I’ve been working on other posts, but then I saw today’s paper, and the stock market drop. You want good reading? How about 60% of Americans say depression likely (A CNN poll). Or the much more reassuring Then and Now. I recognize that my place in blogging is something like baby-boomer ex-hippy MBA entrepreneur, which doesn’t include this post. But I can’t help it.
In case you’re wondering, my list of 7 points here is titled as "4 or 5 truths" because some of these points are only half true.
- Business will go on. Your business will do just fine if you continue to offer customers goods or services they want to buy, and they have money to spend. But there’s no denying some spots are better than others. Real estate’s going to suffer. Banking’s going to suffer.
- It’s surprising how well the high end holds up in tough times. Gourmet foods, expensive coffee, and other so-called "affordable luxuries" tend to do well. Apple stores were crowded yesterday.
- Price-driven strategies do well. Old Navy was crowded yesterday.
- There’s a morality play (sorry, I was an English major once) embedded here. As a nation, a society, we played all grasshopper, not ant, for a generation. We consume, we don’t save. When it was time to tighten belts, we didn’t; our politicians wanted to be popular, not right. We built guns and butter both, not — as the classic economics texts suggested — one or the other. We attracted savings from the societies that save (Asia, Europe) to substitute for savings in our own country.
- Flash back to the 1980 presidential campaign. Jimmy Carter ran against Ronald Reagan. Carter preached common sense and restraint, with a touch of sacrifice, because we were consuming so much more than we were producing. We’d had two energy shortages just before that, and we were in the middle of a credit crunch. Reagan parried Carter’s statesmanlike warnings with his reassurance. We can have it all. We are, after all, us. Reagan won.
- If you wonder why neither presidential candidate spoke of the belt tightening and tough times and sacrifice that are obviously coming, during the debate last Tuesday, see point 5 above.
- Why exactly right now? All this is happening during the last few weeks of a lame-duck administration; one that has the lowest approval ratings on record. Confidence is so important right now. But we have the election uncertainty to compound it. Would this have played out the same way in late January? I think not. I’m sure it wouldn’t have been as bad. The people in power next January will presumably be able to speak truth, and wield credibility, without worrying about an election in weeks. Could sounding the alarm bell have waited until January? I don’t know. Do you?
Was it FDR who said "all we have to fear is fear itself?" I think so. Today, it’s not all we have to fear, but fear itself is driving this thing the wrong way. We need to settle down. Suspend disbelief. As MommyCEO said on her blog yesterday:
We need to keep focused, keep our eye on the ball, and churn out the sales that will keep us growing and healthy. As if our lives depended on it. Because they do.
There are some nice remarks about 'grasshopper' here, but you might rethink your remarks about Carter. The last two years of his administration displayed the phenomenon of stagflation, with the prime over 10 percent and unemployment as well. If the present economic conditions become worse, as unfortunately seems likely, the recession/depression to come will resemble the economy under Carter's administration. There are few, if any, who would maintain the Carter administration managed the economy wisely.