This post also appears in Forbes.com………….CEOnetwork (R)
Just when you think that maybe….just maybe…things might be getting back to a more “normal” business environment, you are reminded how fragile they are. That is…If you truly want to see, and not rely on the so called “Smart Crowd”
People like myself, and a hand full of others have been writing and speaking about the perilous state of affairs we currently find ourselves. The talking heads and other pundits are proclaiming “Victory” over the financial debacle that plagued the economy just 18 months ago. So too are the politicians taking credit for being so “Smart” and enacting policies that in their words..” Brought us back from the brink of a Great Depression.” This is exactly the kind of self grandeur that leads to the thinking one can’t make a worse mistake than before. But ohhhhh contrare…….
First off save the emails, and letters. This is not about which politician, or what party affiliation, or one person, or____________ (you fill in the blank) etc.,etc. It’s about ALL politicians, and ALL government actions, past, present, and future that I’ll encompass here.
One of the little understood reasons why this country has been a force for prosperity unlike ANY nation before it, was the unique ability of the American Free Enterprise system to take its lumps no matter how severe the beating, and then Move On! American business, and entrepreneurship had a propensity to deal with business upheavals the same way a forest remains healthy, by understanding you sometimes let the underbrush burn, so that new start ups, (think real green shoots) and other types of creatures (think vultures and others) cleanup the waste in order that the forest remains healthy. Nature has been doing this for all of time, and when business followed Mother Nature in her ideals business prospered. Sound a little esoteric? It’s not really, take the perplexing reaction of the stock market over the past decades when a major problem was being dealt with at any company listed. Some would shake their head when a company would, Fire a CEO for an outrageous scandal, or sell 1/2 the company because of poor profits, or layoff a large part of its work force because of poor implementation of employee resources, and what would happen? The company stock would RISE!…Why?…because they were Evil, Greedy business people?…NO!..because unlike most other business centric countries, we understand in our Core Business Acumen that if you truly make the hard but necessary changes, the business may not only survive, but might move on to thrive. Politicians, and governments Don’t do this, nor do they think this way. Just take GM, Chrysler, the Banks, and the others. (just to name a few) They are the equivalent of keeping the charred and burned lumber not only within the structure, but using it as the foundation to add additions to. It’s a disaster just waiting to happen. One small storm, one small unseen shaking, and it can collapse with devastating consequences. And that’s why I’m very, and I mean very concerned about politicians being involved in the free markets today. They are showing if one dares to look, just how foolish they can be, and how little understanding they have of both business, and money.
Friday afternoon (the time used most to alleviate scrutiny or coverage .) on September 11, 2009 the administration declared that it was imposing a 35% tariff on Chinese made tires in the U.S. at the behest of the unions to help level the playing field for U.S. made tires. Think what you want on whether they are right or wrong. Business is about the economics, and strategic implementation, and timing. Politics is about the social mood, and votes are the currency.
This warning shot can backfire to point of the shooter originally firing a cap gun, and the other side returning fire with the equivalent of a howitzer. here’s a couple of items to ponder…..
1. China is our largest debt holder. (Like it or not, they’re the bank!)
2. China has already signaled that it is “Uncomfortable” with our spending, and might not purchase as much of our debt as before.
3. China is known for retaliatory one up-manship in economic affairs. ( Close one of your markets…They’ll close ALL of theirs.) etc.
4. Protectionist signals in times of economic distress lead to Trade Wars.
5. You signal to the “World of Business”…..Political doctrine will supersede current understandings of economic fundamentals.
Big events unlike what most pundits will tell you, start with a very small trigger event, then escalate quickly, sometimes very, very quickly. I hope the itchiness to secure more political favors, doesn’t result in the unintended firing of a fatal shot on a hair trigger to the shooter.