“We need an interest rate cut” thunders the business media.
“Give us GST relief” plea the big retailers.
“China will boom forever” assert the government economists.
“Big corporations will buy us out for a billion dollars” pray the hot new start ups.
“I’ll win the lottery this week” thinks the overworked cleaner.
We’re all waiting for the big saviour that’s going to rescue us, our business or the economy.
It could be a big win, a big client or a big government spending program to rescue us.
Sadly, should we lucky enough for that saviour to arrive, it may not turn out to be all we expected.
There’s many lottery winners who curse their win while many disaffected founders who watch their startup baby fade away neglectful new owners.
For a lumbering department store, tax changes will do little to save them from market changes their managements are incapable of comprehending.
Interest rate cuts are great for business when customers are prepared to take on more debt but in a period where consumers are deleveraging a rates cut will do little to stimulate demand.
The clamour for interest rate cuts are a classic case of 1980s thinking; what worked in 1982, 1992 or 2002 isn’t going to work the same way in 2012.
What’s more, the Zero Interest Rate Policies – ZIRP – of the United States and Japan are a vain attempt to recapitalise zombie banks saddled with overvalued assets rather than an effort to help the wider economy.
China is more complex and there’s no doubt the country and its people are becoming wealthier and there are great opportunities.
The worry is most of what we read today could have been the wishful thinking written about Japan thirty years ago. Lazily selling commodities to the Chinese while they create the real value is not a path to long term prosperity.
In business we have a choice, we can pray for luck or we can make our own luck.
Some choose to join the cargo cult and pray, or demand, that someone else does something. Others get out and do it.
John Frum gravesite image by Tim Ross through Wikimedia Commons