We are now seeing everything upon which most of our economic business assumptions depends turned upside down due to drastic impact on the economics of everything required to conduct business caused by war and risk-driven devaluation of U.S. currency.
The costs associated with our Middle East policies, the management of the Gulf War, and the rise in oil prices have created such havoc that critical relationships no longer compensate as they must.
If you were an intelligent airline, you saw this coming a long time ago and hedged the risk as best you could.
Most companies, however, have pretty much just watched as many of their indispensible business agreements became devalued to the point of company endangerment.
It may self-correct later this year. It probably won’t. What are we doing to prevent disasters?
This is not just some political rant. There are too many businesses directly and adversely impacted to deal with the crisis mode of our economy on some shallow political level.
In the food service business, for example, the squeeze is between soaring food costs and customers who can no longer afford to eat out the way they used to. Any marketing plan more than six months old needs to be scrapped. And if you are in a food service franchise model, you probably have to buy from designated vendors who have to pay your franchisor a “commission” for the privilege of monopoly vendor access to you. You have no chance to buy competitively in almost every instance. Even a short perusal of businesses for resale will show the spikes I am talking about.
Airlines are drastically reducing service to what were recently bargain fares destinations, like Orlando. Many smaller cities are losing air service all together.
A quick glance at the recent performance of GM, Ford, and Chrysler connotes myriad jobs lost, mortgages defaulted, lives ruined.
These are all in your face, personal disasters for many thousands. This is not an abstract discussion.
What we mostly ignored as “the sky is falling” political theories are now very matter of present tense fact emergencies. Bankruptcy lawyers are having their best year ever.
One may posit that if the environmental problems are seriously addressed, cyclical tendencies will eventually cure the situation. Economic forces tend to equilibrate over the long term.
The great plague followed that same cycle.