(Editor's Note: Remembering how he brought the City of Toronto through nine consecutive ZERO tax increases budgets, during his 10 years as budget chief, we asked Tom Jakobek, who now volunteers for an array of charitable organizations and manages a private family business, for his advice on how to get through the current economic meltdown.)
The modern world of today has finally admitted to a full-scale Global Recession. But is that true? Are we simply using the word `Recession' when in actual fact there are still a few people alive that see it, as they did in the 1930s, as a Depression?
To the average person there is no or little difference between a recession or depression. The markets crash, more and more people are out of work, Banks and large lending institutions simply close, money cannot be borrowed, and energy prices become unaffordable. Even food sources are becoming scarce and no Government anywhere seems to have a practical solution.
It is not a very heartening picture when, in fact, entire countries like Iceland have collapsed leaving all of their currency worthless worldwide.
Talking heads on the boob tube paint an increasingly dismal picture. But more than anything debilitating fear is our greatest enemy right now and it is crucial that Governments, banks, as well as big and small businesses carefully return to every day life.
Under worrisome circumstances, that is not an easy thing to do.
Cinema buffs might remember that scene in the 1976 Jaws movie, where after a shark attack, no one wanted to be the first to venture out into the water.
But venture out into the water is what we must do, if we are to get out of this set of crises, which just in trying to survive few will now remember were set off by such a small number of very greedy and reckless people.
There is no doubt that almost everyone was responsible for riding the great boom wave over the last 10 years. Whether you charged more on your credit card, bought a bigger home than you should or purchased that second car, an economic meltdown was the result. It is human nature to love prosperity and we all partook in some way.
But no one could have realized that the sober and trusted regulators were fast asleep on their well-paid watch, and that the world as we know it would soon be spinning out of control.
The problem right now is that the big wave has hit the shore and the undertow is now pulling everyone backwards. You cannot fight the power of the ocean or the strength of this global tumble by fighting it head on.
The answer is to follow the current and that means returning to sound conservative practices. Look at your expenses and reconsider your debt load but DO NOT stop everything.
Home builders may not make as much on their sales and may not sell as many new homes--BUT they can carefully take advantage of lower costs in the construction industry.
The workers and suppliers can also get on board by reducing their profit or wage expectations just enough to make the numbers work again.
No, the big wave will not return next year but we can start floating this year and actually swim by next.
Tom Jakobek was highly effective as Toronto’s Budget Chief and used his municipal financing expertise to deliver nine consecutive ZERO tax increases.
