by Michael Dymmoch
My all-time favorite coffee mug was from Hallmark’s Shoe Box® collection—“Don’t let the turkey’s get you down.” It had a turkey depicted next to the slogan. (Or maybe it was a turkey vulture—I’m not an ornithologist.) I wish I still had that mug. I wish I could clone it and give it out to friends because I think the turkeys have taken over the national airwaves and are driving us all over cliffs of despair. Every time you turn on the news you get the newest movement of the Dow and NASDAQ—mostly downward, and the latest unemployment rate—8.5% in January. That’s huge if you’re unemployed, but less than during the great depression. And 8.5% unemployment means that 91.5 % of workers are employed. The glass isn’t even half empty! My house may be worth 25% less on paper than a year ago, but I still have a roof over my head. And my standard of living is well above 98% of the rest of Earth’s population. Crying about how much “value” I’ve lost isn’t going to make me rich or secure.
Companies once put a percentage of their profits into R & D before distributing the rest to stock holders or putting it in the bank or whatever they did before we had corporate conglomerates and mutual funds—back when CEOs got paid for managing efficiently. (Not golden parachutes to save their asses when they run companies into Chapter 11.) Now managers gamble that their company won’t continue to generate revenue—which is what I’d call the practice of investing profits in other businesses that have nothing to do with making parts, supplying services, or creating new products for their parent companies.
Every time President Obama tries something to improve our situation, Wall street registers its disapproval with another sell-off. Why is anybody listening? (If Wall Street mavens are such geniuses, how did we get in this mess in the first place?) If I understand Marilyn vos Savant’s explanation of market capitalization in last Sunday’s Parade Magazine, this preoccupation is insane. Companies that were solvent and well run still are. Maybe they’re not paying great dividends, but they haven’t lost what really makes them valuable. And stockholders who have the guts to hang on to their stock will get their “market cap” back in time.
One of the curses of getting old is that you don’t remember things as well as you once did. The flip side is that you’ve lived long enough to know that old saws became clichés because they’re true—Whatever doesn’t kill you does make you stronger. And everything does come back around in time. People who lived through the depression learned to be inventive and frugal, good values in any economy.
Maybe I’m crazy, but I think we should turn off the news and go back to reading books. It might free up our brains to do the creative thinking we need to straighten out this mess. And at the very least, it would reduce our stress.
That’s my take. What’s yours?
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5 comments:
I'm with you, Michael. Huge parts of the economy should be unaffected by this banking and credit crisis, yet the coldly efficient geniuses who layoff employees at the first sign of a lessening of profits (not a loss, mind you, but less profit) are paralyzed with fear.
I liken it to all the gloom and doom statements about publishing we heard in late 2008. Publishers were canceling contracts and laying off staff, while adult fiction sales were actually up. Much of this is self-fulfilling prophecy. None of these Masters of the Universe wants to be last at the trough, but they're all afraid to be the first to test the water.
Well said Michael. We don't listen to news in our house, especially not about the economy. I do try to find out if Obama & Congress are making any progress to restore civil liberties, usually via the Rachel Maddow show podcast.
Economic principles are pretty consistant no matter what the Dow is doing. That said, I am a little nervous as we embark on looking at houses for sale today.
RaB, here is your answer to Obama's stance on civil liberties. Looks like new boss, same as the old boss to me. http://www.nytimes.com/aponline/2009/02/27/washington/AP-Warrantless-Wiretaps.html?_r=1
Copy and paste it or type obama wiretap in google. And if banking crisis is no big deal, prepare to go back to a cash only society. enjoy
Michael -- I absolutely agree with you. Having been at, and left, a Tribune Company newspaper just as the restructuring was beginning (but before Zell), I saw what happens when stock price and happy -- or happier -- shareholders become the first priority. Any company that's making a seven percent profit, so say the money people, can get it up to nine percent with just a few minor changes. A hiring freeze here, layoffs there, consolidation and efficiency everywhere...that's the way to go, regardless of the impact on the company or its product.
Further, I think so much of the economic problems stem from the Wall Street Chicken Littles who have spent years accululating wealth without actually producing a single thing. GM still makes cars, A-B still turns out beer, but because the bonuses at Bear Stearns and Shearson fell below $600,000, everyone in the financial industry is screaming that the economy is crumbling, with the banks tightening up and the people, employed and not, at home scared to take out their credit card out of fear that they'll get caught up in the next series of Wall Street-driven layoffs. The tail is wagging the dog on this one, and as one of the millions of fleas on this particular dog, the shaking is giving me a headache.
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