Sunday, February 1, 2009

Wolves at the Door

It has been interesting, to say the least, to be in business school at the very time America's entire economy and financial industry have been collapsing. Last year the pundits (and even many very smart people in Washington and New York) said it wouldn't be that bad. Then, after it WAS that bad, they said it wouldn't get worse. Then it got worse. A lot worse. To the point where I have come to seriously doubt the judgment of even the smartest leaders watching over our economy. After being in an environment where we actually discuss intricacies of finance and can see the gaping holes in what should have been sound logic, I'm trying to stop myself from thinking this tailspin we're in right now won't have a bottom until every one of us loses our jobs and our homes. Now that'll keep a fella up at night!

Now come the mass layoffs. Last week alone in this country, our economy lost over 100,000 jobs. I don't believe many of them will come back, and that is a stunning problem I don't know if we are even prepared to deal with as a society. My personal belief is that we have been riding high for 20 years or more on free and easy credit, becoming more and more distanced from what we can actually afford. This has given rise to glittering suburbs, large vacation homes, huge SUV's, and a level of conspicuous consumption unseen in U.S. history. Now we're all starting to learn a lot more about what we can afford, and we're finding we can't afford all that much. MBA's and non-MBA's are losing their jobs, and paradoxically the only/best cure is to do the one thing few of us can afford anymore: shop 'till we drop. When 2/3 of your country's GDP is based on consumer spending, and when those consumers can no longer spend, you're in big trouble. I've always considered our country's dependence on its shoppers to be perhaps our biggest weakness-- many of my better-educated friends called me crazy and pointed to sound statistics and rising index funds. Now many of those statisticians are re-evaluating their formulas and many of those index fund managers are either out of a job, or they're in jail.

It's a pretty crazy environment in which to be getting an advanced degree in business. Every other week, we file into a well-appointed classroom and are treated to catered food and thought-provoking lectures. All around us, the economy is falling apart, and it's come to the point where I wonder how many of my classmates will lose their jobs before we graduate. Since 50% of the people in my class have their program paid for by their employers (I do not), they are even more vulnerable.

We're supposed to be the leaders of tomorrow, all taking this step to improve our prospects for future wealth and success. That doesn't mean we're all not still scared as hell, though.