The Great Economic Collapse of 2008 - What Now?

One Friday evening, Boudreaux and Comeaux go to the Veteran’s Building in New Iberia for a Fais Do Do (dance). They drive to the back of the building, park under the back carport, and enter through the back door. About 3:00 a.m. - after hours of hard drinking, dancing, and partying, the band quits playing. Comeaux goes to the car but Boudreaux is not there. Comeaux goes back into the building and does not see him. He searches in the bathroom and under the tables - no Boudreaux.

Finally he looks out of the front plate glass window and sees Boudreaux on all fours rooting in the grass under a streetlight. He walks up and says, “Boudreaux, what are you doing?” Boudreaux responds, “Mais I’m looking for my car keys.” Comeaux laughs and says, “They can’t be out here - we went in the backdoor, stayed inside all night, and so there’s no way your keys can be out front.” Boudreaux mumbles - “Mais I know dat - but the light’s so much better here…”

As silly as this story is - it speaks volumes to where we are today as individuals and a country. Most of us would rather root around in the light of the status quo then to venture out into the darkness of tomorrow where opportunities and innovations lie. To state it another way - we must change in order to find hope!

In last week’s Blog we discussed how America had evolved from a country tested in the darkness of difficulties and maturing into the spotlight as the world’s only military and economic superpower. Today we stand on the precipice of darkness or at least that is what the media wants us to believe. Rather than focus on the worst of predictions - below are offered ideas for taking the road back to greatness - the road less traveled. Let’s go “back to the future.”

Obviously we face great challenges today. Change is needed. Hope is in our DNA. Here’s the good news - change occurs ONLY when the pain of the status quo is too severe or when the opportunity at hand is too great to ignore. The time is right let’s not miss out on this once in a life time opportunity.

• Let’s mend the fabric that is the American culture. Let’s weave together our differences and create a single culture that is inclusive of diversity - people and opinions - but not divided into diverse cultures. Let’s not be hyphenated Americans but rather let’s be American’s first and then celebrate our unique history, ideas, cultures, and ethnicity.

• Let’s first look to the general good and then focus on our special interest.

• Let’s commit to be survivors versus whine about being victims.

• Acknowledge that “life ain’t fair” - work for justice.

• Acknowledge the genius of Henry Ford when he said, “If you think you can or you think you can’t, you’re right.” `WE CAN!

• Remember that certain principles exist in nature (gravity) and economics (supply and demand, adverse selection, balance needed between income and outgo, etc.)and ignoring these can cause grave peril.

• We are guaranteed the “life, liberty and the pursuit of happiness” - the government can’t deliver happiness - it is not an entitlement.

• Personal responsibility is still an absolute necessity if our society is to prevail. As Paul Harvey says, “Self-government without self-discipline will not work.”

• Enjoy what you have versus obsessing about what you lack.

• Jobs produce salaries - risk produces (the chance of) wealth.

• Scar tissue should be celebrated and brain tissue pursued but not embraced as the “be all and end all of civilization” - remember “the smartest guys in the room” brought us Enron, AIG, etc.

• Let’s get back to basics - bankers should lend money on character, credit and then collateral. Recognize that lending on collateral alone is too great a risk and a “gamble” society can’t afford to pay when we lose.

• Lenders should always “keep skin in the game” - selling off a loan improperly underwritten because compensation rewards the transaction and not the result is a recipe for disaster.

• Let’s end the obsession with 30 day results and the next quarterly report. Let’s hold Boards and the Officers of organizations accountable to a 5 year “rolling” plan where the long term is respected.

• Let’s hold the media accountable to “reporting” the facts not creating the news. If it’s opinion - state it on the front and back end. If its news be sure it so. The media doesn’t slant to the left or the right but to the negative and no one or no society can deal with negative 24 / 7 and not be impacted negatively. Duh!

• Regulation is needed. Entrepreneurs left unmonitored / unregulated will often “run amok.” We need to find regulators intellectually and morally equipped for the job, trained and “battle tested,” and motivated to find problems where they exist. We need investigators not “bean counters.” Entrepreneurs - so inclined - can run circles around bureaucrats.

• Ultimately we need to move back to a system of standards / shared values - moral relativism isn’t working.

• Recognize “too big to succeed” is more real than “too big to fail.”

• Savings, personal accountability, restraint of the consumer gene are necessary for personal success. Without these our companies, neighborhoods, and communities will be at jeopardy. If people aren’t accountable - we must let them pay the consequences.

• Parents love your children and help them grow strong enough to address whatever life throws their way. Don’t coddle them - frustrate them, challenge them, discipline them - someday they’ll thank you.

• Forget the government as a solution to every problem. Recognize them as the cause of many. Work to improve government performance.

• Understand that budgets mean something and that over time income and outgo will need to balance - including the outgo to cover past deficits and debt.

• Let’s end the legacy of legacy systems. Today we talk casually about “legacy systems” being a problem for organizations. Often this refers to yesterday’s technology not being right for tomorrow’s world. In the economic world it includes “promises made” without the “money to make it happen.” Defined benefit plans transitioned to defined contribution programs because one promise can be honored the other can’t. This is true for Government and the private sector. When the Big 3 fail - part of the problem will prove to be their “legacy” systems.

• Remember Einstein was a genius for a reason:

o “Insanity is doing the same thing over and over again and expecting different results.”
o “The significant problems we have cannot be solved at the same level of thinking with which we created them.”
o “Imagination is more important than knowledge.”

• Recognize that Peter Drucker was very smart, too.

o “The best way to predict the future is to create it.”

Before you dismiss these ramblings - as too simple, too innocent and too naïve - remember that so are the concepts of HOPE and CHANGE. The good news - no the great news is that we’ve landed a man on the moon so there is nothing “we the people” can’t accomplish when we commit to it. YES WE CAN!

Copyright - Michael G. Manes (November 29, 2008)
All rights reserved