Saturday, October 08, 2011

Let’s talk about the economy. Home prices that were thought to always go up are steadily going down. I should know, myself being a homeowner trying to sell. Jobs are hard to come by, and those who have it are in constant fear of losing it. Home prices are at record lows, and so are the mortgage rates (4% in US compared to 10% in India). But that is not motivating renters to buy homes. Partly because of lack of job security and partly because banks are not lending as easily as in earlier days. Stricter eligibility standards adopted by banks is a good sign. But with lack of money flowing in the economy, things are slowing down. Manufacturers may not be able to secure their working capital loans at favorable rates, consumers will not spend as much, everyone will cut down, and economy will contract. Add macro-economic factors like sovereign debt of some European countries defaulting, and you have a recipe for disaster across the world markets.

We are living in turbulent times. Just a few years ago when I was in b-school, I heard people wanting to join the likes of Lehman Brothers, Merrill Lynch, Bear Sterns etc. We have lost those brand names forever. I wonder what the dream companies for students are now. There is talk of Morgan Stanley doing a Lehman. Goldman Sachs stock is touching new lows. You never know what would be the next collapse if a too big to fail bank truly fails.

What’s a common man to do? I think the answer lies in entrepreneurship. Recessions are when some of the biggest companies hatched. This may be the time to execute on that big idea you always had. To create something tangible, to be your own boss, to invest in yourself. It does not have to be a big bang theory. Baby steps to test the idea could be the right approach. I see wannabe entrepreneurs on the TV show Shark Tank and wonder why I did not think of doing it. Sometimes the idea is clever, sometimes the execution.

May be one of the readers of my blog would be the next Mark Zuckerberg or Steve Jobs. You never know, but I do wish more and more people will consider taking that next step and not be lazy like me!

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