Month: June 2010

The “Keynesian” end point.

” When an Economist makes a wrong prediction, they just go on to make another. When a Businessman makes a wrong prediction, they may be out of business!”………………………..Mark St.Cyr

For nearly the last 2 years, some of you have noticed I have a cynical view of the so-called “Smart Crowd.” It has been demonstrated to anyone watching them that over and over again most of their forecasts and predictions have been (I’m being kind here) far off the mark.

I’m going to cut right to the chase. Trust me when I say, I could care less about the political nature of what I’m stating. This is about business, period! So do yourself and me a favor, save the emails. Trust me they wont get read.

When the economic crisis first reared its ugly head back in Oct. 2007 everyone said it was just a blip, by March of 2009 we were told the Earth was coming to an end. It was then stated to everyone that if we spent record amounts of money in a Keynesian plan that not only could we stem the tide, but we could “jump-start” the economy into producing millions of jobs, and raise our GDP levels back to pre crisis levels. Well guess what? Trillions of dollars spent, and you didn’t even get a lousy T-shirt.   But wait………….There’s more! At least that’s what we’re now being told. Oh no, not that you’ll get more out of what has already been spent, they want to spend more! How silly of you to get those mores mixed up, you mustn’t be as smart as they are, silly you.

Here’s the part of all this hand wringing by the forecasters, and economists that put all these lovely plans into play that’s driving me crazy. Every single one of these plans not only didn’t produce what they anticipated, but they failed miserably. The only ones that don’t seem to get it are the Keynes devotees. The mantras of spend, spend, spend, is starting to seem a little, dare I say…..spent?

I don’t like to use names, but you don’t need to look very hard to find one of the loudest voices on this subject writing today that we now could be on the verge of a 3rd Great Depression because not enough money is being spent by everyone . The argument may have made sense once before, but it has now been employed twice, and at such a scale this time, that you could look at hard data to see just what you got for the effort. Well………….Survey Says…………………………Squat!

So to sum up my take on the benefits of the Keynesian model of economic theory, I’ll end with this parable……

You said in order for us to get fish, we needed to drain the pond, but since we drained the pond there are no more fish. You said don’t worry about the pond, it will rain and fill the pond back up, and we’ll be back to fishing in no time. If you haven’t noticed, not only has it not rained, but it’s a drought, and even if it did rain, there’s no fish left to repopulate the pond.

Next you’ll tell me about “Green Shoots.”  Sorry…but I know how that went also.

Mark


Why GM may never lose the “Government Motors” moniker. (update)

I wrote back a month or so my take of the whole GM takeover. I said then as I say now, it’s not a good thing, from both a business perspective, and competitive view, never mind the political, that’s another can of worms.

Here’s a view that GM has now taken to help get itself back into shape, and restore the competitive edge it seems to have lost. Ready?….wait for it….

GM has announced it is no longer allowing employees to refer to the Chevrolet brand as…Chevy! The executives at GM feel so strongly about this, that they have instructed management to place…again wait for it….Cuss jars in the corridors so when an employee is heard stating the word Chevy, they will be pressured into putting money in the jar as a so-called fine for cussing. Yep! I wrote that statement. Calling a Chevrolet a Chevy is now considered swearing. I heard it reported on one of the” Financial News” shows yesterday. I never knew getting back to brand dominance was that simple. I guess that’s another college credit class I missed. Here I am thinking branding, market position, new technology, customer service, and customer focus were some of the ways, boy was I wrong. I wonder what the competition like Ford is doing? Oh that’s right, they building, better cars, have better customer satisfaction numbers, have better customer loyalty, and didn’t take any hand outs. The guy’s at Ford must really be kicking themselves. Ya think?

Real companies doing real business focus on customers, and better  products and services. Government tends to focus on changing the way something sounds, while selling you the same old same old. Usually at a higher price.

Maybe it’s just another way to help in paying back the tax payers. Or did they do that already? Their commercials say they did, but that was only the…wait..they said, but they didn’t, but now their, Wow…sounds more like a political campaign than a……………….business?

Need I say more?

Mark