Meredith Whitney, ranked #1 investment analyst in her category by Wallstreet Journal, wrote an article(The Credit Crunch Continues, The Wallstreet Journal, Oct. 1, 2009) about the current state of economy, and how the government support is heading into the wrong direction.

Whitney states that "credit is contracting. Access to credit is being denied at an accelerating pace", and that this leaves smaller businesses struggling to get loans while large companies are still able to do so. I agree with Whitney on this because I'd imagine that large companies would be more of a sound investment for bankers.

Whitney declares that small business credit is diminishing, at a rapid pace, with no credit, banks are reluctant to give them loans, which doesnt suprise me since 90% of small businesses fail within the first 5 years, why would a banker want to support a doomed cause?

Without bank loans, small businesses are largely depending on credit cards to fund their needs, and credit-lines have been cut by 25% so far. I think that if a small business is relying soley credit cards to begin with, its doomed from the start, so why bother?

After reading all Whitney's facts and statistics about smaller businesses im wondering why she states that government support is heading into the wrong direction,but it turns out according to Whitney,"small businesses employ 50% of the country's workforce and contribute to 38% of GDP." I agree with Whitney here because something that employs 50% of the country, deserves a little more attention.

Government support went to businesses that are "too big to fail" anyway, and not to the smaller businesses were more likely to fail. Whitney argues that this government support should not be going to the larger companies, but rather to the smaller banks, that would loan to smaller businesses, which in-turn would "bridge gaps created by the shut down in the securitization market but also gaps being created by a massive contraction in credit-card lines."

Whitney's train of logic, supported with facts and statistics for evidence, and her credibility (Considered one of the most influential/powerful women in several journals/magazines), definantly convinced me that government support should be heading towards smaller banks/businesses.