Saturday, September 12, 2009

Is the Economic Crisis Behind Us - Or Just In Remission?

According to Wikipedia, remission is "the state of absence of disease activity in patients with a chronic illness, with the possibility of return of disease activity."

That's right, it's not a cure - it's just a period where the symptoms of a disease are gone or subsided.

Like chemotherapy or radiation treatment with cancer, throwing money at a chronic economic problem, doesn't fix the problem, it only masks the symptoms. Sure, you see short term growth and you begin to feel better about things. But the nature of the system - the cause of the crisis - in the first place hasn't been fixed.

This is true both on a macroeconomic level, like the Global or National Economy and a microeconomic level, like your business and / or personal economic conditions.

If you were on the verge of bankruptcy, because you couldn't pay your debts on time and sales were down with your business and were able to convince a bank or creditor to loan you money (or even give you some), it would give you a stay of execution, but unless you figure out why your sales are down, why your expenses are exceeding your income, and of course do something about it (if you even can), you will be back to near bankruptcy soon enough . . . except this time with more debt and more pressure of inevitable collapse.

You know this to be true about your own household and business, so why would you think it would be any different for the government - be it Federal, State, or Local. The truth is, the same natural laws apply. You can make symptoms go away for a short period, but if you don't fix the underlying problem, the underlying disease, it will come back . . . stronger than ever.

We've seen it happen twice in the last decade. The first was the Dot-Com Bubble bursting. But since we really didn't fix the underlying social and economic reasons for the rise and collapse of the bubble, the next bubble was inevitable. The only question is what would it be.

Sure enough, next came the Housing / Credit bubble. And this one hit even harder and was the initial "cause" (and I use that term very loosely) of the economic situation we are currently in.

And unfortunately, since we really didn't let the crash take it's own course and find the bottom - bailing out the system and businesses that were struggling, we really haven't fixed the problem, only treated the symptoms.

So I ask YOU, as small business owners and others reading this blog, is the Economic Crisis behind us, or just in remission, ready to come back stronger than ever and crushing our (and the global) economy even more that we saw this past go around?

And in the case of your own business . . . have you done the work, are you doing the work that is necessary to cure your financial woes, or are you just waiting out the tough times, and setting yourself up for the next wave of good fortune . . . for remission of your chronic issues?

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