Recession? What recession? Whether you're watching CNBC or just browsing through newsstands, that's what seems to be on everyone's mind. Are we in a disaster, heading for a disaster - or really pretty okay? Pundits on TV screen squack endlessly: we are going down the tubes, we are already at the bottom, or well, ya'know, it's not really so bad. Jack Welch says one thing, Warren Buffet says another. Our favourite witch doctors peddle hope and hysteria. Who should you believe?
Believe no one. Why? Because nobody knows. This parlor game of guessing the future, for all that it's laden with data and charts, is still just hocus pocus. The future (of markets and everything else) is not written and you can't steal a peak at the end of the book to see how it ends. The complexity of world markets is so immense that no one can model it, never mind predict it.
Looking back at the period 2001 to 2004 -- when we really were in a recession -- pundits stated repeatedly that the economy had bottomed out. And every time, they were wrong. When the recovery really started, no one noticed.
The smugness that comes from hindsight isn't germane here. What's critical and costly is how much time and effort everyone wastes trying to glean the unknowable. Prediction and speculation have no place in business. What does have a place -- what everyone should be doing -- is thinking about where we are today and identifying smart, sustainable strategies for dealing with it. Junk the fiction and concentrate on the facts.
The time taken to figure out whether we are in recession is time that could be better spent asking questions that can be answered: are our products as good as they could be? Are our relationships with customers as passionate as we need them to be? Do we know everything about our customers and their daily needs? Are we hiring the best people and keeping them? If, as Percy Barnevik once stated, most companies use only about five percent of their employees' intellectual capacity, are you doing anything to nudge that figure up?
Instead of trying to read the tea leaves, practice scenario planning; it's a great way to generate smart moves. Don't ask if we are in recession; rather, ask: assuming we are, where are the pressure points and what are we doing about them? Even if it turns out that there is no recession, you'll still be doing smart things in your company.
The sado-masochistic sport that is now TV business coverage is, for any serious executive, just displacement activity: fretting instead of fixing. Get off the coach and get back to work.
I've been a boss and I've been just an employe. More than one company I've worked for was pushed right into the ground by management who ignored suggestions and criticism from staff. Maybe the real problem is, too many businesses in the New Improved Management Model are run by accountants and MBAs who don't even understand their own business.
These are all concepts that require more than 30 second bites of time to actually understand and given all the attention that is being paid to the election and how little understanding there is about that whole thing, It's not surprising that looking at the economy from a probabilistic standpoint is not a popular thing to do.
Very interesting to note that one posted has concluded that Overpopulation is the cause of the current perceived situation in the world. Apparently, this is not the answer that Bill and Melinda Gates and their friend Warren Buffet have arrived at. Their efforts are directly focused on increasing population by decreasing the death rate in the fastest growing parts of the world. It's an interesting thing to consider given the amount of money that they are throwing at the situation.
Well the jig is up and everybody knows it. The entire growth of the economy depends on more debt piled on the existing debt. Most people are deeply in debt and have no choice but to curtail their debt accumulation and start saving. This will tank the economy.
The best advice you could give is to say , hope for the best but be prepared for the worst. The facts are piling up, the chickens are coming home to roost and the hen house is mortgaged for more than it is worth.
It works that way because the Internet, originally ARPANet, was designed to survive a nuclear holocaust.
In the past forty years, our economy un-built all of the redundancy that it once had, always in quest of the "lowest price" and always assuming that nothing could go wrong. So today we see plants shutting down for lack of just-in-time parts that must travel 10,000 miles away ... and the factory down the street has been shuttered for years and the people who used to work there are on financial life-support.
If we want to genuinely be traders, the decision to source something locally, or internationally, or both must always be a viable decision that is actually within our grasp at all times ... and constantly subject to review. This has not been done, and the United States (as well as other countries) is paying the price for what is actually, in part, a pure management/policy/politics failure. A strong economy is actually highly redundant, not highly specialized.
The TV is for suckers. It's push media, it survives by pushing fear and hope and other emotional buttons. Of course they spend their time fretting. It pays their bills.
And of course you are right, that we should not be sucked into it.
Thanks for saying so.
Your suggestion is perhaps one of the better ones currently floating through our ether.... "get back to work"
Don't believe any of the experts who seem always to remain well within the safe confines of unassailable hedged waffling while feigning confidence.
CNBC and their friends can't conduct a revealing interview since not one of them seems to be gifted with an inquiring mind or appears capable of recognizing deceptive exhaust. They do seem ready, willing and able to acquiesce to pharisaically delivered platitudes.
America has to adjust some of its behavior.....
http://pacificgatepost.blogspot.com/2008/02/rebounding-us-economy.html
It is obvious the economy is slowing. It is also evident that America has the tenacity and capacity to rebuild confidence.
Economics has become more about perception than prediction. It has lost the rudder of scientific endeavor completely, preferring instead to pitch a bromide in justification of the ridiculous, offering apology instead of analysis.
It is not that no one has the answers, it is that none of the business and government entities that ostensibly report to you, want YOU to have the answers.
It costs much more to feed my family than it did before, and my wages haven't gone up!
Gasoline costs so much more and increases so often that filling my gas tank has become a traumatic experience, and my wages haven't gone up!
All of those people who have been had their mortgages foreclosed are now renting, so my rent has gone up, and my wages haven't.
I can't tell you what your ROI (return on investment) will be, but I can tell you that if your counting on my business, it isn't going to be good.
Of course the solution to this dilemma is difficult, and not one any politician is willing to address.
I wholeheartedly agree with you. At my company we use staggering amounts of manpower to forecast future sales with increasingly complex models. What is so dispiriting to someone like me (I seem to be the only one that knows that the exercise is a waste of time) is that from a business point of view, we would be better off taking those hours spent forecasting, and using them selling, developing strategies, developing new products etc ie doing something productive with them.
Whenever I propose a particular marketing plan or product development, I'm always asked what the ROI is on the investment.....why does no-one ever ask what the ROI is on all this forecasting?
You want to know if we are in a recession, I'll tell you with a fairly high degree of accuracy. it is likely that we are. I used to forecast auto sales and when they go down the economy does with them. Auto sales have been tanking since last Oct., we are in a recession. (Contrast this, by the way, with the 2001 recession which was surprisingly mild. This is in part due to the huge interest subsidies that GM started after 9/11. In truth, GM kept us out of a bad recession.)
You want to know how bad and how long this one will be. That's a harder question and one that I decline to answer. This illustrates my larger point. It is possible to say some things with a degree of confidence.Then wise guys ask "ok smart guy now tell me this". At that point flushed with our own ego we make predictions that are not justified by the data and lose what little credibility we have. You can have a bite of the peach but not the whole peach. alas.