Filed Monday, January 12. 2009
Bailouts don’t create customers. They guarantee the status quo to those who should be making drastic changes.
Watching the “experts” on CNBC and other business shows gives you solid and irrefutable confidence that even the experts sometimes don’t have a clue. What about the holiday sales rush that never happened? The financial experts seem to have cloudy crystal balls because no one can predict the future. ‘Now’s the Time to Spend Money’ Some of the financial professionals were crowing this earlier in 2008: “Consumers will help us out of this recession.” I don’t think so. Few consumers had money – and the confidence in holding onto their job – to spend a lot on Christmas and holiday sales. Was this something that could have been foreseen? Yes. This was a common response I got eight months ago from a column I wrote about people losing IT jobs: I know from my own experience that many people can no longer afford new cars, bigger homes or nice vacations. I sure can’t. I lost my network engineer job in 2002 in the teeth of the IT recession. It took until 2005 for me to find a permanent job again where I made almost $20,000 less than my previous job. I will be paying off my credit card debts for years. There is no way I can afford a new car. I haven’t been able to take my family on a real vacation in I don’t know how long. With both my wife and I working, we are still living paycheck to paycheck. This is with three college degrees (including the much-vaunted M.B.A.), status as a Microsoft-certified systems engineer and almost 20 years of experience. If we get a tax rebate from that economic stimulus package the politicians are fussing over, it will go straight to my credit card balance. There’s not much economic stimulus to be had there.
Even though this has been pointed out in my columns for more than a year, some of the experts seemed to think sending $1,200 to everyone was going to make the economy skyrocket. Here are the results of the slow spending for the season, according to CNBC: Total holiday sales (excluding automobile purchases) were down negative 5.5 percent to 8 percent. Including gas and automobiles, purchases were down negative 2 percent to 4 percent. The results are well below the [positive] 2.2 percent forecast made by the National Retail Federation in Sept. 2008. Big-ticket electronics purchases also tumbled this Christmas versus last. Sales there down 26.7 percent. How many “door-buster sales” did you run to during the holidays? How many did you just say: “Why bother? I’ll wait until next year.” Big discounts didn’t bring out big crowds. What about big-ticket item sales, which were down significantly? I watched the last Chicago Bears game over the weekend and they had a glitzy GM commercial on to buy a new Cadillac Escalade. You would get $15,000 off the sticker price of $69,995. Big deal. Everyone laughed as one viewer at the bar said: “I’ll wait until they knock off another $15,000. That’s about what they are really worth.” So much for the automobile bailout. Most people aren’t looking at spending on big-ticket items. Bailouts seem to guarantee unearned bonuses to those who should get nothing for their lack of performance. If Money Grows on Trees, Where Are the Forests? Don’t you just love bad economic times? That’s when you constantly hear from those who mismanaged your stocks and financial planning all along with their latest “winning strategy” for whatever you have left. There’s still a fee attached to that, too. Is “financial planning” another oxymoron? What about the reasons why your 401k plan lost 60 percent of its value? They may have told you: You aren’t diversified enough. You have too much in domestic stocks. You have too much in international stocks. You should have left more money in cash. You should have had your cash in gold. You should have gotten into this real estate mutual fund. You should have gotten out of that real estate mutual fund. The midnight experts are just as entertaining to watch. Put your money into real estate. Sell stuff on the Internet and make thousands a day. Now is the time to buy foreclosures. Buy for no money down. Seriously? Try going to the bank and saying you want to buy for no money down. See how many deals you close. The economy is where it is today due to years of job loss in several industries and the resulting impact of declining buying power. Disintermediation, which helped streamline business transactions through the use of the Internet, has also removed profit to a point where margins have become too thin to continue business for many companies. Look pragmatically into 2009. Anything short of creating real and sustainable jobs for average skilled as well as highly skilled citizens to bolster the economy will only create a Chicago Cubs fan mentality that clings to the perennial fatal optimism of “wait until next year”. Unless real changes are made in leadership and corporate strategic direction, 2009 will just be a repeat of 2008. Carlinism: Bailouts don’t create customers. They guarantee the status quo to those who shouldn’t survive. Not modified
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