I was talking to one of my pilot friends yesterday. He was the CEO of a public company for 20 years and now serves on the Boards of several big firms. I asked him whether he thought there was any prospect of an economic recovery. “I think we’re more likely to see a Politburo down in Washington and all of those guys wearing fur hats.”
6 thoughts on “How business guys see our new planned economy”
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Factor in his point of view. The world as he has known it seems to be ended.
If what ended is only the most warped part of our past reality,
what did we lose?
What has changed? The sun still rises. Crops still grow. The folk living in this country are unchanged. What they have the potential to do is unchanged.
When are capability is unchanged, it is insane that our “economy” should wobble, like an engine with a poorly designed governor. For a part of our “economic system” we used a bit of fiction that mostly seemed to work – except when it did not (and rather frequently not).
Finding a workable future is the trick.
philg… With the Doom & Gloom economy upon us, you may find it interesting that the glider/sailplane market is booming. Prices have *not* fallen as I regularly check W&W seeking the elusive “good deal”…
http://www.wingsandwheels.com/wantads1.htm
In fact, it appears that if ever there were an “inflation hedge” and “investment vehicle” combined, a glider would be it! W&W a “fun read” for any aviator (nice pictures).
My “new economics”… I did an examination of the past 2 years… “Where do I go on vacation?” and coupled this w/your “retirement” essay (I’m in that boat)… So… Moving from Oh-so-upscale SoCal ($2360/month rent) to a *larger/nicer place* in desert-Ridgecrest (the dirt-bike thing) for (honest, I’m not making this up) $900/month.
Also, I’ll be 2.2 miles from the Sierra Soaring Club (I’m an active glider pilot)…
http://www.inyokernairport.com/sierra_soaring/sierra_soaring.html
Conclusion: America is a big big place. It appears that, with research (and effort), you *can*… “Have your cake and eat it too” 🙂
Preston: What has changed? The willingness of business guys to invest in factories and other business capital that would create jobs. As in the 1930s Depression, when business people are fearful of uncertainty and changing rules, they defer investment. Right now nobody knows whether a competitor is going to be bailed out by a friend in Washington, how much tax rates are going to rise, which rules for union organizing are going to prevail, etc.
Paul: See how many of those gliders have actually sold for the asking price!
Depression? No. Recession? Yes!
It’s obvious that the economy is in a state of terminal meltdown and everybody wants to know how we got here and who’s to blame. Well, how we got here is simple. A credit driven, consumer based economy cannot be maintained indefinitely. Sooner or later the weight of debt becomes so great that the “ship” gets top heavy and capsizes. That is precisely what is happening now. It’s inevitable. No matter how much money gets thrown at it, it will happen. In fact, the more capital the government sinks into the “rescue effort” the more severe the consequences will be.
As far as who’s at fault? Well, there’s plenty of blame to go around but the American consumer himself gets the lion’s share of it. For decades people have been “living the American dream” which basically is owning a home. Here’s the scenario. You buy a house. Start making payments you can barely afford. After a few years you discover something magic. EQUITY! So you take out a second to put your daughter through college. Then you refinance and get a new boat or whatever. The point is, your debt is growing instead of getting smaller. It’s OK though because you have EQUITY!
Enter the housing crash. Suddenly you find yourself stranded on your own little iceberg adrift in an ocean of debt that you will never be able to repay. Well, look around and you’ll see that the “ocean” is filled with hundreds of thousands of other icebergs. Each with a bewildered consumer in a state of total denial standing on it. What this amounts to is billions of dollars in loans which will never be paid back. Who eats this? The financial institutions who were irresponsible enough to loan you the money in the first place. They are second on the blame list. Feeling the crushing effects of all that lost revenue, they begin selling off these bad loans. Thereby spreading the problem like a cancer. smaller institutions begin to fail. The stock market gets wind of it and starts declining. People begin to panic. Then the government starts printing money with nothing to back its value. Inflation takes off and the next thing you know we are in a full blown recession.
Well, guess what folks. We’re here. It will be prolonged and severe and we have no-one but ourselves to blame.
The future is not all doom and gloom though. We will weather this storm. We are about to enter into an era where borrowing to consume is a thing of the past. Predatory lending practices will likely be prosecuted and, as a result, lenders are likely to concentrate primarily on business investment loans. Most people will have to get used to living without credit and start getting by with only what they can afford to pay for. What a novel concept.
If “business” is so opposed to government intervention in the economy, pray tell what alternative do they have to offer? They’ve already enjoyed eight years of policies that promote the “trickling up” of wealth into their coffers (it’s actually more like 24 years). They’ve gorged themselves to the bursting point at the trough, and now they’ve eaten up all the swill. So what do they want us to do now?
Ref: Paul: See how many of those gliders have actually sold for the asking price!
Philg… Most sell for above-asking 🙁 due to bid-wars.
Yes, certain models undesirable or too-rare (parts problems) but when a “mainstream glider” hits the market, you better be there checkbook-in-hand or you’ve lost it. Another problem is location (on W&W many listings are overseas).
Trade-a-plane (power planes) is another story, with a wide-spread between “ask” and “sell” prices.
Also, don’t try and find any deals on moto-cross (mx) bikes. Oh-no. And trust me as the owner of 5 dirt bikes (and mgr of a cross-country team) I know…
For those of you interested in desert/rural property (rent-cost) and “What exactly is this dirt-bike thing?” hey here’s my last story (“annotated pics” so fun/informative)…
http://www.pencikowski.com/articles/HousHunt.pdf