenuous business models seems to have slowed to next-to-nothing.

Well, that's one universe -- full of deeply altered circumstances and historic events occurring in a matter of a few weeks. But look at Main Street, and it's an alternate dimension.

On Main Street USA, calmness prevails. Saneness prevails. Most of fly-over country (the middle of the country that some only "fly over" to get to somewhere else), was not part of the excesses of credit default swaps, which have triggered such historic events and wild gyrations in the credit markets and fear of bank failures.

Becky McCray at Small Biz Survival writes how "small town banks report 'business as usual'." Most small town community banks are in a different situation from Wall Street. She quotes one Oklahoma bank president who says the community banks "... are sound and well capitalized and most of that negative publicity is not going to affect these banks across this area.

Bill Wyckoff, a president of a small Kansas community bank, echoed similar sentiments about sound banking practices in a recent Op-Ed in the Wall Street Journal. Community banks in Kansas are doing just fine he says, thank you very much. An article in Finance and Commerce repeats similar sentiments for Minnesota's community banks.

Oh, regional economies and certain industries have their challenges in middle America. It's not as if everything is perfectly rosy outside of Wall Street and Silicon Valley. Economic challenges come and challenges go -- always have, always will. But in terms of the high-finance credit crisis, we've been far removed from that in the Midwest and outside of the money centers. It feels like it's occurring in some alternate universe separate and apart from our daily lives.

It doesn't feel real.

Thank heavens for the saneness, the judgment, the steadiness of Main Street USA. Thank heavens for the sense that even if the next 6 to 12 months involve a challenging recession, our self-sufficiency will guide us through it. It's reassuring.