Thursday, January 8, 2009

The cost of failure / A perilous analogy

Although our situation is perilous, it may not yet be fatal.
While business failures are devastating to those involved,
the business cycle should not be arbitrarily manipulated.
The US economy is like a giant coast-to-coast forest.
Occasionally, to stay healthy, it needs to reseed itself.
Fire is nature's best answer to burn the scrub and rubble .

When business and manufacturing, as limbs of the banking
trees, become diseased, infected, overgrown and choked
by overhead, they too must burn.
(Read big auto and big finance.)

Such is the cycle of life. The fire, while severe, will prepare
the way for the next round of growth. If we step in and
interrupt the cleansing cycle, we are probably only postponing
the inevitable. Rabid bankers and greedy businessmen, like cancers,
need to be burned out completely or they do twice the damage in round two.

To use another analogy, we find our country in a game of
world-class poker. Table stakes are whatever you can borrow
from everybody else on earth. You have had a run of bad luck.
Your stake is getting thin, so this may be the time to go all in.

Or maybe you should wait and play another round.