Thursday, August 1, 2013

Big Companies More Valuable Than Small Companies

So what explains the surging stock market, when the fundaments of the economy remain weak?  Again, micro-factors favor large companies with access to government.  This is true for banks as well as for non-financials.  Smaller companies are getting hammered by higher tax rates, more mandates, and looming ObamaCare.  Large businesses, with some exceptions like coal, can deal with all the bureaucratic regulatory stuff because they have so much scale.  Not true for smaller businesses.

So what you're seeing is a change in the playing field.  The big guys are doing relatively well and small business is in the doldrums.  That is keeping with the Obama playbook of the grand corporate-government teamwork.  Obama can relate to big giant companies, because they are so much like the government and, in some ways, indistinguishable.  But small business is an annoyance in the Obama scheme.

The problem is: small business produces the new jobs for the economy; big business is a stagnant employer in the aggregate.  So folks looking for a job are out of luck.  The Obama economy is great if you're big and rich, but not so great if you're an out of work American or a small business enterprise.

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