A phrase well known by anyone who has taken a trip with young children, the anticipation of arrival is coated with all of the perceived excitement. It is the many ideas that have been brewing of the amount of fun and excitement the destination will bring. It is for this very reason; the voyage toward the destination always seems to take longer than the return.
It is almost as if time is measured by a different scale, the scale of anticipation of excitement. In today’s economic times, there are many chanting “are we there…yet?” These moments are more in holding onto the hope and dreams of better economic times. The chanters are holding onto memories of better times and promises of a better future as a means of swallowing the bitter pill of the present.
I have briefly written on these times and I have had comments on my writings. True economies move in cycles. There are periods of growth where demand outstrips supply, prices move upward thereby increasing inventories and the market calms down; a recessionary period. History has shown this to be the process since the Depression of the 1930’s. Interestingly enough I had lunch with an economist who, through tremendous research, could peg when the next recession and recovery would hit!
These times are not like any other we have seen since the 1930’s. Although statistics profess that the unemployment rate is in the mid 7 percent range, some economist contend it is in the double digits. This coupled with countries like Iceland going bankrupt and the World Bank seeking financial funding from the US bailout money, signals a direr situation.
How does one gauge reality through these times? Certainly not through rose colored glasses believing that these times are temporary and will behind us shortly. Based on economist wisdom and lately government press releases, ‘it will get worse before it gets better’. These times, I feel, will reshape the economic landscape forever. From this vantage point, the hay-days of yester-year will be a memory as we won’t see anything close to them again.
As organizations continue the bloodletting process, they continue to dump billions of economic value of intellectual capital in to an inventory pool. As this pool churns and people get slowly reemployed the economy continues to remain depressed, stagnant and scared for the next step. Thursday February 12, the US legal community took another blood bath with 6 major firms trimming their ranks by 679. Debra Cassens Weiss in her article More Bloodletting Predicted for 2009, reports that the bloodletting frenzy in law firms will continue well through 2009. In a citation, Weiss reports that “that up to three-quarters of the nation’s top 100 law firms are considering partner reductions”. In another of her articles, Weiss reports how a prominent Philadelphia law firm cut associate salaries by 10% across the board.
Over the past week, huge electronics manufacturers were quoted as dropping in the tens of thousands of employees. Today alone the State of California is poised to trim 20,000 people from their ranks. This would mark the second trimming of ranks in California Government in almost two years. There hasn’t been a week since 2007 where some company wasn’t crumbling under the weight of a deteriorating economy, and thus shed staff.
But the question ‘are we there… yet?” continues, have we hit the bottom? When will the turn around start? In the plethora of articles written on this subject; no – we are not there yet! We, as a global economy, are still on a nose-dive trajectory. The nice thing, the bottom is fast approaching and reality, hopefully, will hit us in the face! The turn around following the face-plant will not be as fast as many hope for. The build up of inventories will take many years to dwindle; many years until the economic forces absorb these inventories.
Sometime today approximately 7 million Americans and an awaiting world are hinging their hopes on the ‘economic bailout’ to be signed into law. This 790Billion dollar bill is their glimmer of hope from the economic pit of despair. This hope hinges on borrowing billions to spend now, in the hope that it will kick-start the economic engine.
The starting of the economic engine continues to get harder with each recessionary period, because we simply fail to fix the core problem. We continue to borrow more and more expensive fuel to start the engine rather than fix the core problem; dwindling productive capacity.
Currently the USA national debt is rapidly closing in on $11Trillion, with no end in sight. To every American that is more than $35,000 that should be remitted to the government to relinquish the debt. Borrowing more and listing to Tim Geithner who contends that ‘fixing’ the economy will take $3trillion; that easily adds 30% to our civic responsibility. As we feed the national debt monster by borrowing more, the closeted monster only gets bigger and more ferocious awaiting its next visit.
“Are we there… yet?” That all depends, are we at a point where we will stop borrowing today and become fiscally responsible, thereby charting a true course to financial freedom. Are we at the point to borrow more today, feed the debt monster only to await his return in 2018.
Maybe we should stop asking ‘are we there … yet?” and first understand where we are and where we want to go!