Sorry, but we’re not seeing signs of a full-blown recession around here. That, coupled with reports of “less growth” as opposed to negative growth (as stated on cnn.com a couple of weeks ago, I can’t track down the reference anymore – that’ll teach me to document better!) makes it all the harder for me to buy in to the gloom-and-doom that the news readers are peddling. My wife and I are in the midst of launching a new online business and we have a small retail presence to serve our local customers. The retail outlet is in Blue Moon Gift Shops which is a fantastic venue for specialty merchants. Since setting up shop at Blue Moon in late July we have seen sales grow rapidly and have struggled to keep up with demand over the holidays (how’s that for a reason to struggle during a “recession.”)But what of the credit crisis? What about all the construction workers out of work? What about the problems we’re seeing in the auto industry? I’m glad you asked! The credit crisis was mismanagement on the part of the lenders – trying to give anyone and everyone the American Dream on the instant gratification plan. As I have stated previously, the acceleration of information and associated acceleration of expectations has not been an unequivocal success for society. Now we have seen the day-trader induced volatility from the equity markets spread to the lending market, only this time the volatility is due to the institutional side rather than the individual. If the mortgage lenders had maintained the standards of their predecessors and avoided the “no money, no credit, no problem” car salesman mentality I’m certain of two things. First, we would not have seen the wild escalation in real estate prices of the previous decade. Second, we would not have seen the horrific crash and associated foreclosure tsunami that we’re witnessing now. Like the man said, “There ain’t no such thing as a free lunch” and we just got the tab for an opulent meal. Now we have lumber mills running short shifts, skilled carpenters looking for anything to generate income and painters going door-to-door soliciting work. Not to mention the people making absurd offers on real estate that isn’t distressed just because they assume in a weak market every property ought to sell for a steep discount.
The auto industry is in trouble due to mismanagement that goes back 30-40 years or more. They have long suffered from the philosophy that bigger is better and Detroit is king. Innovation has amounted to nothing more than adding a curve here and an air dam there, maybe some tweaks under the hood, but there haven’t been any significant innovations in generations. Sure, Ford has swapped engines in their SuperDuty trucks, but the last two changes (from the International 7.3 to the 6.0L and the 6.0L to the current Twin Turbo) have been disastrous. The other two have fought similar battles while failing to bring an economical, efficient, robust unit to the market in a time where people are starting to look for more environmentally friendly options. It’s not the unions, it’s not the suppliers, it’s the management – plain and simple.
Now we have the economists performing their autopsy, publishing such insightful pieces as this;
How is that for an example of Monday-morning quarterbacking? I suppose it would be too much to ask for them to consider that gas prices were the highest in history during the time he’s examining – which consumed any “extra funds” that most people would have had to spend on other goods and services. Now he’s looking at last quarter and saying “oh, wait ’till you see how bad next quarter is” – this is tantamount to screaming “FIRE” in a crowded theater. An economist is a meteorologist who gets to tell you what the weather was last week, which is all but useless. Another way to look at it is this, they are masters of information after the fact. I’m so sick of the talking heads I could literally explode. They have moved beyond “reporting” the news to conjuring doom and gloom. It’s the proverbial wreck that is too horrible to imagine but too compelling not to look at.
So, I invite you to join the movement and make the choice to boycott the “recession” – go about your business and don’t let the news readers influence you. Pay off some debt but don’t stray too far from your path of normalcy. If those of us who can manage this approach actually pull it off we will only help those who are truly in a bind by creating jobs for them through our activity.
