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From The Local Organic Farmer - Words of Wisdom

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Friday, October 17, 2008

From The Local Organic Farmer - Words of Wisdom
Current mood: enlightened
Category: Jobs, Work, Careers


October 16th, 2008


Our Self-Fulfilling Prophecy

Ok, if I see another picture of some dude on Wall Street with his head in his hands about to cry or looking into space like he has just seen the Four Horsemen of the Apocalypse, I am going to scream. Enough already. We get it. The stock market is in the tanks. But here is the frustrating part.

We, and I mainly point the finger at the media right now, have created a self-fulfilling prophecy. With all this attention on Wall Street, we are perpetuating its downturn. And it all boils down to one phrase, consumer confidence.

Sure stocks rely on earnings and quarterly reports, but as a whole, they are dependent on what the confidence of the consumer is. Take Amazon for example during the '90's. Amazon would never post a profit. Every dollar they earned they sunk back into the company. Always in the red. But their stock price (through the '90's) was going through the roof. Why? Because people had confidence in the company. Not rooted in anything, but just a good feeling. So stock went up.

Is our economy (nationally) in trouble? Sure it is, but this trouble has been here for over a year. This is nothing new. The only thing new to the whole scenario is a word called "meltdown." If you use terms like "meltdown" too much, people might start to believe it. But this stubborn Norwegian is not going to. I refuse. And here is why.

New Mexico is an island in many cases. When the economy nationally shoots through the roof, we lag behind. When the national economy falls through the floor, we stay afloat. We stay out of the riff raff for the most part because we have solid economic drivers and players in NM. Los Alamos Labs. Sandia Labs. Kirtland AF Base. Univ. of NM. APS. Intel. Among others.

We have always been very stable here. Yes, missing the high time of the peaks, but to compensate we miss the valleys too. Much of this is due to our strength in diversity. NM is not a one industry state. Thankfully. And our banking system is one of the most solid in the country.

So if that is all good news locally, then what is the problem? The problem, as I see it, is that the national manure sandwich is starting to affect our local confidence in the local market.

And I will use LPO as our example because it is obviously the business I know best. As I previously noted, the national economy has been having problems for over a year now. Throughout that though, LPO was able to grow our CSA membership over 50%. A sign that our community was still doing well and supporting business.

Then the stock market started to slip, trip, and panic set in. People began holding on to their wallets to see what the economy is going to do before venturing back out into the world. So in the last two weeks our renewals drop 20% (not members, just those renewing). Not a good sign.

LPO is small enough and our over-head low enough that it is not that detrimental for us. But it makes me worry about other businesses. Most businesses cannot withstand a 20% loss in sales for very long before going under.

Cash fuels our world. Fuels our economy. And not cash in a greedy way, but in a necessity way. With no exchange of cash, the wheels of the economy stop moving. Fewer sales equate to fewer employees needed. Fewer jobs mean fewer paychecks to pay the rent/mortgage. The more bad loans, the harder it is to get credit. And without credit, the economy stops.

Now, I am not trying to give a "get out there and shop" lecture. We all have to be smart financially right now. But what I am trying to say is that we, as a community, need to be realistic and do some honest evaluation. If one has a stable job, and is not overly leveraged in the stock market for short term needs, things will be fine.

The economy, and our consumer confidence, will bounce back. It always does. This is not economic Armageddon, and the sooner we realize it, the sooner we will get back on track.

At least that is how I see it, Farmer Monte




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