by Jiten Patel

Thoughts on the economy, rising dollar, and lower price of the barrel of oil …

Nov 14, 20083 mins
IT Leadership

As a result of the financial crisis of the past year and the recent collapse and specifically the loss of trust and confidence in the banking sector (though not just limited to them), and the spiraling and worsening economic woes here in the US  and abroad … brings both good and bad in its wake.  

The good … we will now get back to some level of reasonableness or perhaps over-reasonableness of regulating the financial services sector, more stricter regulation would not necessarily be a bad thing.  Also in the aftermath of this economic crisis, precipitated by the financial services collapse, and with the winds of “change” swirling and ready to blow across the Potomac we will  have major investments in infrastructure and like which portends well for job opportunities and for volunteerism to help the country back to good health. 

The bad … Against most, if not all, foreign currencies, the USD has strengthened, it is everyone’s favorite currency and only by default for it is the only one that offers a safety net, and only because of the size and might of the US economy and the stability and confidence in its democratic principles, and at one time I would have added confidence in its capitalist ways … though one can forget that last piece. This does not bode well for the following reasons …

  • It spells doom for exporters … especially the tech companies like IBM, ORACLE, HP, CISCO, etc;
  • It increases our trade deficit … increases our dependence on the likes of China and others;

However it does offer good news for importers … makes imports cheaper (Wal-Mart must be feeling just a little giddy, more so than anyone else). 

Now add into this concoction, the reduction in the price of barrel of oil … which really is a mixed blessing.  This is about the only good news for the US consumer, having to pay less at the gas-pump, however this also has the likely affect of slowing down the clamor for finding alternative sources of energy. The auto industry who for years paid lip service to innovation and squat about improving fuel efficiency, has now all of a sudden got the speed bug to race to Washington with a begging bowl in hand, having seen greenbacks being doled out to one and all who could spell “finance” …  want some for themselves. 

My emotional recommendation to the auto industry … let capitalism run its course and let the fittest survive; do not give them a single penny; they have thwarted innovation at every turn, and the only time they have embraced any innovation is when they have been under duress from Congress.  Speaking with a small dose of hallucinating drug, I realize that we must help them, however I would want conditions as specified by the Detroit Editor of the WSJ, to first demand the complete ouster of all management and the full Board.