When you look at the economy you should look at the people end. We always get wrapped up in the science/technology of a thing and ignore the people effects … the closest we get to studying the people is companies … a collection of people. Our economy is made of people … our economy is our people. That was never so apparent as 2000 when even bad announcements stirred people to invest more. Attitude is everything when it involves people which most things do.
As a people based thing, our economy has to go through the Kübler-Ross behavior cycle … this cycle applies to almost any strong negative event involving people. We all go through each particular stage at a different speed and we all go through the cycle at different speeds but we all go through it. The entire United States has to travel through this cycle as a people before we rebuild to something stronger. I believe we shortcut this cycle after the economic crash of 2000 instead of going through it properly and now we repeat it.
As a strategist, I am always looking for indicators. Since housing and land ownership are the root of our people, I think we should look at the housing market. Until 90% of our banks accept the loss and re-evaluate and re-loan the homes that they are holding on their books for a more realistic value … a price that a person who now has a job at half his/her salary can afford, we as a nation cannot get past the denial stage.
A financial stimulus (I don’t blame a group of folks whose success cycle is based on 4 years and whose collective genius is reset every 4 – 8 years) only tricks our senses into believing that we are getting better and prolongs the stage of denial. No shot of adrenaline is going to help us with a bad heart … we need to eat right and exercise … we need to truly re-evaluate, as a people, what everything is truly worth and re-build our lives accordingly. Those of us who still have jobs should look to 1996 as an indicator of what their services are worth to people.
Lets start with the lawyers … they should start at half of what they charge now to sue a person out of their savings. And medical … those doctors and hospitals sure charge a lot more to let about the same amount of people die. Of course, doctors and lawyers have to pay back their student loans since it costs so much more for them to get their education. This is why they charge so much. And on an on it goes … the circle of over-pricing, the circle of pointing to reasons why. We as a nation … Wall Street Broker to Taxi Cab Driver, Hollywood Movie Mogul to Forest Ranger … need to back off slowly and re-assess our services … need to start thinking hard work for a reasonable profit rather than get rich quick … then we will be moving forward. Look for those signs. Ignore the signs of a rapidly beating heart due to a stimulus shot and look for the change in behavior that shows hard work and exercise is the true road to a strong life.
John's Recon 