Canucks No Longer Schmucks. My take on the American Debt Crisis

Believe you can and you're halfway there ~ Theodore Roosevelt

Q:  VinayKG of Bangledore via Twitter DM (Direct Message):  Hey, Can you give me your expert opinion towards US recession towards end of this year? I heard there going to be recession again.

A:   Whew, what a question Vinay!  I am not sure I would consider myself an expert on the US recession, however, I did ask readers to post questions and I will answer.  Thus, I can certainly give my personal opinion on what I see from the northern border, Canada, as cousins to our US neighbours and friends considered by most in the world.

I certainly can relate to the question in the first place.  Many countries, businesses and people rely on the United States to be a strong country.    In Canada, many head offices are located in the United States.  I remembered an advisor several years ago recommend that if you want to predict what is going to happen, just watch what is going on at Wall Street.  Some would say from that advice, I have accurately predicted the domino effect for dominant leaders like Quebecor in their print division shortly after 911 based on reading about all the catalogue cancellations written up on Wall Street.  A couple of years later, they were shutting down successful operations.   It seems to always come down to money, interestingly.

Since I do a lot of driving travel, I’m glued to CNN, Fox News, etc. on Sirius Satellite.  Why not listen to what is going on than just empty space music radio?  It’s my idea of multi-tasking since I’m interested in what is going on in the world.

Think of Canada and the US relationship as that of siblings …  the United States has been like an older brother to us, who we look up to and rely upon for many things.   All of a sudden, the younger sibling starts to grow up, form opinions of its own after absorbing everything that they’ve learned and applying unique ideas, stretching itself, spreading its wings and soaring to new heights on its own.   Canada has a dollar, the US has a dollar.  The Cdn dollar has been below the US for several years.  Fast forward, through numerous events, our dollar is stronger than our cousins and our banking system is one of the strongest is the world.   Sounds to me like the younger sibling learned a lot from its older brother, made some improvements and moved on.

But, this isn’t answering Vinay’s answer …. yet.

I like President Obama.  I think of another President that I truly admired even though I was probably at a self-absorbed age when he was in power and read/learned about him long after because after leaving politics he has had the opportunity to allow his true character show through … Jimmy Carter.
I wouldn’t want President Obama’s job.  You couldn’t pay me enough.  In fact, sidebar thought, what is it that even Donald Trump who has fame, power in his own right and wealth doesn’t have it all until he has what is considered the ultimate prestige of being the President of the United States.

I relate to President Obama what many, thousands, millions of us go through.  You apply for a job, you’re given a job description, a salary yet it isn’t until you actually start the job do you REALLY discover what all the challenges are.  Oftentimes those challenges are the budget is a lot higher than you thought, or you were so mesmerized by the company or title, you didn’t really anticipate what was in store.  Then, there is this and that employee or boss who has this or that influence in making your job a living nightmare.  On top of it all, it is a bigger mess than you realized from the incumbent that you have to deal with before you can even go on to doing before any of those great ideas you presented at the interview.

It gets worse.  Your team doesn't play well together!  Your management has its own ideas and its own agenda.  Then, there are all those promises that you believed in, that vision created to get the job done ... all before you had any idea how dysfunctional the group was.

Matters are much graver than you imagined.  Your budget is blown, you’re up to your eyeballs in the red (i.e. China), you’re competitors are ten times more aggressive than you realized (Republicans), and your employees (Nation) are restless, while confidence has nose-dived from your customers (voters).

Do I think that this mess is going to be cleaned up anytime soon?  No.  Why?  Because as an outsider looking in, it looks to me more like positioning for the 2012 election is more important than cleaning the house.  Metaphorically speaking that is of course.  Or maybe not.  There is a crisis at hand and everyone seems to be more concerned with taking a stand than fixing the issues.    I like Obama.  He made “compromises” and that still wasn’t quite good enough.  A leader who makes compromises in corporate worlds is called a leader.  A President who makes compromises (think back to Jimmy Carter) is considered weak or possibly waivers. 

I’m getting closer to answering Vinay.  Perhaps I already am.  If the US cannot fix this problem, how can they move back to being the power it has been?  It is starting to look embarrassing to its cousins to the north.  After all, we are used to bickering and lobbying and disagreement because we’ve had a minority government until now.  It’s amazing how much smoother things go when the people “vote” confidence in its government. 

The power to fix the mess seems to me to be in the hands of the party who made the mess to begin with.  Is it just me, or doesn’t everyone else see it that way?   The corporate bail outs, lifting the debt ceiling, fighting competitors (foreign countries) is like giving marketing or research and development carte blanche spending power.

In the corporate world, you would not be allowed to squander money away fighting the competition.   In the corporate world, accountabilities skyrocket when profit isn’t being made.  Usually, those that spend more time pointing fingers than fixing the problems are fired.    Most corporations would love it if their customers could vote for them to stay in their jobs.  In the corporate world don’t the shareholders truly overpower customers because they look at the bottom line?  Don’t they analyse whether or not they’re getting return on their investment?  Who are the shareholders in the US?  Could it be China who finances the corporation?  I doubt it, because as long as they get their payments and earn the interest, it could continue to rack up for all they care.

Vinay, you’ve been patient … and so have the readers if they’ve stayed with us this long.  Will the US go further into a recession by year end?  Absolutely, definitely, you betcha if they continue on the path so far!   In many instances, the questions get asked in the same context as a department employees asking its manager if they should pay attention to rumours that there is an impending merger or takeover that may risk their jobs. 

In a corporation, or even a divorce, they bring in mediators.  That is what the US needs -- an objective third party who has no hidden agenda whatsoever.  Better if it’s someone who can look at the financial and the operational side of things.  Like Canada perhaps?  However, as in many dysfunctional environments, admitting there is a problem is the first step towards a solution.   In the current US climate, it appears to me, as a humble, non-expert, nobody is willing to admit there is a problem.  Until then, we will all watch in dismay, the decline of a great nation.  Not by any other person, corporation or country’s hand but their own.

My friend, Vinay, even if the US can get it together, it doesn’t mean they won’t go into a recession because there are too many elements going against them.  However, it isn’t a guarantee.  Yet, one thing is for sure.  If they don’t, it is more than likely it will go deeper into a recession.