Obama from the ashes

Phoenix_Obama When we look at the carnage of our economy, it's not too hard to come to one hard conclusion:  we're at rock bottom.  And we may even get worse than rock bottom, but fortunately the English language has yet to cater for an expression of such depths of bottomness, so we'll just stick with "rock". 

The consequences of the next few months' policies are going to shape how we recover from this.  And while many have tried to devalue the importance of the US as the epicenter of the world economy, noone can escape the fact that the US is tasked globally with dragging us out of our current predicament. 

The Chinese have long-boasted that they can shut themselves off from the problems of the West and thrive on their domestic and regional dominance, but the world's second-largest economy is now suffering from more severe recessionary problems than those which Western countries are going through (Iceland aside).  They thrived on the US economic prosperity and its free-spending of the last two decades.

And having just spent three days with the leading retailers at the NRF show, all I can tell you is we're in dire need of an economic stimulus package and some new leadership.  What a time for a new President to take the reigns – and what a mandate he has to make some bold new policies.  Just when we're running out of hope, here comes the audacious one.  Over to you Mr O… you couldn't have dreamed of a better platform to change the world

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4 Comments

  1. Lepeak
    Posted January 13, 2009 at 9:44 pm | Permalink

    Don’t hold you breath on those bold new economic policies; at least if you mean “good ones” relative to globalization, global trade, outsourcing, or any or a myriad of other non-PC mainstream business concepts.

  2. Posted January 13, 2009 at 9:59 pm | Permalink

    The most effective form of economic stimulus will entail a reduction of investment risk. The fear of massive regulatory changes and of a rapacious congress poised for massive spending will continue to drive cash hording as the most prudent business and personal strategy until the smoke clears. Some would cheer the type of economic stimulus that was implemented in the 1930s and which ultimately prolonged the Depression by a decade. One hopes that the president elect has learned something from FDR’s mistakes.

  3. Posted January 13, 2009 at 10:04 pm | Permalink

    Stan,

    It wouldn’t make sense for him to penalize offshore outsourcing, as companies will be looking to shed overhead in anycase, and outsourcing provides a route to get more-for-less in many instances. He’s more likely to incentivize onshore job creation onshore, but how that can be measured and rewarded is going to be complex.

    My message here is focused on the frenzied level of expectation on the man once he becomes inaugurated. He is harboring the hopes of a troubled global economy and needs to pull a couple of rabbits out of the hat. The bright spots are in areas such as investing in alternative fuels and energy sources, electic-powered cars, education and healthcare. However, there may be a lot of focus on creating jobs in road building etc., which could lead to many new “big digs” and over-budget infrastructure projects. My concern is how he can keep a focus on the long term and not solely focus too much on short-term quick-hits, and low-value investments for the sole putpose of stimulating consumer spend.

    Whatever happens, we’re going to have to go through a lot more of this pain before things level out, but there are a few bright spots – as I mentioned – on the horizon where new growth can emerge, and global economics, technology and new-generation delivery models are at the heart of this.

    PF

  4. Lepeak
    Posted January 14, 2009 at 9:39 am | Permalink

    Phil – agree with all your points and recommendations, except that what will be done will make “sense”, at least economically vs. politically. The key issue is making sure in efforts to “create jobs” the ability of commercial/private sector businesses to excel is not significantly hampered – that’s where economic growth, and new tax revenue comes from. A public sector job is just a substitute for a commercial sector job, not a new job, because it’s funded by taxes from the commercial sector – employees or businesses. And if it’s a big dig job it’s ultimate value will likely be less.

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