As one watches or listens to the media, they find themselves inundated with information regarding problems in the economy. Further, most people are aware we must find real solutions to correct the catastrophic condition of the financial system. Yet, as we all can attest, it is easier to identify problems than solutions. Therefore, our government and its citizens must identify a clear-cut plan of action to solve the economic crisis. Moreover, the plan must have viability, and, be free of defective assumptions' and ineffective practices.

The foremost realization people must embrace is the actual problem behind our current catastrophe. Many clamor that the problem is the lost value in the capital markets. The devaluation of the market is really not the problem; it is a symptom of a much worse condition. However, the devaluation of the market is also the solution attempting to emerge. Many people may take pause at such a statement. However, the market is just exposing its true value or lack thereof. Therefore, the object of this article is to bring into focus the obvious solution, and what's more the solution will be self-evidencing. The devaluation is caused by a supply glut and investors' realization that the prices of the stocks are indeed inflated and it does not pay to purchase new stocks or even hold them.

Much like with any product if one does not feel his or her money's worth is contained within the given item (in this case stock), he or she will want to find better value. Thus, demand is lowering and supply is remaining high. Really, what's happening to Wall Street is an economic adjustment in full motion.The value of the market in actuality is likely half of the amount of investment dollars that have been placed into the market. Moreover, as with any company that sells a defective product for more than its true worth, there comes a time when a loss of market occurs. In the case of securities, a desire has developed to sell off current investments in the market and seek safer and better investments elsewhere. Vast amounts of capital are being transferred from the stock market to treasury notes, bonds, and gold as well as energy investments. However, the transfer of money to other areas such as those mentioned above will consume only part of the investment dollars. At the same time, there is still a hint of instability and possibly poor return in treasury notes, bonds, gold and energy investments. Therefore, it is the remaining dollars that we are interested in as if they are not re-invested in the REAL economy, the economy cannot revive.Decidedly, the remaining portion is the money investors need to utilize wisely. The question is, how does one prudently invest and what else exists if most publicly traded stocks are inflated? Well, as I have mentioned in some of my earlier articles, the investment of the future is in new businesses that have not had the chance to enjoy Wall Street inflated stock values. Example would be new start-up businesses designed to endure tough economic times. Additionally, there are many strong industries. For example, clean energy, service businesses, new technologies and so forth.

So is there a chance that investors may move funds from Wall Street to Main Street and what impact can such transition of capital have on the economy?

Well, shifting investors' focus to Main Street requires a bit of promotion and incentive for investors to gravitate to small business. The idea is to create new high quality business infusions in the form of good debt, equity and guarantees. This will recreate the economy rather than our government buying up old bad debts and further escalating the problem by propping up a bad business. Beautifully, there is an infrastructure in place that was established under the 1958 Small Business Investment Company Act. Small Business Investment Companies (SBICs) specifically focus on attracting investors, pooling investors' money and investing in small businesses. The funds are partially guaranteed or financed by the federal government. Thus, it only appears natural that if our government wishes to use government funds to correct the problems in the economy as it has attempted to do with the bad debt bailout of the dilapidated mortgage industry, a much more feasible solution is to infuse the capital into small main street business.
This can be accomplished responsibly through generating a dramatic increase in SBIC involvement. Perhaps the Government could infuse five hundred billion into the SBIC system; this will fund five hundred thousand new businesses of which two hundred fifty thousand will be a success. Of those two hundred fifty thousand businesses, the average staff will be twenty employees. This equals five million new jobs created. Further, it is estimated that there will be an equal number of jobs created or sustained through residual products and services purchases made by those newly operating businesses. The creation of ten million new good paying jobs will certainly be a springboard to stabilize America. Finally, with government involvement, there can be caveats such as high standards of employee payroll for businesses obtaining funding through SBICs, the government can also give preference to particular industries to insure the businesses receiving the funds will be depression resistant etcetera. This plan is essential to restore the workforce, thereby providing a foundation to restart and rebuild the economy allowing America to be financially comfortable as this market correction takes place.

BreadStreet Author: SJ Fortenberry

This article brought to you By BreadStreet Investors' Union at http://BreadStreet.com

"Bringing Investors and Entrepreneurs Together for Profit"

Also see http://www.PrivateBusinessInvestments.com

This article also published at ArticlesBase