Generations@Work

“Recession fighting measures will help if they come quickly experts say, but there is disagreement over which policies would have the greatest impact.” This is the lead sentence from the Jan 19th Times under the headline “Economists Debate the Quickest Cure.” Below this story is another, with the headline “Bush Proposes $145 Billion Plan to Spur Economy.”

That was Saturday morning. It’s now early Tuesday evening and the economic turmoil felt last week has taken an ominous twist as financial markets worldwide appear to be in free fall. Early morning selling pressure had the Dow down 467 points until the Lone Ranger (Fed Chair Ben Bernanke) rode into town wielding a .75% interest rate cut. To put this in perspective, this would be like Warren Buffet showing up at the World Series of Poker and pushing $30 billion in chips across the table. You’ve gotten people’s attention, but it’s still gambling. If this doesn’t work there is little else the Fed can do in the near term short of having Ben stand at the top of the Fed Bank in NYC throwing piles of thousand-dollar bills off the rooftop.

So now the drama switches to Washington where today several members of Congress said in essence, ‘we need something and we need it fast’. I’m paraphrasing.

Well, this is another fine messs you’ve got me into Ollie! What to do? What to do?

Just a week ago, I published my first post on ‘Gen-Omics.’ How timely. In light of this past week’s economic events - the Dow’s 4% decline, the $10 billion quarterly loss reported by Merrill Lynch, the announcement of weak job growth and worse-than-expected news on holiday retail sales - not to mention Bush’s groveling in Saudi Arabia in an effort to get the “leaders” of this neo-medieval monarchy to agree to pump more oil and bail out Wall Street, the announcement of rising wholesale and consumer price indices and the related weakness of the dollar (I could go on), this wasn’t the best week for our economy.

So, let’s do some applied Gen-Omics. Here’s a quick reminder of the basic national income model:

Y = C + I + G + X - M

The fear, of course, is that Y (total income) is falling or will be soon. Actually, that may be a bit of understatement. There are some folks saying Y isn’t just falling, but is in a full-on swan dive. People are talking about the early ‘80’s all over again, or perhaps the return of ‘70’s-era stagflation (rising prices + rising unemployment) largely due to skyrocketing energy costs. In economics terms, this is “human sacrifice, dogs and cats living together, mass hysteria!” And who we gonna call? Not Bush. In fact, the man should just shut up and go away! Our President hasn’t blessed us with a sneak preview but in all likelihood he is going to tell Americans just what he told them after 9/11: go out and shop! Take the family to Disneyworld. Don’t worry, be happy! Simple Simon is going to give middle and upper-middle class folks a few hundred bucks so the peasants can go to the fair and buy stuff they cannot afford, most of which won’t have been made here!

Some stimulus. I can hear the cheers in Shanghai already.

Here’s a Gen-Omics snapshot. Thinking in generational terms I would propose to give:

• The Silents mostly get an income boost

• The Boomers get some tax relief depending on their tax bracket

• Gen X’ers get tax relief + target consumption incentives + lots more

• Millennials (Gen Y) get ed loan relief + jobs and job training + lots more

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