President Bush and Treasury Secretary Henry Paulson sold the Wall Street bailout to lawmakers as a way to help Main Street, but, for the most part, that benefit is not trickling down to Ashtabula’s Main Avenue.

“It hasn’t helped us one bit,” says Leonard Eames, manager of the Outdoor Army-Navy Store. “I’m not sure how buying up bad mortgages is going to help Main Street, not in Ashtabula, at least.”

Eames says the store has seen supplier’s change their credit terms “from 120 days to 90 days to 30 days to COD.” He says it all started to unravel on Sept. 17 and has been tight ever since.

“American Express, and then all the others followed suit,” he says.

Across the street, John Ginnard, owner of the E-Comm Cafe, has seen suppliers tighten their credit terms, as well.

“Suppliers are not allowing us to have credit, to have the 30-day supply we need to do business,” he says.

Ginnard says this means he’ll have to either go into the market and get short-term credit or dip into cash reserves to purchase inventory. The problem is he’s earmarked those reserves for January’s and February’s operating expenses. Ginnard knows he’ll be facing $400 to $500 heat bills those months, plus an overall slowdown in business. Adding to his worries are forecasts for an especially cold winter and a hike in forecasted energy prices – 17 percent for natural gas and 5 percent for electricity, according the U.S. Department of Energy’s outlook issued Tuesday.

On top of all that, Ginnard has seen a slowdown in business since the market melted. He says many of his customers are on fixed income and he tries to help them get through the end of the month until their checks arrive.

“Cash flow is the biggest problem,” he says.

Jim Enger, who owns 18 auto maintenance stores in Ohio, including Lou’s Tire Mart on Main Avenue, says the credit crunch has resulted in cash flow challenges for his business, as well. It is most pronounced in the processing time required for credit card transactions. Whereas it used to take 24 to 48 hours for the merchant to get his money from the card company’s bank, that transfer is now taking a week or more to clear.

“Eighty percent of our sales are credit card purchases, hardly anybody pays with cash,” he says. When banks don’t transfer the money in a timely manner, merchants can’t pay their vendors and have to scramble to find enough cash to cover payroll. And when payroll can’t be covered, workers can’t meet their credit obligations.

It’s a cycle that’s been gummed up by the tight credit market, which is rooted in consumers’ inability to pay their mortgage payments.

Accordingly, Enger feels the $700-billion bailout was “absolutely needed,” but he’s unhappy about the fact small businesses will bear much of the repayment cost. Enger feels there will be less spending and prices will be driven down in the months and years to come as this burden is shifted onto taxpayers.

The credit crunch and slow economy apparently claimed one of Enger’s competitors, Conrad’s Total Car Care on Center Street, which closed its doors last week. Enger says his Ashtabula store is already seeing an increase in customer traffic and applications from laid-off employees as a result of that closing. A request for comment from the corporate office of Conrad’s was not returned.

Enger says consumers are being cautious with their money, which is bad for new car sales but good for his business as consumers invest in the vehicles they already own.

“Consumers are very cautious about what they are going to spend their money on,” he says.

Dining out is one of those luxuries that families appear to be cutting back. Oscar Tomasio has seen business at his Casa Capelli restaurant slow down to its lowest level in the 14 years he’s been in business on Main Avenue.

“It’s the most difficult time I have seen,” says Tomasio, taking a break from re-stocking wine in the restaurant’s lounge.

As Tomasio talks about conditions, a television in the lounge plays the bad economic news of the day – a cut in a key interest rate failed to produce a rally on Wall Street. Tomasio says he’s been following the news and fells the bailout was handled incorrectly.

“My biggest concern is why was it done so quickly? It’s hard to know why we had do this tomorrow. I wish there had been more foresight, more planning,” he says.

Tomasio says the credit crunch has not affected his business, but feels it could if a piece of equipment fails and he has to get financing to replace it.

“If I have to go buy something and I could not get a loan, it could cause a business to close,” he says.



Cash isolates

Barry Silverman, who owns Michael’s Furniture, and Aric Anderson, owner of Towne Furniture, say they’ve not seen a negative impact on sales from the Wall Street meltdown. Silverman feels the bailout’s immediate effect will be psychological, but doubts if that’s a factor in the local market.

“We’re a lot busier than I thought we would be,” Silverman says.

The business has been in Ashtabula since 1940 and weathered many economic downturns. Silverman has been there 35 of those years. “We’ve had a heck of a lot worse years,” he says.

Michael’s is isolated from the credit crunch because it has a cash reserve.

“As a business we don’t borrow money,” Silverman says. This has allowed the business to continue to offer credit to customers, who can select either 100 days of interest-free financing or a longer term with interest. He says the store has always treated customers as people first, not credit scores.

“We loan to people, and that’s been the strength of our business,” Silverman says.

Anderson feels the overall sluggish economy of Ashtabula County has actually isolated it from Wall Street’s woes – businesses here did not enjoy the huge housing bubble that grew in other parts of the country, and the fallout from its implosion has therefore not been as dramatic. However, consumers are being more cautious about the future. Anderson says most are hesitant to finance their purchases through a long-term loan through an outside lender.

“They are either paying cash or taking advantage of in-store short-term financing,” he says.

Silverman feels it will take several months for the bailout’s financial impact to take hold on the local economy. He says it’s just too hard to predict what that effect will be.

“Everything has changed in the past 10 years,” he says. “The norm of 20 years ago is not the norm now, we are entering uncharted territory.”



Mixed outlook

As the executive director of the Ashtabula Area Chamber of Commerce, James Timonere has his fingers on the pulse of Main Avenue and beyond. He sees the bailout as both helpful and hurtful. Helpful in that credit markets will, in theory, be unfrozen, which will allow employers to make payroll and put money in the pockets of consumers who shop and eat downtown. But it also shifts a new tax burden on small businesses that don’t enjoy the same government rescue protection as Wall Street.

“I think many of our small business owners like we got down here feel that if we get into a situation like (Wall Street’s), there is going to be no bailout for a small guy on Main Avenue,” Timonere says.

A businesswoman who did not want to be identified says unsecured credit is to blame for not only the Wall Street meltdown, but the nation’s steady economic decline. She says manufacturing, once the base of the American economy, was replaced with the job of “moving money around.”

“You don’t build a country on electronic manufacturing,” she says.

She’s against the bailout, which she feels won’t do anything to help the people on Main Street but will ensure Wall Street CEOs continue to fare well.

Silverman says he understands the need for the bailout, but can’t understand why it took $150 billion in pork to slide it through the House.

“To me, that’s the crime,” Silverman says.

Others see the whole thing as a waste.

“I don’t see how that’s going to help business in Ashtabula,” says Darrell Hamilton, owner of the Broken Dreams Cafe. “I don’t see how that can help business on Main Avenue.”

Hamilton says he operates his business on a cash basis, so it’s of no consequence to him if the credit markets freeze up. However, the day-to-day operating expenses are killing him and many other small businesses that live from sale to sale.

“Utilities are what hurts us here. I wish they had a bailout to help with utilities,” Hamilton says.

Ed Loftus, who has owned Lotfhouse Books for nearly 20 years, says the last two years have been very slow for his Main Avenue used book store.

“Ashtabula has been real slow,” he says. “Most of the sales have been on the Internet, that’s carried us over, but that’s slowed down, too. If it were just for the local people supporting us, we’d have to close up.”

Loftus says that as a businessman, he’d prefer government keep its hands off the market and not attempt regulate business. Several of the business owners expressed disappointment in the overall lack of leadership coming from Washington during this crisis.

Indeed, Silverman says he really can’t think of anything government could do at this point to help Main Street. He feels that – just like during the Great Depression – it is going to take a series of innovative, often risky programs, some of which will fail, before the right solution is hit upon.

“All you can do is try something,” he says. “If that doesn’t work, you try something else. I can’t give you an idea of what (government can do) to help. None of us has ever been here before.”