Kudos to Governor Beebe and the Legislative Council. It is not often I can say this, but the State of Arkansas reacted quickly and efficiently to the Arkansas student loan crisis. The Governor offered the SLA an $80 million dollar loan from the state coffers to help the Authority get through this credit squeeze. This will enable it to offer student loans in the fall as normal.
Fast, decisive, and smart action by the government of Arkansas. This is such a rarity that I am in shock.
Thursday, April 24, 2008
Sunday, April 13, 2008
No Child Left Behind
The agency in Arkansas that provides funding for college loans is unable to acquire money to loan because of the freeze up of the credit markets. It normally sells bonds to raise the cash but nobody is buying student loan bonds.
The state and federal levels need to make this priority one. We can't wait around here because unless something is done, students for the fall semester are not going to be able to get loans. Once you drop out of the college money pipeline you are pretty much out of the pipeline. We can't lose a couple of years worth of kids for this to get corrected.
Companies can also step up. Colleges are prime recruiting grounds and its in their best interests to help take up some slack. The admirable Murphy Oil Company has done just that. Other companies need to follow Murphy Oil's lead. Large wealthy corporations in this state that traditionally do well during recessions can play a big positive role here also.
For what it's worth, these are loans so the buyer gets the money back...they are pretty much guaranteed by the US government so the risk is moderated also. No time to waste.
The state and federal levels need to make this priority one. We can't wait around here because unless something is done, students for the fall semester are not going to be able to get loans. Once you drop out of the college money pipeline you are pretty much out of the pipeline. We can't lose a couple of years worth of kids for this to get corrected.
Companies can also step up. Colleges are prime recruiting grounds and its in their best interests to help take up some slack. The admirable Murphy Oil Company has done just that. Other companies need to follow Murphy Oil's lead. Large wealthy corporations in this state that traditionally do well during recessions can play a big positive role here also.
For what it's worth, these are loans so the buyer gets the money back...they are pretty much guaranteed by the US government so the risk is moderated also. No time to waste.
Saturday, April 12, 2008
Something Wrong
Consumer spending goes down....what is the natural reaction of corporations across the United States? Fire more consumers and cut their own business spending.
When consumer confidence decreases.....create more consumer fear by firing more people and decrease the earnings of other corporations by slashing your own spending. It is a built in negative feedback loop that increases the depth and duration of a recession. It is the symptom of a flaw in the system and a lack of imagination.
The way the system is arranged, you can't blame a corporation for acting in its own short-term financial interests...even though those individual actions poison the entire business environment when viewed holistically. Companies are caught in a Prisoner's Dilemma with their competitors where they must be the first to slash and burn.
What we can blame corporations for are their actions during the "Boom" portion of the "Boom and Bust" cycle. When a recession comes and you must lay off thousands of workers.....chances are that you did not manage your workforce correctly during the good times. When a recession comes and you must slash costs......you were probably not managing your costs appropriately during the good times. If your earnings collapse at the start of a recession.....chances are you did not plan appropriately for a downturn. During the "Boom" its an orgy. During the "Bust" its a bloody massacre. That is not leadership.
Most companies have learned the hard way to develop a good plan for emergency disaster recovery. Similarly, every company should have a good emergency economic preparedness and sustainability plan designed to weather an 18-24 month economic downturn with minimum impact to itself, its employees, and its community. If every company in the United States adopted such an effort I guarantee that it would lessen the depth and duration of a recession to some degree and help everyone.
If corporations are unwilling or unable to work in concert to recession-proof themselves and their workforce then it should be required as a Generally Accepted Accounting Procedure, or encouraged by government.
Every CEO who hopes to sell products or services to someone has a direct interest in not seeing unemployment rise throughout the system.
A commitment to recession-proofing, combined with lean management during the "Boom" part of the cycle would go a long way toward dampening the "Bust" part of the cycle. If you keep inefficiencies out of the the system during the binge times...you have less to purge during the bad.
When consumer confidence decreases.....create more consumer fear by firing more people and decrease the earnings of other corporations by slashing your own spending. It is a built in negative feedback loop that increases the depth and duration of a recession. It is the symptom of a flaw in the system and a lack of imagination.
The way the system is arranged, you can't blame a corporation for acting in its own short-term financial interests...even though those individual actions poison the entire business environment when viewed holistically. Companies are caught in a Prisoner's Dilemma with their competitors where they must be the first to slash and burn.
What we can blame corporations for are their actions during the "Boom" portion of the "Boom and Bust" cycle. When a recession comes and you must lay off thousands of workers.....chances are that you did not manage your workforce correctly during the good times. When a recession comes and you must slash costs......you were probably not managing your costs appropriately during the good times. If your earnings collapse at the start of a recession.....chances are you did not plan appropriately for a downturn. During the "Boom" its an orgy. During the "Bust" its a bloody massacre. That is not leadership.
Most companies have learned the hard way to develop a good plan for emergency disaster recovery. Similarly, every company should have a good emergency economic preparedness and sustainability plan designed to weather an 18-24 month economic downturn with minimum impact to itself, its employees, and its community. If every company in the United States adopted such an effort I guarantee that it would lessen the depth and duration of a recession to some degree and help everyone.
If corporations are unwilling or unable to work in concert to recession-proof themselves and their workforce then it should be required as a Generally Accepted Accounting Procedure, or encouraged by government.
Every CEO who hopes to sell products or services to someone has a direct interest in not seeing unemployment rise throughout the system.
A commitment to recession-proofing, combined with lean management during the "Boom" part of the cycle would go a long way toward dampening the "Bust" part of the cycle. If you keep inefficiencies out of the the system during the binge times...you have less to purge during the bad.
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