A increasingly popular journalistic cliche is suggesting that the economic downturn which started on Wall Street is about to impact upon neighbouring Main Street.
As well as watching stock prices fall, we are about to see unemployment figures rise.
This seems to happen every few years, with various levels of disruption to the life of an average citizen. September 11, was mild in its impact, the Asian meltdown a little more severe, 1992 was fairly tough in my part of the world, and of course the 1930’s Great Depression was legendary.
There is some evidence, that this current earthquake might register an historical high on the economic Richter scale.
Growing up in Perth, Western Australia, like many of my peers, I spent most of the summer surfing in the Indian Ocean. Each year, around Easter, we would get the first of the winter Antarctic fronts coming through and the word would pass around that the surf was up.
For body surfers (no surfboard) this was a truly exhilarating experience. You had to swim far out into the ocean, as these huge waves crashed onto the shoreline. Once you got out beyond where the waves were breaking, you would turn around and swim as hard as you could, until a breaking wave caught you and over the waterfall you went. Hopefully you would ride down the front of the wave and end up on top of all the froth and bubble which was now moving into shore, having lost most of its latent energy.
If you were out of luck, you would get sucked into the middle of the breaking wave. The experience was a lot like being in a giant washing machine as you got tumbled in all directions. Either way, we thought it was fun. So we would turn around and head on out again to catch another big wave.
It seems to me that those big waves of early winter are a good metaphor for our current economic downturn which may be historically severe.
Growing up by an ocean, we all learned at our Mother’s knee how to handle a big surf, what a rip was and how to get out of the way of a big wave that was about to dump you. We used to laugh at foreigners who did not understand the surf. One good dumper and they were back on the shore to watch the insane natives trying to kill themselves.
Now, I am old enough to have known people who lived through the Great Depression of the 1930’s. In my opinion, they fall into two categories; those who knew how to ride the wave and those who were completely confused and scared to death by what was happening to their normally calm ocean of life.
The first group actually lived fairly well through the Depression. Like us surfers, they understood the wave and how to handle the rough conditions.
Firstly, they knew how to dive under the wave rather than get dumped by it. They kept a few chickens. They trapped rabbits. They grew their own vegetables. So the family did not starve.
They lived in cooperative communities, where you helped each other out. Bartering was rife because cash was really scarce.
Beyond tightening their belt, some people understood the source of the chaotic changes enough to learn how to actually ride the wave back into shore.
These people knew that this was no ordinary storm, where you wake up in the morning and everything returns to how it was before the downturn. These enlightened people saw where the changes were heading and so they actually prospered in the medium to long term.
Essentially, an economic downturn is Nature’s way of killing off the past and freeing up the resources needed by the new economy. It is hard to face up to this when your company has just gone bankrupt or worse still you have just lost your job.
The natural urge is to hope that your shares will recover or that you can get your old job back, or at least a similar one.
However, in a Depression, the changes are too massive for things to stay the same. The cause of these big changes typically are inventions like the steam engine, electricity, or the internal combustion engine which completely change how we do things.
I suspect that the current downturn has its genesis in the Internet and its underlying technologies, the computer and the communications satellite which are the most recent chapters of the Information revolution.
To create a context; just 133 years ago, it took three months for news about the assassination of President Lincoln to reach London. That was just to reach the English shores. It took several more hours for the news to reach the masses by way of a newspaper.
If you plot the speed of the changes from 1865 to now, most of it has happened in the last ten years with the spread of the world wide web.
Can you really see a troubled newspaper company coming out of this downturn unchanged?
And these chnages will ripple through the whole economy, as the equivalent of yesterday’s printer goes about finding a new occupation.
That is what this big breaking wave is all about for us average little battlers.
We can either get dumped by the wave or recognise how to dive under it. And ultimately we can learn to surf the wave all the way back to shore.
If you arrived at this page wanting to know how the internet works, what inventions it is spawning and how some entrepreneurs are using it to spawn a range of new business models, in my opinion you are going the right way to prosper in the big storm of 2009.
It is certainly better than hoping your share prices will recover or that you will get your old job back.
And don’t forget to enjoy the journey. Those monster waves of my youth in Perth were fantastic fun to ride. And so was the evening when we lit a fire on the beach and enjoyed each others company; the best things in life indeed are free!
One person’s dumper is another person’s natural high.
Stay positive because the best is yet to come.
