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Hold on to Your Wallet

Posted on December 5th, 2007 by Will Marre.
Categories: Leadership, Community, Lifestyle, ADP Diary.

Wall Street is not Main Street. Not any more. Have you noticed the stock market has malaria? Its temperature is constantly rising and falling causing economists to hallucinate about what tomorrow will bring. Well it’s going to be very different for some than others. You see, the fortunes of large multinational corporations and banks are now driven by very different forces than what drives smaller American business, which employs over 90% of U.S. workers. The U.S. economy can be like an ever-growing snowball hurtling off a cliff while big corporations are sitting in the ski lodge sipping martinis in front of the fireplace.

No, I am not saying that all large company leaders are evil wizards who don’t care what happens to the rest of our economy. I am only stating the obvious. These relatively few big global companies and financial institutions have their own economy. When the dollar plunges in value, these companies are exporting faster than tourists fleeing a Tsunami. This enables them to earn bigger profits in Euros or other currencies. As our economy slows down, they’re expanding. Not in the U.S. but in China or India where the consumer economics are just getting started.

None of this is secret. Nor is it a conspiracy. It’s simply the new economic logic of globalism. Capital, investment, jobs all flow to countries where the greatest economic rewards will be earned. Economics is rational, self-interested, and mostly short-term. This wasn’t so bad when the interests of Wall Street and Main Street were aligned. This meant economic bad news was bad for all of us. So we could all row in the same direction to get back up river. But it could be very bad now that our fortunes are disconnected. Since our biggest economic institutions can be hugely profitable even when our economy is sinking, they can safely row their stockholders to the “bank.” As for many of us, we’re speeding down river toward the falls.

Today, anyone who can face the truth looks at our true inflation rate of food, oil, education, healthcare, and housing running at over 10% and gag. They look at our zero savings rates, our individual and national debt, the growing epidemic of foreclosures. Gulp. The days of using our home equity to buy Hummers like they were Tonka Trucks are gone. According to the Economist, the ratio of household debt to income is 130%. 15 years ago it was only 80%. We are over spent.

The waterfall we’re heading for is called stagflation. Rising prices, rising unemployment, high interest rates, and sagging pessimism. The difference between this version of stagflation and Jimmy Carter’s in 1977-80 is that it may not matter that much to America’s biggest companies. They’ll keep right on making money in foreign economies. Am I overstating the case? Well, perhaps, but consider a vivid example. If you or I make a catastrophic investment, we go broke. If Citibank does, they get $7.5 billion from Saudi Arabia. This is courtesy of the $3.00 a gallon gas we buy every day. Let’s see, we buy gas on Citibank credit cards at 17% interest sending billions to the Middle East so they can buy Citibank. No wonder we’re hallucinating!

No, Wall Street is less like Main Street than it’s ever been. If you have a business you better get busy with your export strategy. For the rest of us, we need to hold on to our wallets. We’re going to need whatever’s in there.

4 comments.

Marriage on Fire »« Portion Control

Hold on to Your Wallet

Pingback on December 5th, 2007.

[…] Read the rest of this great post here […]

Scott

Comment on December 5th, 2007.

OK so what’t the big surprise. We do not learn about economics in school, we do not learn about money management from our friends, we are trained to keep up with the Jones regardless of our fiancial capability. We were given easy access to homes, even though any reasonable money manager knew that the end was near and we’re blaming big business.

I don’t get it. When are Americans going to take responsibility for their actions. Regardless of our price of gas we continue to drive gas guzzling machines. Why? Becuase we can afford it. Why? Because gas in America is half the price of any other country in the world.

We can afford it becuase of minimum wage increases and expedendable money. Things unheard of in other countries. Why do most imigrants thrive in the US? Because this is truly the land of oppurtunity. They know what it’s like to come from and have nothing and they apply themselves to better their standard of living. Most people in the world have little to no hope of ecking little more than an existance life and we pay people hundreds of millions of dollars a year to play games. We have celebrities who cannot even pay for their crimes with minor jail time or inconvienences because it would cause so much pain. Please! Those same people should be sent to Darfur to live with the people, not just visit them for a photo oppurtunity, share the same mush bowl, the one time a day they are fed.

When these 20 somethings can buy and do whatever they want we wonder how it all went wrong. Americans are spoiled selfish individual who have never felt the pain of hunger, or had a true need go unfullfilled. We complain we don’t have health care, most countries don’t have health. We complain we can’t afford gas, most counties primaty means of transportation is a bicycle or their feet. How many two car garages are in Mexico? Darfur? Honduras? China?

I’m not buying this wall street isn’t main street, Americans need to wake up and take financial responsibility for their own actions. J Paul Getty made millions of the sweat of somone elses labor. The laborers aren’t rich, unless they were responsible. IBM, Microsoft, and all these other congolmerates have all had the same oppurtunity as any individual in America. Yet Bill Gates is where he’s at today, Ross Perot, Warren Buffet. They are no diffent then Scott Pearce, Wille Marre, Mike Nichols, etc. etc. Get some financial education, quit living beyond your means, and do not fall prey to the same individuals you are complaining about and you too can live the American dream……or…….. you can always move to one of theose other countries where the standard of living far outreaches our own.

Christopher Strachan

Comment on December 8th, 2007.

Silver lining:

At the same that the corporate board meetings are in session, actively outsourcing everything from consumer goods to patriotism and responsibility, Americans are starting to fight back thru taking pride and control over their own influence. We are the end-user, the final decision-maker that decides which companies will succeed and which will fail. Even more, which will bend to adapt to our needs as consumers. Thru realizing our own purchasing power and its globalized ripple effects, we are learning to weigh overall value instead of being simple minded “price grabbers” Think globally and act locally is something we see the power behind. We celebrate the value of leaders such as Marre whom are redefining and bringing-to-age the meaning of “The American Dream”. Marre is challenging us to think and act on behalf of the future of our country and eachother. We need to join together as modernized, urbanized, thinking men and women. We are aware that we will need to fight a different sort of fight, one that forces us to look inward, in order to preserve this nation we call home.

Comment on December 20th, 2007.

That is quite a sobering perspective. I’m a self employed general contractor and have known some time now that the economy is not going to rebound to where it once was. Maybe, if we ever get out of war mongering and start concentrating on us, maybe if we ever get out of our dependence on oil and debt, or maybe if some new technology arises building an entirely new industry for American workers, but I doubt it. That is why I’m looking for a career change now in the public sector, as a police officer or firefighter. As our economy worsens we’re going to need more officers, and emergency responders as some of us start to lose hope and get desperate. Makes sense.

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