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A lot has been talked about the current global economic crisis. Your only ever hearing about the doom and gloom and the media has done it’s best to scare the hell out of us. It’s our fault really. We are the ones who tune in to hear about which company has just collapsed, who’s going next and who might just make it through. We are the ones watching their global economic crises specials and expressing our feelings in news forums. If you want to blame the media for hyping it up then you should also blame yourself for talking about it. We are giving them ammunition because they know that deep inside your loving it. If you haven’t already read it, I have written a whole post about this a little while back which I recommend you read, just to get your head around why I’m saying this. Click here to read that post.

History tells us that times like these are usually superseded by times of great opportunity and prosperity. I’m specifically referring to the emergence from the great depression in the 30’s. Don’t worry I’m not going to do another history lesson here but rather a little bit of explaining.

The Great Depression was the major depression in the 20th century and occurred in the 20’s – early 30’s. Its a time of hyperinflation and soup kitchens.   It cannot be compared to what we are experiencing now because back then, the level of globalization was no where near where it is today. Of course at the time the US economy downturn did effect other countries around the world but it was more distinguishable in isolation.

However the similarities we can take out of it is the fact that the level of opportunity that exists in now in abundance. It introduced the world to new concepts and new thoeries on wealth generation as well as allowed those with great value added ideas to make them a reality and in turn become super successful.

Today the world is a place of uncertainty and personally I think its an extremely exciting time to be alive. This is amazing. This is a time where all the corporate giants offering terrible value buckle up to either improve their offering, or die. i can’t be the only one noticing the great deals going around today. This is a time where business opportunities are in abundance because not only are new niches being created but infiltrated niches are being abandoned creating many gaps just waiting to be filled. This is an era where people will have time to think and ponder about how to create even greater value. This is a time where we will see the emergence of the new world order of business, where people who have been cooped up in an office will finally be removed (by force) from their comfort zone and told to think. Its these thoughts in times of crisis which will no doubt become the most valuable.

I have asked this question before but I will ask again: how will you deal and emerge from this? Have you lost your job or suddenly have a lot more free time through the general decrease in world demand? Will you go back to your comfort zone or will you take advantage of this time to create value and be part of this new world order?

People fear failure and that’s perfectly understandable. What stops people going into business for themselves? Most commonly, it’s the risk of not having a steady income which to them is a bi-product of failing. So it’s safe to assume that there is always an element of fear of failure which turns people off chasing their dream.

I like failure and I get excited about big flops. I love set backs and obstacles that present themselves and really enjoy losing a lot of money.

Well the previous sentence may not be entirely true but there is an element of truth to it. Every entrepreneur tackles a certain business or project with the aim of succeeding and inevitably if you don’t succeed you may get a bit bummed out. However what you also must (try to) remember is that to every action there is an equal and opposite reaction (Newton’s law). Even better, when applied to the business world it should read “for every action there is an equal or greater reaction”. If you take one step backwards it will usually be superseded by 1, possibly 2 or 3 steps forward. The key is to embrace this powerful concept. When something goes wrong sit back and think about what this failure is trying to tell you. Remember that with your failure there will come a greater benefit in the future.

This brings me to my next question: why would you want small failures? What’s the point of thinking small and losing small? The key is to think BIG. Put yourself out there and if your going to fail, make sure it is BIG. With BIG (preferably Public!) failures will come even BIGGER rewards. The best businessmen understand how to think big and many along the way have also lost big. During these tough times they have been able to bounce back, not just breaking even but launching themselves into their next level of business success.

The problem with small successes and small failures is that they keep you complacent. Limiting yourself to making small gains is the catalyst to settling with what you have. You have not lost much so who cares? Big failures force you to learn, understand and analyse to ensuring your next move is wiser, better and more effective. If your stuck with insignificant small gains and small losses then that will define your business life and it will be just that, insignificant. No one will really notice your losses and no one is going to notice your gains. I know your not this type of person, why else would you be reading this?

The aim here is not to get you to go out and try to fail or lose a lot of money but rather to help you understand that failing is something that should be embraced rather than frowned upon. It makes you stronger and wiser. Take sport as a great example. If you play a sport the only way you’ll improve is to play people better than you and who will beat you. Your failures and losses will point out the areas where you need to improve so you can come back better and stronger until you eventually can win. The you go up another level and start the process again. Playing people far lesser skilled than you does nothing for your skills and you will miss out on the chance to improve your abilities. This is no different in your business life. Set yourself up to play with the big boys and play tough but fair. You will lose and fail along the way, but it will make you stronger and the rewards will be greater.

Looking back at my own experiences I am always been able to find a positive to come out of every negative. Each of these positives have far outweighed any losses initially incurred. In my mobile business I initially paid upwards of $10,000 per mobile application and this left me and my company financially debilitated. Now I manage to get it done for under $1000 which is a massive saving. It enables me to create 10 applications for the cost it used to cost me to make just 1. This was mainly due to being forced back and challenged to find opportunities which provided greater value. This was done without me even acknowledging it and it was only in hindsight that I realised that I overcome that obstacle, ten-fold. I learnt from my negative experiences in outsourcing which cost me many thousands of dollars in programming as well as cost in time. What I learned from these failures has enabled me to increase efficiency far beyond any monetary loss that I once thought was wasted.

What to take note in these examples is that if I didn’t lose I’d still be in the same situation.If I had won a little then why would I change? What would tell me there was a much better way to do things? Nothing. Use your failures to your advantage and remind yourself that big failures manifest into even bigger returns, you only just need to embrace it.

The world loves a good economic crisis. I do. It gives me an abundance of ammunition when I’m writing my blog posts with so many ideas springing to mind, erupting feelings of frustration, annoyance and the need to question the whole system. There are many others just like me and I see it everyday. Newspapers, magazines, blogs and word on the street is all about the terrible, horrific, catastrophic, destructive GEC which has taken the world by storm.

And we love it! We lap it up wanting more and more and guess what? We get it. We get it in spades and bucket loads. There is more information about the global economic crisis than any person could possibly sift through in a life time. The funniest thing about it is, no one actually knows anything about it. What’s going to happen is all speculation. All the media, governments, individuals, companies and the like know is that the GEC sells. It makes governments look great when they come in to save a nation of distressed damsels. It drives traffic to websites and viewers to your show… and that’s a good thing.

Its probable to say that if doomsday talk was stopped and people were allowed to think rationally based on an objective element of understanding, then we would most likely still suffer from a downturn but maybe not to the degree that it may just occur. Telling people that the world will cave in will only make them cut spending, cut jobs and hunker down which is a really good way to prolong any economic downturn. Why stop something so newsworthy, something that gets bums on seats and increases that all important readership circulation?

People love to talk to friends and feel good about comforting someone who has lost a job or is concerned about their current one. It can be sad, upsetting and emotional. But we love it. Just like we love a good sob story, TV drama or a John Grisham. Drama ads passion and without passion you get boredom. We love the drama, we love shaking our heads in disgust, complaining about the executive pay increases and booing the corporate nemesis. It’s sport and you support your team, one day you lose and one day your a winner and that’s why we do it. Where is the fun if it all goes our way? Its the thrill, the excitement, the highs and lows that makes it incredibly addictive.

What I’m trying to say here is not that there is no such thing as the GEC and it’s a figment of our incredible imagination, however the extent at which the world’s media jumped on the GEC bandwagon can only be described as self-serving and opportunistic. Such expansive information has led to many entrepreneurs struggling to bring out something great and innovative because funding has become so scarce. Company pipelines have been mutilated by prospective clients running scared and cutting budgets. In my experience alone the GEC has cost my companies many potential clients, all of which would have greatly benefited from the relationship and I know I’m not the only person who can say that.

I’ll admit I’m a bit of a hypocrite but I’m comfortable in admitting it. The GEC makes great conversation, whether it be debunking government initiatives or having a go at people just like me.

Business sentiment is astonishingly low at the moment. The experts are predicting worse to come and companies and individuals are preparing for the worst. I believe its truly a shame that businesses and individuals are being scared into contraction, cutting staff, cutting spend and told to prepare for the worst.

Yes times will be tough but frightening the population into believing apocalypse will hit sometime this year is by no means helping the matter. To see special documentaries, extended news coverage and dedicated newspaper lift-outs litter our surroundings doesn’t instill us with a great deal of confidence. Sure we cut down, people don’t eat out as much, hold back on that new pair of shoes and forgo this year’s holiday. The sad bi-product of doing this is that those cost savings are also costing other people money and are detrimental to the economy, further extending and prolonging the downturn. I wrote a blog post about this a little while ago that brushed upon this idea.

So what will you be doing this year? Where have your personal or business costs been cropped? What will you do with your spare time as your no longer working on that new project or upgrade? Seth Godin has a great theory on how to use this ’slack’. I recommend you take this on board and think of what you can do. Hopefully this time will see the development of new skills, thoughts and ideas. It may bring upon a new Google or Facebook or make the world friendlier and smaller in some way or another.

I urge you to learn something new and use it to grow so that at least you can really say you learnt from this experience.

A standard macro economic stabiliser is through the governments ability to adjust its monetary policy. This is one method the Australian government has been able to use in its attempts to boost the local economy. The general thinking behind it is quit simple: The biggest money sucker for most households is that of mortgage payments. Changes to the monetary policy allows the government, the Reserve Bank rather,  to cut interest rates in order to, among other things, reduce the payment burden for households (assuming the cut is passed on by the banks). Households then have more money, hopefully now they go out and spend more and therefore improve lead to a boost in the economy. Simple really and full credit to the Aussie government being able to have enough elasticity and leeway to be able to use this policy in tough times (take note US!)

Reading the opening paragraph you may be forgiven to believe that I am fully supportive of the rate cuts. I am supportive in a purely objective way but personally it has me frustrated to no end and I’m sure many people have the same sentiment. I was the poor sap who decided to fix the their mortgage when the interest rate was at its highest, concerned about the rate continuing to grow. Now after rate cut followed by more rate cuts the interest rates are the lowest since the 60’s! Since the 60’s!

Well before you all jump for joy remember those misguided and unfortunate souls, like me, who locked in one of the highest rates in history during a time when they are at the lowest in almost half a century. Then jump a little more… I would!

Acceptable. Understandable. Tolerable.

This describes the current sentiment when you witness company after company slashing jobs and restructuring their businesses in order to ensure survival in these turbulent times. After all business is bad and who has the nerve to question any organisation making any harsh moves? Who questions a company when profits and valuations sink to new lows? Not many. It’s to be expected. Times are tough.

So who’s bluffing? Who is playing their hand knowing that no one is going to call them on it? This week saw the announcement of 1850 jobs slashed from Pacific Brands, one of Australia’s iconic companies. These jobs were slashed with the hopes of improving profits by outsourcing manufacturing to Asia. Acceptable. Understandable. Tolerable. What happens when, just after announcing job cuts, the board are also found to have given themselves considerable pay raises?

This really gets the thinking juices flowing. Is the laying off of staff something that they have wanted to do for a while yet it would have been so socially wrong it could have brought their iconic brands into disrepute? Is the timing of such a move really only that, good timing. Picking a time where ditching almost 2000 Australian jobs is actually considered acceptable. Everyone knows at least one person who has been made redundant, so for the 1850 its simply joining the long growing queue which is now not such a big shock. Was this another good reason for Pacific Brands execs to let go as the timing also minimises chances of an internal backlash?

Pacific Brands have certainly been called on their bluff. Now lets see if the public will stop accepting things on face value and learn to question motives as corporations try to sneak under the “GEC” radar.

From December 8, 2008 the Australian Rudd Government put forth a $10.4 billion dollar Economic Security Strategy.

According to www.pm.gov.au the spending was broken down as follows:

• $4.8 billion for an immediate down payment on long term pension reform.
• $3.9 billion in support payments for low and middle income families.
• $1.5 billion investment to help first home buyers purchase a home.
• $187 million to create 56,000 new training places in 2008-09.

The overall chief aim was to strengthen the national economy and support Australian households.

I agree with the latter portion of this statement referring to the supporting of Australian households. Considering that the funding was distributed to groups most needy, notably pensioners, lower and middle income families as well as first home buyers.

However it’s the ’strengthen the national economy’ bit that I largely disagree with. If the Rudd Government had intended on boosting consumer spending by pumping 10.4 billion into this market then I’d like to know the logic behind it. In the aftermath of the distribution many retailers were left stumped as to how little effect this had on sales. Most vocal was that of Gerry Harvey, chairman and founder of the Harvey Norman franchise who claimed that this stimulus did very little to boost sales.

I’m not surprised this stimulus didn’t have the desired effect, albeit only a minimal one. Such a stimulus, directed to the debt riddled population would do very little to get these guys spending to give the economy it’s much needed boost. Instead of the funds being spent on a new TV or a wardrobe upgrade, the cash was undoubtedly used to relieve some debilitating debt, paying off bills, the mortgage or the credit card.

It’s an unfortunate case of catch 22 where the people who need the money are the one’s who will spend it in ways which will not benefit the economy. Yet those that are privileged and deemed not needy by the government, are the exact people who would spend any stimulus back into the economy.

It’s easy to see why this path wasn’t taken… give to the rich? That won’t look good, it might work, but definitely won’t look good!

In light of the current $42b package, another thought that’s circulating through my brain is whether the stimulus packages are a result of the governments ‘knee-jerk-response’, something that has cost the country heavily in the past. The need “to do something” seems the main reason for the actions rather than a planned and structured spending process to achieve maximum effect. After all how can anyone ascertain the best way to spend 42 billion in the space of a month? Kevin Rudd himself stated “The most irresponsible thing to do today, with the worst global economic recession since the 1930s staring us in the face, would be to do nothing,”. Is it possibly a sign to show the Australian people that the government is quick to act and really cares in times of crisis. Im not the only one in doubt, with various publications showing little support for the package. For a brief editorial rundown visit OpenPolitik

I’m sceptical but I sincerly hope the next round of stimulus funding addresses the issues at hand, or at least takes note that cashing up the needy may not be the way to go if economic stimulation is the resounding aim.