What will the consequences of the downgrade be? What will be the trajectory of the recovery? How should business prepare?
The downgrade will have a price. I expect to see prices rise as the dollar weakens. Expect your cost of goods to go up.
Uncertainty is now magnified. The big order you expected will be put on hold. Expansion projects will slow.
The political divide will deepen. There will be more acrimony than ever as each faction from the Tea Party to the Libertarians blame each other. It will be hard to hear the few voices of reason over the din of dissent and discontent. They are rioting in the streets of London today.
The government must cut spending. There will be major battles for funding. Those with the least volume to their voice, the [truly] poor, disabled and disorganized will suffer the most.
Regulations will be eliminated under the guise of freeing business from oppressive regulation. Consequently, the gap between the rich and middle class will widen. Expect ethics to run amok. Expect more food recalls. Expect more lay-offs. Expect more foreclosures.
I could go on but what’s the point? You get the picture. It’s grim.
We might be able to turn things around if we act quickly. This will require the majority to pressure the upper class minority to change. It will require we see past the rouse of the Tea Party and Sarah Palin, both of whom profit wildly from the mantra of cut “entitlements” such as Medicare and Social Security.
Entitlement? Since when has Medicare become dirty money? Since when has Social Security become akin to welfare? Billionaires collect social security in this country.
Ethics: We must act in the interest of the country and not allow greed to drive every decision.
Education: We must revitalize our education system and stimulate thinking. And those within the education system must accept the responsibility for the task at hand. We must all participate in the closed system the current education has fostered. They really don’t want your participation or input. Don’t believe me? Try getting a group of parents permission to ‘audit’ classes. What if you are not a parent? I doubt they’ll even let you in the classroom.
We all must demand better from the badly broken system. We must also realize that demanding better does not mean focusing on blame.
Manufacturing: We must encourage, even subsidize initially, the manufacturing of goods in the USA. We must understand that labor cost is not the chief reason companies move manufacturing from the U.S. to China.
The real drivers are greed and escape from moral responsibility. It’s okay to pollute the air and water of China. There is no true labor protection in China. In other words, the costs are concealed.
We breathe the air and we share the dying oceans. We suffer the health consequences of the lax controls in China while CEOs and shareholders profit.
We can manufacture here in the U.S. Manufacturing in the U.S. is more profitable than “made in China” in most cases when all the costs are considered. This is the myth ‘they’ want us to believe. Look closely at the next “made in China” product you purchase. How much labor is really in that product? How many work hours can be in a $3 item?! Have you not heard of automation?
Get up before the muscles atrophy and you can no longer walk.