The Panic of 2008: History Repeats

"Those who cannot remember the past are condemned to repeat it."
-George Santayana, 1924
This famous quote was also paraphrased by Winston Churchill:

"Those that fail to learn from history, are doomed to repeat it"
With stocks continuing downward precipitously today, the following cartoon and commentary which appeared today on Planète Béranger is particularly apropos:

From the Library of Congress description: «This poster for the stage production of The War of Wealth depicts what might have been any number of nineteenth century-financial crises. During that time, the U.S. experienced panics in the years 1819, 1837, 1857, 1873, and 1893. The major financial catalyst for the panic of 1857 was the August 24, 1857, failure of the New York branch of the Ohio Life Insurance and Trust Company. It was soon reported that the entire capital of the Trust's home office had been embezzled. What followed was one of the most severe economic crises in U.S. history. Almost immediately, New York bankers put severe restrictions on even the most routine transactions. In turn, many people interpreted these restrictions as a sign of impending financial collapse and panicked. Individual holders of stock and of commercial paper rushed to their brokers and eagerly made deals that "a week before they would have shunned as a ruinous sacrifice." As the September 12, 1857, Harper's Weekly described the scene on the New York Stock Exchange, "…prominent stocks fell eight or ten per cent in a day, and fortunes were made and lost between ten o'clock in the morning and four of the afternoon."»

Sound familiar?

The Second Great Depression

With Yom Kippur over I turned on the news this evening. It was consumed with two things. The American Presidential election was down to number two after the now global economic crisis.

Stock markets the world over continue to crash down. The Bush administration, once the voice of laissez-faire capitalism, is considering following the British example and taking the decidedly socialist step of purchasing parts of private banks, in effect partially nationalizing them, albeit "voluntarily". How voluntary is it if the choice is semi-nationalization or outright failure? We also have the spectacle of a possible national bankruptcy in Iceland. Has a nation ever gone bankrupt before?

All these events are, I think quite accurately, being described as "the worst financial crisis since the great depression" by various talking heads on all the major and not-so-major news media. Normally optimistic economic voices are now saying we're going into a deep recession. Hello? We're already there and I honestly believe this is the start of a second great depression. 2008 and 1929 will often be linked from this point forward.

I think a lot of us are going to have to rethink our lifestyles, our finances, and how to plan for our future. Too many Americans, encouraged by our consumer culture, have lived way beyond their means. A little economic panic may actually have a healthy result if people pay down debts and start saving for a rainy day. It may also make some rethink their political ideology and make a more sane choice in the November election. Those would certainly be silver linings to the proverbial dark clouds.

What about me? What will I do? Believe it our not this may actually be beneficial to my business if I do some clever marketing. OK, I hate marketing. Only chasing people down for monies owed is worse. I truly loathe collections. Yet I honestly believe suddenly being very good at marketing is vital to me.

Let's face it: Linux can save companies money. It can do lots of really serious work well on machines that can't even minimally run a current version of Windows. That's true both for servers and desktops. Linux can allow companies to leverage the existing, aging systems and extend the productive life of hardware they already own. There are no licensing costs either, and for small and medium sized businesses the savings involved can make a huge difference in difficult times. My expertise is Linux. I'm very good at making it turnkey, easy to use, and optimizing for performance. Now I need to be especially good at showing people how using my expertise will save them money, as in many times what they pay me for my services.

It's not just Linux, of course. It's also using Free and Open Source Software (FOSS) to replace proprietary and often costly software. If I can offer alternatives that save licensing costs for multiple products a business needs the savings can add up, perhaps more than enough to make learning a new product and transferring or converting data worthwhile.

Can I do it? I honestly think so. No, it won't be easy. Selling change never is. Asking people to step outside of their comfort zone and dive into new software is difficult at best. Now, though, people may make some tough choices they wouldn't have made in better times when they weren't counting their pennies so closely.

A new website, perhaps a little print advertising, and a few successful engagements to create word of mouth advertising is what I need. It's a challenge but then again, riding out tough times and keeping heads above water is a challenge lots of us will be facing now.