Thursday, February 05, 2009

What we can learn from the show Intervention...

If you've never seen Intervention on A&E you're missing one of the few remaining examples of compelling television. We are in need of a national intervention.

There is going to be a wealth of information hitting the markets in coming days - potential accounting changes, possible nationalization of Bank of America (?), stimulus vote, TARP II, auto supplier bailout (?), etc, etc.

However, I thought I'd take a moment to try and put some perspective around the current crisis. The banking and housing issues are the worst symptoms of the illness facing the US economy.

Here the way I would describe the troubles facing the US economy to my grandparents if they read my blog. The US has overeaten, smoked 3 packs a day, drank a 12 pack a day and sat on it's comfy couch for the last 25 years. Now, we're concerned that the doctor says that we have lung cancer, heart disease, and diabetes. We want to pop a pill (stimulus, TARP, tax cuts) and make it all better, but the that's not the way our economy works. We need to quit cold turkey, eat better, hit the gym and hope for the best.

Forty years ago there were very few fields where the US was did not have a major corporate presence. Today, I'd argue that we are the global leaders in casual dining, social networking, and .......... okay, I'm drawing a blank. Even our leading firms in technology, while they are run domestically, many of their innovations come from offshore resources. My point is that while the problems facing our economy seem to have suddenly emerged, these problems have developed over decades of poor planning, corporate indecision, and gross negligence. These problems can not be addressed by any short-term stimulus or tax cut. The only way to reestablish our economic health is through a slow and steady diet of hard work and innovation.

Eventually, I'll try to offer some long-term trends that we should capitalize upon.

I think I'm ready to enjoy an adult beverage. Cheers!


Scott Atkinson said...

So back in the day - early 70s - you could graduate from my high school, Carthage Central, and if you weren't a rocket scientist go straight to the paper mills and start knocking down $25k plus OT, a considerable sum back then.

When the economy started to transmogrify, I used to ask - what happens to those people? The answer I got was always, always a vague...well, there'll be new kinds of good jobs for them in the Bright Future We're Building.

Maybe they won't run a paper machine, they'll be...a computer programmer. Yeah, that's it...

(For a period in the late 80s, early 90s, everyone out of work was going to be a computer programmer.)

So here's my question to you, oh keeper of my favorite blog: was part of the getting drunk/stoned for 20+ years a big lie about how the economy was going to work?

Were these folks always going to get screwed, and the Masters of the Universe just needed a plausible lie (big jobs are just around the corner) until they could jimmy the economy around to its current state?

The Artful Blogger said...

It's a great question - How did we get here? The continous need to strive for lower costs led to jobs losses domestically. US consumers did not rebel b/c it allowed us to keep buying cheap toys from Target.

Unfortunately, something was missed in the transformation to SERVICE economy. If the service economy is a great multiplier on the way up, it's going to be the great divisor on the way down.

When someone is working huge hours in NY and pulling a big bonus, they've got a housecleaner, lawn guy, dry cleaners, restuarant delivery, etc, etc. We're now watching that unwind.

But hey, the markets are UP!!!

Anonymous said...

If you "weren't are rocket scientist you could go straight to a mill". C'mon Scottie, I guess the alternative is you couldn't invent news stories. Lighten up, please.

The original post I agree with all the way. But how does this equate with huge bailout bills followed by this latest spending spree? Doesn't sound like hard work or back to basics to me. Sounds like more of the same. The same old that got us into this mess. Sit on the couch and spend money we don't have.

Scott Atkinson said...

I don't understand the 'couldn't invent news stories' part. Lighten up? I'm the soul of lightness.

My point was - you could have a good life without having to go to college. The economy was big enough.

Now it's not, despite promises that the old good jobs will be replaced by new good jobs.

My question was: has the new economy of the last 30 years really lived up to its promise?

As for the bailout, I'm ambivalent. I'm generally opposed to this kind of government spree, but people a lot smarter than I am say we've got to spend now, before the economy stalls completely.