what to do, what to do....

There are too many people in the pool. The strongest swimmers are able to stay afloat in the middle of the pool. the ones at the edge of the pool are relative safe, and the lifeguard is standing in the shallow end with a few compassionate individuals

 

First person,

Now picture yourself in the pool, you are a strong swimmer. You are the Phelps of the pool, the best and the strongest, but you are in the middle. You can swim there and survive, or you can reach out and try to save someone…What do you do?

 

Second person

Next person, you are a weak swimmer, along the side of the pool. You see someone with in reach; you can stretch out your arm and pull them to safety. What do you do?

 

Now the hard one

            Now lets just say you are the lifeguard you can see everything that is going on, you could throw a life preserver to anyone in the pool to try to save them. You can pull someone to safety in the shallow end. You can break up the only lifepreserver into tiny pieces and scatter it amongst the crowd to try to save everybody.

            What do you do?

Lets add another point to this last one… you can rise or lower the level of the water. Lower the water level and the dying will die faster, the weakest will be crushed, but the survivors will be happier and stronger. Raise it and people will be spread out, and unable to help each other if they chose to and more will slowly drown because they can no longer reach the edge of the pool.

Remember drowning people will react in any way they can to survive, or to make their way to the edge of the pool...

The results of your action are below

 

 

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Now the results of you actions….

            First person- You are Microsoft

You reached out to one person, knowing you can keep the 2 of you above water. As you reach out, people see who you are reaching to, and they all try to grab hold of them so they can be saved too. Now, do you still grab them and hope to hang on, or do you draw your hand back and make sure that you survive? This happens far too much in the business world, many times resulting in a company separating from their core focus as a business. These groups have a tendency to get too spread out and are unable to reform back into the organized group that made them successful to begin with.

You don’t reach out- you are able to survive the ordeal and can form a strong base for the economy to regain its former momentum.

 

            Second Person- You are Bank of America

You reach out. Maybe you are able to pull someone to the side of the pool, but there is only so much room and another weak swimmer gets pushed into the center to drown. Maybe you reach out to a company that is so unstable that you are unable to keep your grip on the wall and you both get pulled to the center to drown.

You don’t reach out. You watch the people drown but you survive to help (and profit from) the rebuild of the economy.

Only time will tell on which is the best decision here, but the risk is massive.

 

This is a big one. You throw out the life preserver to one of the drowning, you keep them afloat, but they are ill equipped to survive in the rebounding economy, they survive long enough to fall apart as the economy is rebuilding around them. Or the rest of the businesses around them try to piggyback on the life preserver and pull that person down with you. Or maybe you give it to Phelps(Microsoft) they poor that money into acquisitions, growth, and expansion. This would save numerous smaller companies in the long run, but would be political suicide.

 

You break up the life preserver and throw it for the masses. Here you manage to save maybe one or two out of the masses, those very, very few who only needed a few dollars to keep their heads above water, and of them, only the ones who know that they are drowning, far too often these companies don’t’ realize they are in trouble until they receive notice that their checks have started to bounce.  All you have managed to do was destroy a perfectly good life preserver.

 

You bring one person to the shallow end. Normally you would grab the worst off person to do this to. That would be the humanitarian thing to do…well congratulations, you now have a best friend that you are stuck with, and he’s that kid with the perpetual snot bubble coming out of the one nostril and keeps picking the other…and worse yet, he tries to sing karaoke ALL THE TIME!! This is the equivalent to bailing out a company and, as the Government, taking it over or regulating it. You have to be very careful with this decision, often these businesses come with more bad baggage, bad debts, and often, the company is worst off because it was poorly planned, poorly run, or produces something that is not necessary. Now there are some things that have to be taken over, often Public Transit systems are the best example, when they provide a necessary service, that service must continue whether it is profitable or not. But often those will be taken over long before people start drowning.  

 

Finally, the last point, did you raise of lower the water level?

Rise the water level- you have now effectively caused a Stagflation, that is INCREDIBLY BAD! Money being printed and dumped into the economy may make everyone millionaires, but everything made in the USA will adjust accordingly…and things that are imported will become even more expensive to compensate for the volume of the US dollar.

Lower the water level- this is just as dangerous as rising the water level, more so from a public popularity point of view. Yes a depressed dollar is good for international commerce, it is also nearly impossible to manage when operating with a massive national debt. First off is pulling money from the public, to do that you have to raise taxes far above the amount that it is being consumed by the government, and even then people will want to know what is happening with it, senators and representatives will already be spending it long before it leaves the taxpayer’s hands, to say that it’s being removed from circulation would cause a frenzy. People would refuse to pay taxes, and you are out of luck as a government. Or, raise federal interest rates…this was done twice before.  To make the kind of difference that was needed interest rates were raised to obscene levels. During the first US Stagflation, President Lincoln raised interest rates past 17%. This resulted in one of the lowest in-office approval ratings in US history. Don’t quote me on this but I think it was 28% approval.   But it managed to reduce the inflation rates and allowed the economy to stabilize.

 

Sadly the only known answer to any of these points was to do nothing. The economy will balance itself out if it is allowed to do so on it’s own. The last time this happened the president got himself involved(FDR), made minor changes, threw some money here, some federal regulations there and it resulted in the Great Depression taking almost 10 years and the Second World War to return to normal.   So when any candidate talks about “fixing the economy” just write it off as more political crap that won’t make a difference. And I don’t’ mean this for any specific candidate, I’ve heard both talk about making changes, the same changes that didn’t work in 1933, what makes them think they will work now?