We are assured that all of the modern Greek economic drama won’t have much effect in our part of the world.Even in this global economy, the interconnected Eurozone’s troubles probably won’t extend much beyond the continent. Greece just isn’t big enough or economically important enough to send much of a ripple across the oceans.
Don’t get too smug, though. Even if we’re isolated from economic peril, the United States is vulnerable to the same circumstances that have put Greece and the European Union on the brink. No, we’re not trying to harness disparate countries with long, independent histories through a common currency. Thankfully, our states united from the outset, so we’re spared that grief.
I’m thinking of the brinkmanship on display and the clashes it has produced. The competing economic theories, the fudged numbers and the power trips ought to look familiar to Americans who have watched our economy torpedoed by a bursting technology bubble and then the unscrupulous development of financial instruments that inflated a real estate bubble that nearly consumed the financial industry.
We’re flirting with disaster if we think the United States is immune to the behavior that has contributed to the problems in Greece.
“We all put some blind faith in our banking system,” said Peter Margaritis, who dubs himself “The Accidental Accountant” and makes presentations to financial services pros across the country. “Are there people who do things they shouldn’t? Yes, but hopefully the good outweighs the bad and the system is sustainable.”
Ah, the Westerville, Ohio-based Margaritis has identified the rub. People who do things they shouldn’t create havoc in the economy, and that, in turn, erodes the confidence of you and me and everyone else. When that happens, we can all be like Greece vs. the EU.
Margaritis and his counterpart Jennifer Elder, the Pasadena, Md.-based accountant who bills herself as “The Sustainable CFO,” will be in Indianapolis on Aug. 25 as part of the Indiana Society for Human Resource Management conference. Together they’ll school SHRM members on business, including what not to do.
The financial meltdown that led to the 2008 recession offers many examples for lessons, but let’s distill this to a single element, one that can make or break an economy: confidence.
“Confidence goes with the flow,” Magaritis said. “It goes down with fraud or negative news based on failure.”
And the opposite is true. Don’t believe me? Then explain how World Cup soccer star Carli Lloyd scored her third goal from the middle of the field. Lloyd does not kick the ball from 54 yards out if she hasn’t already scored two goals in five minutes. She takes that shot only because she’s brimming with confidence.
Many minimize the role of confidence, or the lack thereof, in the economy. Yet behavior is a key factor in consumers’ actions, and confidence affects behavior. Not feeling too good about your job prospects? You likely won’t be buying that new car or house. Just got a good raise? Then it’s more likely you will make that purchase
