As I write, I believe the next big trend in the markets will be a much scarier ride down than the previous 2008-2009 recession from which we are supposedly recovering. I consider the US in particular as perhaps subject to the greatest changes, although the trend will be global to one degree or another.
If we take a forthcoming deflationary depression as a foregone conclusion, how do we succeed in business while in a depression?
If I am not going out on a limb to predict a depression, I would be to predict a likely scenario for many things. I do not know which institutions will go bankrupt and whether the dollar will fail, for example.
I can say that Americans have already taken action under changed circumstances, as is no doubt true elsewhere. Things like reducing expenses, delays in having children, and working until older. These changes can only become more common in the near future, but for many, they will not prove sufficient. More fundamental and sweeping changes in expectations must occur.
For a period, we will not know what to expect in an alarmingly worsening market. We will have fewer options when accident or illness strike. More emotional stress over debt, more fear of spending, greater difficulty gaining trust, more competition for customers, fewer business and educational opportunities, more losses of homes, careers, cars.
In the 1930s, the US looked in substantial measure to government credit for relief, but government credit is tapped out now in the US. There is much truth in claiming that government does not create wealth, at best it only provides a milieu in which private citizens can create wealth.
Government functions by siphoning wealth off of private citizens. And when the income of private citizens drops, government revenues drop with them. Less money for welfare. Less money for social security. Less money for schools, roads, health, public transportation, education and research grants, farm subsidies, and so on.
Of course, the changes will present new opportunities for business. Many products and services are geared toward customer tastes under bull market expectations. In a bear market, many will develop new expectations and tastes for bear market products and services.
In comparison to the bull market, many will have even stronger unmet desires, but less money to buy. It would be a mistake to focus on price alone, although a preponderance of credit card spending will likely yield to cash and debit card spending.
Economic pain and job scarcity will likely motivate more to take risks associated with self-employment and entrepreneurship. More desperate people will also try their hand at scamming others. Skepticism toward too-good-to-be-true opportunities can only increase. But the entrepreneurs who provide innovative solutions will do well.
In general, those businesses which helpfully address people’s fears will probably find the readiest markets. If not a wild income, at least a small, steady one. If not the hope of elective surgery, at least the assurance of lower risk. If not quiet private homes, at least close proximity to opportunity. If not the convenience of debt spending, at least a secure investment. If not time saving outsourcing and automation, at least an affordable do-it-yourself. If not the vanity of flaunting, at least the value of floating.
Success itself will be redefined. And yesterday is the time to think about what it will be.
Tags: economic depression
[...] my thoughts here. I have discussed this context in terms of an economic theory, social mood, and bear market depression [...]