Why I Wrote This:
Everyones loves to tell me that we are in a recession, I get it, we are, are in a deep putrid green glowing vat of shit. What is particularly annoying is how incredulous people sound when they are telling me this, like it never occurred to them that we were actually in a recession and they are NOW coming terms with that discovery. People are unemployed or underemployed, life is tough, people who have jobs are getting poorer and consumer based economies are facing the ultimate poltergeist nightmare of no consuming. Shit Balls.
I however, have no problem with recessions, in fact I call them market corrections. Seems a lot nicer that way, being as that millions are unemployed and all.
1. It is Necessary to Weed out the Crap Companies: 'Recessions Catch What the Auditors Missed'; John Kenneth Galbraith. Lets be honest here, big companies should not be considered important or vital for the structural soundness of an economy because they employ lots of 'hard working, honest folk'. Lots of big corporations are crooked and cook their books (sometimes with help from their auditors), to make themselves seem blue chip, when they really are the deep putrid glowing shade of green chip that I was talking about earlier.
2. My Values vs Your Values: When the market hits a correction trough, Companies become fairly valued or under valued. The best time to buy is when you can see the market bottoming out, the problem with the hysteria that is the stock market is that ones the pendulum swings, people don't realize that it's eventually going to swing the other way, unless it's a really crappy pendulum and just breaks entirely. Buy Low Sell High is more profitable than buy high and sell higher. When there is hysteria around a sector or a stock, it just makes smart investing that much more entertaining, even if it means that someone's pension fund just got ROBBED.
3. Debt & Capital Markets Squeeze Up: Like a Fat model looking for work, once something becomes too bloated it becomes unattractive, so like that model, it must loose weight and get rid of all that excess fat. But one important distinction that needs to be made is that Capital Does NOT mean Cash, it means access to human, physical and mechanical inputs constrained by nature. If you have decent access to Capital in a crappy market, that means that you are a pretty decent company. If a cockroach is the only thing that survives a world wide nuclear blast, you can bet anything that those will be the most valuable animal species on the planet.....well the only one left too.
4. Government's Posse to the Rescue: Whilst the most scariest ten word sentence in the English language is, 'We are from the government and we're here to help', it must be noted that companies get a lot of help from the government. They also have a right to whine more, but with the added advantage that the govt. needs your business to survive, so they'll give you more fun stuff. Tax break, stimulus packages, bail outs, big screen Tv's ...the keys to the nuclear arsenal etc. If you want a date with Miss '(Insert Home Country)' this is the time to ask for it.
5. Shitty Businesses are Meant to Fail: Capitalism is as much about failure as success. In fact statistically most businesses fail, and they ought to as the strong, truly viable ventures will survive. the reason why communist and socialist models stutter and fail even on the back of tax payer support is because they are inefficient, they aren't in the same cut-throat winner take all environment that you find in the free market. Shitty businesses ought to fail, it's not fair on those fair few who managed to get their shit together, what is their incentive to improve?
The Big Idea:
Life is not perfect, companies are only as perfect as the people who work in them. Sometimes bad decisions are made and risk taken that really shouldn't have been taken, and there are massive far reaching consequences and the worst part is that people who don't understand the system that they are even in the first places are dramatically hurt. This sucks, but market corrections are necessary for the long term good of our species, to ensure that we can keep innovating, being more productive and just plain being better year in and year out. Think of it as the Evolution of business complete with natural selection fueled by money.