Businesses around the world will be hoping Barak Obama can win the White House and reinvigorate the global economy. COLIN BENJAMIN
By Colin Benjamin
We now know the two candidates for US presidency – and the task of turning round a world recession and starting a new era of energy policies.
While the polls have them running neck and neck, the reality is that today’s events at the Democratic convention may well be the lead indicator for a dramatic resurgence in the American economy, a rise in the value of the US dollar and the beginning of the end for the short sellers who have been pushing up oil prices.
All elections are going to move towards the middle with the media pumping out the “it’s too close to call” message to keep up their flagging circulations and voter interest.
But the real question is what will be the economic policies of the candidates and their impact on consumer sentiment and the world economy (for more on this, see here).
Those who are barracking for Obama cite speeches such as this: “John McCain wants to continue George Bush’s tax cuts for the wealthiest Americans; I want to give a tax cut to working people. I admired Senator McCain when he said he could not ‘in good conscience’ support the Bush tax cuts.
“But now, as the Republican nominee, he’s fully embraced them. He wants to give a permanent tax cut to the wealthiest Americans who don’t need them and didn’t ask for them, while working people are struggling. And for all his talk about fiscal responsibility, he’s proposed $400 billion in tax cuts without any word about how he’ll pay for them. That’s exactly the kind of attitude that has shifted the burden on to the middle class, and mortgaged our children’s future on a mountain of debt.”
This is the rhetoric that was the basis of the Clinton family’s efforts to try to rebuild the Democrat unity ticket at the Convention.
As indicated earlier, the decision of the US Fed to promote moral hazard by bailing out the mortgage market (and not the hundreds of small banks that will go broke and get consolidated) and the belief that Barack Obama will lead to real changes in Washington, will generate a new sense of consumer optimism that will put an end to the recessionary gloom. Watch the Michigan Consumer Sentiment index of consumer expectations for the economy in the next 12 months for indications that this message is being received.
The reality is that small and medium enterprises around the world will be the big winner where four basic steps are taken early.
First, it is essential to determine the extent that business is going to come from a growing domestic economy and short-term contracts or from an international economic reconstruction that will take longer but be more sustained.
Second, a focus on profitability and sustainability rather than cash flow alone, and taking in business that is speculative and requires substantial capital investment.
Third, sound business planning and active engagement of all key stakeholders in innovation, creativity and entrepreneurial activity that establishes a unique selling proposition that enables the business to be seen as a market leader in at least one expanding market segment.
Finally it comes down to investing in the best staff recruitment, training and retention to be able to be customer and consumer sensitive as hope returns to front-of-house attention.
Dr Colin Benjamin is Entrepreneurship and Strategic Thinking Consultant at Marshall Place Associates, which offers a range of strategic thinking tools that open up possibilities for individuals and organisations committed to applying the processes of innovation, creativity and entrepreneurship. Contact: CEO Dr Jane Shelton.
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