Market bailout on the bubble

With the financial markets on Wall Street resembling a runaway roller coaster ride with more downs than ups during the past two weeks, Congress will likely return to session on Thursday, October 2 to resume talks about a potential bailout plan after it rejected a $700 billion plan three days earlier.
While it is unclear if Congress will reach a deal by weeks end – or if at all – New York State, City and Queens businesses and families are already feeling the economic crunch of the Wall Street turmoil with more uncertainty likely ahead.
“The preliminary September numbers show the fallout from the Wall Street crisis is starting to hit the state hard,” said New York State Comptroller Thomas DiNapoli. “The volatility in the markets is creating difficulty in predicting budget revenues, and [Monday’s] vote in Washington will only increase that volatility.”
As people throughout the country continue to monitor the financial markets closely each day, businesses in Queens, including a number of small businesses in the borough, are already starting to feel the ramifications from Wall Street.
“This will force small businesses to close, some businesses to abandon growth plans and other businesses to shrink,” Edward Roff, Director of Field Center for Entrepreneurship and Small Businesses at Baruch College.
Roff explained that almost all small businesses need access to capital, and it is not easy to find that during this time of uncertainty.
“Banks are very reluctant to lend, period, right now, and they don’t know where things stand,” he said.
Ricardi Calixte, a program coordinator for neighborhood development at the Queens Economic Development Corporation (QEDC), specializes in commercial revitalization work throughout the borough, and he is starting to see the downturn affect people that used to come to him for help.
“I don’t think I have gotten one phone call in the past month from someone looking to expand a business,” said Calixte, who mentioned that in months throughout the past year he might get up to 10 or 15 calls per week from prospective businesses looking to position themselves in Queens. “The credit market is not healthy right now.”
Meanwhile, Jamila Payne, QEDC’s director of business services who oversees all programs relating to helping entrepreneurs and new businesses, said a number of very qualified people have started coming into the office more frequently find out information about starting their own business.
“A lot of people are coming into start businesses particularly because they seem at a loss for what’s going on in the job market,” she explained, adding that some of the people were even looking to start a business as a second job to help with saving money for the future.
In addition, Payne also said that businesses with good credit history are finding it very difficult to get loans from banks to grow their business so they are increasingly turning to micro-loans to finance their expansions.
Meanwhile last week, Mayor Michael Bloomberg announced that the city was already taking steps to deal with the economic pinch, and he ordered all city agencies to slash their budgets by 2.5 percent this fiscal year and 5 percent next year.
“City government can’t solve the problems on Wall Street. But we can take steps to ensure that even as the financial services industry stumbles, New York City continues to move forward – and we are doing just that,” Bloomberg said during his address.
Even with all of the fiscal cuts, Bloomberg took a slightly less pessimistic view of the city’s future and during his weekly radio address touting the City Planning Commission’s recent approval of Willets Point and Hunters Point development projects as key economic development benchmarks. He also urged the City Council to approve the plans for these initiatives so that they can continue to move forward.
“Both projects will mean new jobs and opportunities for thousands of New Yorkers, giving another much-needed boost to our local economy,” Bloomberg said.