The market hysteria and panic of 2008 are creating a self-fulfilling prophecy. If you believe the markets are crashing, they will. Markets are about psychology. As with bubbles, panics are fueled by irrationality.
Recently a report of retail sales dropping 2.7% drove the markets in the retail and banking sectors to new lows. Please put this in perspective. If you have a checking account with $100 in it, you just lost $2.70. The economy did not crater. Panic fueled a reduction of holiday spending just as the most recent financial bubble fueled irrational home prices and lending practices.
Massive amounts of funds were spent during the presidential campaign to convince us that the economy is a disaster. This campaign may have been one of the most effective marketing campaigns in history. The average consumer now believes the hype on the economy to be true. Just as a marketing campaign can drive you to new lows and a collective panic, so too can leadership, calmness and rationality lead us to prosperity.
If you build it they will come! If you build the economy, the consumer will spend.
This current crisis is about leadership. It is about people and I mean all of us reacting calmly. Economic growth is fueled by a positive attitude and not a pessimistic one.
The abject fear I see on corporate leaders’ faces and profound confusion are disturbing. The fear, as one bank executive told me recently, is because the markets are so irrational that they can no longer be predicted. Prudent and reasoned business practices are being ignored. Bad news fatigue on the part of consumers, homeowners, labor and management is rampant. Anger at decimated retirement plans for many baby boomers is prevalent.
Put the bad news in perspective. Unemployment has been much higher in the past 40 years. We have economic tools to deal with that. Sales have declined before and we have tools to deal with that. Banks have seen defaults rise before and they have tools to deal with that.
We are a very creative people. Our forefathers built a tremendous nation. Let’s not let them down. Remain calm. Look at where you are financially. Do not materially alter your spending plans. Reduce your debt as a family over a very long period of time rather than immediately.
I would encourage you to demand stiff penalties for corporate greed and greed in general. Enforce the rules of law that we have so that investors feel confident that we can trust our leaders again. Right now leaders have done too many things to harm the trust we had in them. Now is the time to show us that you can be trusted. Leaders practice self-discipline and set the tone at the top at all times but particularly during times of crisis.
As a retired Marine Colonel, I was taught and have taught my young Marines to care for others first. You lead by example. I ask all corporate and government leaders to now exercise that leadership and provide for others before you provide for yourself.
I ask labor leaders to think about your customers and the children of your members. If your contracts today destroy the businesses where you work, you have destroyed opportunities for your children. Please be responsible and ask your members to respond to this national call for calm and fair play.
Take care of our children instead of ourselves. It is just not fair that we leave them a legacy of debt we are creating.
Our press has a Constitutional guarantee of the very freedoms which have sustained us during prior crises. Now though, perhaps the freedom of the press must emphasize the responsibility of the press as well. Stories which embellish the facts are destructive. I can only wonder if the stories of the demise of Wachovia were reports of problems or causal factors influencing the panic which hit the bank. Would anyone condone someone screaming fire in a movie theater?
By the same measure, the press should be careful not to scream layoffs, bankruptcy, and disaster merely to sell their stories. Only our editors can regulate themselves and I ask you to consider the responsibilities your have for the freedoms you enjoy.
Today, more than ever we need to recognize a national conscience of self-sacrifice, duty to our fellow citizens, self discipline and restoring those principles which made our nation the great nation that it is. Reaffirm the rights and responsibilities of “Life, Liberty and the Pursuit of Happiness”. During a crisis, leaders emerge. We all need to be leaders today.