Wednesday, January 14, 2009

The Economic Spiral

If there’s anything worth celebrating in regards to our economic condition it’s that we’re all feeling the pain. It might actually bring us together as a nation.

I will be the first to say that handing out money to the banks was a huge mistake on the part of the Congress. To blindly give the Bush administration (the Treasury) another blank check – was THE BIGGEST ERROR of 2008. It played out like the resolution to give the President the authority to declare war on Iraq. There has been no accountability, none.

Again we are relying on trickle down economics. What we need to do is reverse it – give the money to the people. Let us use the funds to pay bills (money going to banks through mortgages, credit cards, etc.). Let us use the funds to buy gas, groceries, necessities, and some not.

What we have now is an Economic Spiral. People don’t spend money. Retailers and other businesses cut costs (layoffs, spending, etc.). Banks quit giving loans and lines of credit, which hurt businesses even more.

Things get worse.

Lets talk about small businesses. They tend to run very lean to begin with; one of the areas that they end up cutting is advertising/marketing. This becomes a catch 22. In fact cutting their marketing budget can bring certain death to that business. No customers walking in the door. No ads trying to entice them in. It ends there right? Nope – layoffs ensue. The business starves itself to death. But the reach is further than that. No one buying ad space in the local newspapers, radio stations, direct mailers, etc. Those businesses now begin to suffer too. More layoffs happen within those businesses. Think about all of the vendors that the small business may use within their marketing efforts (copy centers, printers, equipment resellers, etc.). Those individuals that get laid off rightfully now don’t go shopping, don’t eat out, don’t go to movies, etc.

Things get worse.

On a positive note… the lottery is doing GREAT!!

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