THE ECONOMIC MELTDOWN
We are consistently bombarded by the media with how dire the American and World Economy has become. Every news service, industry group and media celebrity has focused on this topic, all stating the same obvious facts.
We have a Financial Catastrophe that originated in the Mortgage Market and has spread throughout the financial community. This has caused a credit crunch which has plummeted the world’s economy.
The media, banks and most government officials would like us to believe that this crisis is the result of one factor - the “sub-prime” mortgage. While it is true sub-prime mortgages have gone into default in unprecedented numbers, it is not because the people who financed their homes using these instruments are just personally irresponsible with their financial matters. This is the simple and media friendly answer to a complex problem.
The truth is it is a problem that has its roots, not in the problem of homeowners overextending their financial resources, but in a multitude of bad financial and business practices that have been brewing for decades
If we are truthful, the real issues involved in our financial freefall is that American business has allowed itself to erode over time and become both ineffective and greedy. Our fundamental strengths have been replaced and our performance as an economy has suffered.
America’s greatest asset, its ability to innovate and lead the world’s business community, has been abandoned because “American Business” has become exclusively “BIG Business”.
Business has become so big its size alone gives it unprecedented privileges. The impact of these “privileges”- privileges that government alone is equipped to control, is what is has destroyed our economy.
Make no mistake about it, we as an am American society have failed. It is now up to us as Americans to re-establish the innovation and leadership that created the successful US economy and our worldwide business dominance.
THE ROYAL SCAM OF CURRENT CORPORATE ECONOMY
The world’s most successful economy – the American economy - is based on our strong belief in fundamental capitalism. American business is motivated by profits and it is profits that drive the economy. This simple statement is true and is a cornerstone of a successful American economy. However, as true as this simple principal is, over time the target for corporate American business has become “Real” Profit, but a “mutant” form of Profit – short-term profits. It is our preoccupation with the annual financials that has created a management mindset that cares little about good business practices, but instead optimizes its corporate activities, budgets and numbers for the benefits of its executive compensation plans.
These managed numbers are the playground of corporate management. They have been trimmed, shaped and formed into packages that work against long-term growth and instead promote numbers that can be crunched into an executive’s paycheck – not the profit performance of each company.
Most amazing is that those who profess to have the greatest reverence for the “Free Market” business environment the greatest proponents of “Capitalism” have abandoned its core requirement and have in fact hastened our decline in the world economy. Generally, government CAN’T let Big Businesses fail regardless of how poorly they perform or how much they abuse the marketplace and the American public. Big Busines is now protected by its size alone,
American Big Business companies have become “risk adverse” reducing their commitment to change. Instead, they have concentrated on taking advantage of the lowest hanging fruit which has the least risk and the highest financial rewards.
A dedication to this principal by America’s largest corporations is the reason we have declined over the past decades. We are more about maximizing this year’s financial numbers than about and large segments of American business have been unsupervised for too long. They have grown to the point where their size alone makes their actions difficult view and this creation of a corporate “black box” has hidden an ever increasing abuse of their routine business practices.
These abusive business practices have rewarded the most greedy and unprincipled leaders of our society and we have, as a society allowed the higher standard of doing “what is right” to be replaced with doing just “what is legal”. This relatively small change in our standards is a major player in why our financial institutions, the credit card companies, banks and other financial institutions have created the “worst practices” that sacrifice responsibility for immediate profits.
Our current economic situation is the result of the irresponsible actions taken by “the big, the few and the greedy” to line their personal pockets at the expense of the population at large.
It is the responsibility of the public to push for better oversight of the “Big” segments of our society and to refocus on the business values that created the prior and “Great” American economy.