Financial markets do the one thing better than nearly any other form of protest or lauding of government policies. When the financial markets are falling that’s a tell-tale sign something somewhere is wrong. Same for the lifting, where the rise lifts all giving policy makers as well as the general public at large explicit feedback of what is, as well as, what’s not working.
Yet, once those indicators become an adulterated vehicle with the ability to mask true economic information, the underpinnings of that very same economy at some point will inevitably give for it allows more, and more burdensome tax policies, regulatory initiatives, along with a host of other parasitic fee structures that have the ability to thrive as they in turn kill business.
Just how pungent does today’s economic corpse need to stink before everyone understands it hasn’t been resting, or recovering, but has been dead for who knows how long? With a print of nearly 3% negative GDP, sustaining, or plodding along, or any other descriptor stating “recovering” is ludicrous.
These are not just troubling issues rather, the implications contained going forward are far more frightening. Just take a look at the current economic landscape from the purview of someone trying to start, run, or sustain a business in today’s climate.
Where is a person to go that is both industrious as well as endowed with the self initiative to take on the world and go out and start their own business? At one time that question had a reflexive answer: anywhere in America. Today? Not so fast.
Look at the once shining city of New York as just one example. Remember when you would sing with reverence: “If you could make it there, you can make it anywhere?” Now, is it the first choice? Hardly.
Ever more growing regulations are being foisted upon business owners as well as other entrepreneurial minded individuals. The more you make – the more they’ll take seems to be the lyrics of today.
Want to hire or need to fire? Better check on that for you may be in violation via some code if you do either, regardless if it’s in your best interest or not. But don’t worry for that other mantra that recited at you is: “You’re rich! You can afford it! And you’re going to pay even more!” Makes you feel all warm inside for taking on all that risk doesn’t it? And besides, New York has been, and is continuing to experience an outflow of wealth and business. So don’t worry, if you’re feeling you can’t pay more, don’t worry, they believe you can. And you will.
Want to skip the harsh northern climate for a little fun in the sun? California is the place to go for a beautiful change in climate. But in regards to a business climate? As fast as they can proclaim the earth is getting warmer the business environment is chilling at an even faster pace.
With the announcement of large employers such as Toyota® moving their entire corporate headquarters out of the state entirely not to mention the outpouring of other small and medium-sized business, who’ll be left to pay all those great and wonderful benefits allowed the citizenry?
Ask most people and they’ll say: “The government.” As if they can print money from thin air. But wait, they can via the Fed. So as long as the wheels on the presses whirr – who needs business!
Then again why should anyone worry? You’ll be able to flip burgers at a “living wage.” However, if you own that burger joint, restaurant, or the other myriad of establishments that many have now been deemed “evil.” Your payroll is now going to possibly double. Regardless if you can afford it or not.
Have a few too many employees that makes your healthcare costs soar? You can possibly try as to downsize, but it has been expressed you might be in violation of some edict incorporated into the new laws where doing just that for the sole purpose as to reduce your costs (or the necessity as to be able to keep your doors open) you may find yourself being fined. Costing you even more!
Just look up the law for clarity on these matters you say? Sorry, they change at the whim of whoever is wielding a pen. You had just better get your own pen at the ready to sign that check payable to ___________(fill in the blank) Better check your ink supply. Just saying.
There isn’t enough space nor time to list all the other ancillary fines, regulations, and more being hurled at business at such an alarming rate. It’s becoming near impossible to keep up let alone know what the cost of doing business will be next month, let alone next year.
The exacerbating enabler to most of this problem and why no one can put 2+2 together and understand the impact is for the very reason I and others have expressed ad nausea. The intervention of the Federal Reserve and their monetary policies within the capital markets.
The Federal Reserve has absolutely adulterated and is nearly obliterating the one and only mechanism powerful enough to keep many of these business killing interventions in check. i.e., Market forces expressed via the capital markets.
Currently the only force being expressed is the “forcing” of Fed. provided liquidity to levitate stocks to heights never before seen in history as the GDP plummets to levels in a fashion reminiscent of a lead zeppelin.
How in the world can any so-called “business analyst” state publicly that stocks are “fairly valued” against such a back drop? It’s beyond moronic, and to me, it’s damn near criminal.
Today I also find more people who will proclaim they understand business better than most because they’re sporting a piece of parchment from some Ivy league school. Nothing could be further from the truth. In fact, many newly minted MBA’s know nothing more than “theory.” e.g. This economy will support jobs plentiful enough, at salaries robust enough, to pay off all that accrued student debt within their lifetime. Best of luck turning that theory into fact in today’s economic climate is all I’ll say.
What many just don’t seem to realize is what’s currently taking place is not capitalism via free market forces, rather, it’s crony capitalism leveraged and maintained by monetizing debt to allow winners and losers to be chosen by some elite body or bureau. This has never been so, at this level, ever in the history of our nation. Ever.
This form of capitalism is reducing, not expanding opportunities. Or said another way: This is a race to the bottom, not the top. But the stock market levels allow the main stream media to keep printing “everything is just dandy” more times, while at an even more furious pace, than the Federal Reserve can print or digitize the fuel that keeps the hot air in this balloon aloft.
And so in lies the dangerous mindset being propagated throughout the business landscape. However this mindset is not borne out of a vacuum. It’s being institutionalized in principle throughout the country. You get doe eyed responses when you try to explain without the Fed.’s facilitating, there is no market. But alas, it once again falls on deaf ears.
At some point reality is going to have to be faced. You can only adulterate the metrics so many times, change the calculations where bad equals good for only so long. Sooner or later far too many will no longer accept the burden of creating businesses, let alone expanding them. And Atlas won’t shrug – He’ll throw his hands up entirely.
And when that happens the turmoil that will result will explain quicker, and with more understanding to today’s “smart crowd” than any Ivy league lecture hall ever produced.
I penned this years ago and I feel it’s more true today than ever…
“Markets right themselves with pain… That’s Capitalism.
Backroom manipulation to avoid that pain only increases the severity to be felt down the road.”
There comes a time when the weight of business regulations and burdens make it far too heavy to continue, or even worth the effort to start. Rather than waiting to prove how much weight Atlas can bear we should be doing everything within our power to ensure he still wants to even try. And at a near -3% historic negative print in GDP. We had better hope he doesn’t drop the world and decide to fill his spare time with social media or gaming apps.
Just look at how productive they are for business.
© 2014 Mark St.Cyr MarkStCyr.com