Preparing Your Business for the Coming Economic Crash

News Type: Opinion — Wed Aug 15, 2007 2:24 PM EDT

business, economy, web-2-0, crash, dollar, open-source, collapse

Webster Tarpley is the real deal. A gifted historian who has written outstanding books about the Great Depression, George Bush Sr., and 9/11, has just written a killer economic analysis of the current situation in the US.

The bottom line is simple: the central banks are injecting liquidity in a desperate and perhaps foolish attempt to save the credit markets -- just printing money and putting it in the system. The increase in supply devalues the dollar. Coupled with economic stagnation, the result will be stagflation: a stagnant economy with rising prices.

The good news is that the Internet will be less affected by this economic crisis than other niches -- although this is an economic issue, and so all companies exposed to US macroeconomic risk will feel the hit (which is all American companies).

What Should You Do?

1. Sell US stocks. Should've done that a long time ago, but better late than never. Foreign currencies and precious metals remain investment opportunities, as does foreign direct investment in private firms outside the US.

2. Cut costs. In a hyperinflation scenario, the costs of goods and services could rise significantly. How would a 40% increase in operating expenses affect your business?

3. Push to the edge. In the spirit of cost cutting, what business operations can you push outside the firm? Content development? Search marketing? Software production? I think the good thing is that this economic decline will force companies to finally start looking outside their company to get stuff done. Instead of the first question being, "how do we build this?" it will be "who's got an API we can grab to do this?" Accordingly, investments in open source communities will be where it's at.

Originally Published on KidMercuryBlog

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{"commentId":949813,"authorDomain":"PamelaDrew"}

Pamela Drew

Nicely done; a favorite of mine for general economic advice on an individual level is Catherine Austin Fitts. Here you can download the seminar free and that's the page not the download. Then check out the rest of the site for the inside scoop on the bankster-gangsters who rig this show, missing money and how to play by better rules.

{"commentId":949813,"threadId":"138212","contentId":"898500","authorDomain":"PamelaDrew"}

2 votes

#1 - Wed Aug 15, 2007 5:42 PM EDT

{"commentId":950282,"authorDomain":"ririaroo"}

Ben Josephs

Pamela, I skimmed through the 'the US could be going bankrupt' and HOLY CRAP.

The guy in the story scares me, especially this:

"This can be contained if the political will is there. Similarly, the expected increase in social security spending can be controlled by reducing the growth rate of benefits. Expecting a fix now is probably asking too much of short-sighted politicians who have no incentives to do so. But a fix, or at least a succession of patches, will come when the problem becomes more pressing."

What sort of "patches" do they want? These guys at the Fed are not to be trusted.

{"commentId":950282,"threadId":"138212","contentId":"898500","authorDomain":"ririaroo"}

#1.1 - Wed Aug 15, 2007 9:02 PM EDT

{"commentId":949924,"authorDomain":"eriktheread"}

Erik the Read

Converting property to cash may be a good strategy, it will give you the clout to buy when the chips are down, but all currencies, all commerce will be affected by a crash in the US. No one is safe, no one will be spared. That is why everyone all over the world is supporting the dollar and accepting the vast trade imbalance. Only big companies can take the long view, most of us do not have the wherewithal to step out of our current investment positions. (= Our home, our car and the kids college tuition)

In times of trouble, people run to gold and property, but shrewd currency borrowing may do the trick, too. Still I think investors will have to accept some loss in nominal sums these days, hoping that the things they trade in will become cheaper, too.

I was first warned of the difficulties faced by the US consumer by a sharp-witted used car sales man. This was 2004. He saw how his customers were digging their own graves by borrowing on everything they owned just to maintain a facade, just so that they could keep going for another year, hoping things would "turn around" for them. The individual consumer does not see the over-all macro-economic situation, nor understand that their problem is a problem faced by millions and millions of other people. They think they have choices and can make up their own minds. In reality all the decisions about their lives and economy are fore-gone conclusions, they are just filling in a single answer, no-alternative test form. Do you think the answer is "A"?

{"commentId":949924,"threadId":"138212","contentId":"898500","authorDomain":"eriktheread"}

2 votes

#2 - Wed Aug 15, 2007 6:22 PM EDT

{"commentId":950071,"authorDomain":"splitmind"}

kidmercury

nice post, erik. i only wish it weren't so painfully true! :)

{"commentId":950071,"threadId":"138212","contentId":"898500","authorDomain":"splitmind"}

#3 - Wed Aug 15, 2007 7:19 PM EDT

{"commentId":950254,"authorDomain":"ririaroo"}

Ben Josephs

I was talking about this last night, and while I'm not an economist, the impression that I got was that the crash is a result of 911. The Fed tried to stabilize the economy by lower interest rates and it didn't work, so they kept lowering it more and more and eventually subprime mortgages were introduced.

Basically, they just staved off a crash for awhile and created more chaos because now all these people are going to lose their homes.

As I've been researching this, I see more and more implications - and I don't like it, they run very deep. It looks like impending doom for the country I love. I hope that this isn't the case.

{"commentId":950254,"threadId":"138212","contentId":"898500","authorDomain":"ririaroo"}

#4 - Wed Aug 15, 2007 8:50 PM EDT

{"commentId":950310,"authorDomain":"eriktheread"}

Erik the Read

Nah, Ben, it's just a recession, not the end of the world. A plague of locust, a time of change and realignment. We still have our natural resources and the competence in our heads. Bouncing back is almost a law of nature.

{"commentId":950310,"threadId":"138212","contentId":"898500","authorDomain":"eriktheread"}

#5 - Wed Aug 15, 2007 9:16 PM EDT

{"commentId":950329,"authorDomain":"ririaroo"}

Ben Josephs

My reaction is due to not trusting the Fed.

{"commentId":950329,"threadId":"138212","contentId":"898500","authorDomain":"ririaroo"}

#5.1 - Wed Aug 15, 2007 9:24 PM EDT

{"commentId":956416,"authorDomain":"counciloftruth"}

counciloftruth

"It's gonna be difficult....this has been perhaps the worst six years of mismanagement of the macro economy....I think we can avoid an implosion if we manage this carefully but it's going to be very risky," said Stiglitz, agreeing that if the same course continued to be followed a global depression would occur within 12-24 months.

Former World Bank Vice President, Chief Economist and Nobel Prize winner Joseph Stiglitz

http://www.prisonplanet.com/articles/october2006/301006globalcrash.htm

Sounds like it's going to be a depression rather than a recession. China is also threatening to use the dollar as a political weapon. Hopefully, once the US gets the neo-cons out of the Whitehouse you'll be able to bounce back.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/08/07/bcnchina107a.xml

Two officials at leading Communist Party bodies have given interviews in recent days warning - for the first time - that Beijing may use its $1.33 trillion (£658bn) of foreign reserves as a political weapon to counter pressure from the US Congress.

{"commentId":956416,"threadId":"138212","contentId":"898500","authorDomain":"counciloftruth"}

#6 - Sat Aug 18, 2007 6:57 AM EDT

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