Deleveraging is so painful!

In past blogs, I've been talking about the inevitability of deleveraging for everyone; individuals and companies alike. The process is a grueling one and this is why – as the United States is just in the midst of it – there is such a malaise everywhere you look.

Real estate isn't selling as it should, because, deep inside, sellers haven't come yet to terms with the reality of a practical floor. Companies aren't hiring, because they don't see a visible bottom in their activity. Landlords are reluctant to rent for less, because still under the influence of pre-recession, high rents. Job seekers are still dreaming of stratospheric pay scales when in fact these have come down crashing. A new reality is already everywhere, but the old paradigms die hard. In summary, we all know what needs to be done, something like more with less, but we haven't come yet to accept that need as a new reality. As a result, everything freezes up, deal-makers hesitate, everyone is wishing for an uptick in some opposite direction that isn't taking place and in the meantime, time elapses, and we all waste crucial time.

This reminds me of some time when I was out of job, wanted a replacement work very badly and took a position for 50% less money than I was making in my preceding post. I took it; showed what I could do, and in no time was back up to my former salary and very soon was ready to earn much more. Deleveraging means less consumption, a smaller GDP, less money to go around and obviously, less earnings! The perspective of deleveraging is scary, but there is healthy bottom from which we can all regroup and shoot up from there, always keeping in mind that the cream always rises to the top...