Recessions are Opportunities
There’s been a lot of talk, and frankly fear-mongering, in the press about the current recession. It’s “the biggest financial disaster since the 30s” by some accounts, although it’s hard to reconcile that with inconsistent economic data (such as the fact of contuining GDP growth through the first half of 2008).
With all the comparisons to the Great Depression, it’s worthwhile to discuss briefly my take on it. I am an incessant optimist, but I just have to respond to all the negativity.
First off, recessions are a normal part of the business cycle. The business cycle is: make investment, operate business, depreciate capital, close business. You invest capital in order to be able to run a business, produce products, be more efficient. At some point, that capital must be depreciated, because the factory machines are worn out and need replaced, or the product is no longer relevant in the market. At that point you either reinvest and start the cycle over, or you quit and liquidate.
Business cycles occur all the time in microcosm; only when a significant number end at the same time do we have a recession. And in some cases, like this one, an unusual bubble can have ripple effects through the economy. Irrationality in the real-estate market coupled with home-equity-fueled consumer spending were the instigators of this current downturn – a lot of the economy was being driven by the out of control upward spiral of home prices, instead of by sound business investment principles.
But this is an opportunity. Capital has been withdrawn, homes and businesses liquidated, assets available on the market for pennies on the dollar in some cases. Creative entrepreneurs will innovate, and investors who have been banking on real-estate as the best place to put their money, will be looking for new homes for their investment capital. Recessions are an opportunity to do things better. Those who have better ways, will be successful. Those who are stuck with old business models will fail. Recessions are a big economic introspection, and a free market always comes out faster, better and stronger.
foreThought.net is accelerating its expansion in 2009 – this is not a time to be timid, this is a time for us to really get our products out there. We can provide more bandwidth for less money than any of our competition, and other businesses in 2009 are going to be seeking exactly that: cutting their budgets or getting more for the same money. Either way, we can help.
And we’re not alone, there are many other companies doing the same thing we’re doing, looking at this recession as an opportunity.
I believe in free enterprise and free markets, and I believe in the ability of human beings to solve the problems that face us. We’ve been through worse, much worse, before and we will get out of this. foreThought.net is hopefully putting in our part to help make business more efficient. Working together, we’ll get it done.