Commentary - December 2008

The Sky is Not Falling

Do not let fear determine your future

by Lyle Brennan

It is no secret that the mainstream media feeds on disasters, crises and tragedies. Ever since the U.S. economy entered its current downturn, so-called experts have filled the airwaves and syndicated newspaper columns with dire predictions of the next Great Depression, complete with breadlines and tent cities.

Pick up any newspaper or magazine, listen to any cable TV station or radio network, and you will find editorial much like the below from recent Associated Press articles: “Scared and out of money, Americans stopped buying everything from cars to corn flakes…jolting the national economy into what could be the most painful recession in decades…retailers are bracing for a grim holiday buying season…economists said tougher times still are ahead.”

Bad news from the financial sector makes headlines, such as this one from the Las Vegas Review Journal on November 2nd: “Local Banks Not So Safe.” Below that headline, a graphic showing a nearly empty bank vault, the article began, “Like a great earthquake, the real estate bust and credit crunch have shaken, buckled and driven huge cracks in the foundation of Southern Nevada’s banking sector.” The credit crunch is not the only headliner in recent months, declining housing prices also made the news, including this headline from the RJ on October 24th “Las Vegas Real Estate ‘is in the Toilet.’”

Although some aspects of the current situation are unique, much of what we are experiencing is the normal operation of the business cycle, which shifts between periods of expansion and prosperity and periods of contraction and decline. We might not like it, but it is nearly as regular as the annual change of seasons; bemoaning the “down” part of the cycle does not do any more good than complaining about winter.

According to the National Bureau of Economic Research, recessions have occurred approximately every five years since the end of World War II. There were recessions in 1970, 1975, 1980, 1982, 1991 and 2001. The average recession lasted less than a year.

Remember when the dot-com bubble burst in 2001? How about “Black Monday” in October 1987, when stock markets around the world crashed? Each time it seemed like the sky was falling, but we managed to survive, and we will pull through this time, just as this country always has.

Creating fear and panic about the economy is irresponsible journalism at its worst. Not only does it take advantage of people’s fears in order to sell airtime or newspapers, but it adds to economic problems by creating a self-fulfilling prophecy. If consumer spending is down, how can creating a climate of fear help the situation? The simple answer is that it can not. If unemployment is up, crafting panic-driven stories will only serve to make business owners more fearful of the future and perhaps unnecessarily lay people off or freeze hiring.

I can not help thinking that some of the national media outlets purposely created panic about the economy. If voters believed that the Bush Administration led the country into a major depression, it would naturally cause a backlash against the GOP. The results are in and now we will all endure the next Administration. Now that the elections are finally over, will we see a return to responsible journalism? I sincerely hope so.

Here at Nevada Business, we are dedicated to giving Nevada companies the information and advice they need to succeed in challenging times. There are opportunities to succeed at every phase of the business cycle. It takes creativity and persistence, but money can be made. Bottom line: don’t be paralyzed by fear.

When a reporter asked Sam Walton what he thought about the 1991 recession, he replied, “I thought about it and decided not to participate.” He kept on growing his business instead of letting fear determine his future. Now is the time to determine what you can control, and do something about it – increase your marketing efforts, buy property while it is cheap, increase your market share by being more nimble than your competitors. Do not waste time agonizing over things you can not control, such as the inflation rate or the Dow Jones Industrial Average’s closing levels. Remain alert to the business cycle, but do not let fear run your business.

This magazine has been the voice of Nevada business for more than 20 years, through economic ups and downs, and we pledge to continue uplifting and supporting our readers in the future. We hope you all enjoy a blessed and happy Christmas season and a prosperous 2009.

Lyle Brennan Publisher
COMMENTS? email: lyle@nbj.com