Are recessions like traffic?

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  • My2Cents Taylorsville, UT
    July 16, 2013 4:52 a.m.

    I think stop and go traffic is a poor comparison because the care remain and chain reactions economy is not stop and go business. Using the traffic analogy its more like multi-car major wrecks every mile of the road.

    The recession is a result of business starts and failing in predictable sequences and no stable industry for any business to base its MTBF (Mean Time Between Failure). Small hobby business takes out a loan on long lease and contract with a limited and specialized customer base and once that customer base is saturated they begin to flounder until they run out of Line of credit funding.

    Small business advocates are not looking at the long term sustainability. Every dime a small business gains as profit has to be rolled over into an increasing debt to income ratio. A business operating on line of credit debt has no future or growth to reach beyond hobby status. For a business to profit they have to have cash flow, credit cards and fees destroy cash flow with delayed returns fixed overhead costs. Flow in has to exceed flow out and its not happening for many reasons.