According to a report on the BBC News site, the US is now in the grips of a recession.
The National Bureau of Economic Research defines a recession as “a significant decline in economic activity spread across the economy, lasting more than a few months”. It bases its assessment on final figures on employment, personal income, industrial production and sales activity in the manufacturing and retail sectors.
Merrill Lynch said that the figures showing the jobless rate hitting 5% in December were the final piece in that puzzle. “According to our analysis, this isn’t even a forecast any more but is a present day reality,” the report said.
It added that the current consensus view on Wall Street that there is a good chance of avoiding a recession is “in denial”.
The spectre of a recession can only been seen as a challenge. It’s how you respond to that challenge that defines you. You can expel thousands of people from your workforce in an attempt to shore up and save your overpaid executives or you can make an effort to innovate through the crisis.
In 1996, Lesley Stahl ripped Robert Allen a new rectum with:
“I’m wondering if you would respond to the charges that it isn’t fair that you’ve gotten a big pay increase, a big pay package for millions and millions of dollars, when you’re laying off thousands and thousands of people.”
When Nortel went from 96 000 staff to 33 000 staff, we didn’t think much about what the executives were receiving. They had to maintain their good hair and expensive suits. It’s only now, with a more bitter eye that I cast my memory back to walking down the Mall in Monkstown three weeks before Xmas and seeing groups huddled together. Nortel was, at the time, suffering huge losses every quarter due to unfulfilled sales.
I have somewhat less sympathy for well-rewarded executives with big fat pay packages who shed tens of thousands of people when the company is still in profit.