By Allan Maurer
CHAPEL HILL, NC – While small positive economic signs have prompted suggestions we’re coming out of the recession, Chapel Hill business consultant William Dunk says that it is more likely the economy will float up and down and often move sideways before it trully recovers. “I’m hopeful that things are well enough in hand that we won’t go off a cliff, but we won’t be climbing any mountains, either,” says Dunk, well known for his “Annual Report on Annual Reports” that the late Louis Rukeyser devoted a news column to each year.
Dunk advises businesses from major corporations to technology start-ups through William Dunk Partners, Inc., based in Chapel Hill and New York, and has also advised venture funds.
He accurately accessed the state of the economy for TechJournal South and other media in the past. At the end of 2007, discussing looming economic problems, he warned, “We’re in for it,” as indeed we were.
The Obama administration’s efforts have stabilized the financial system, “But that’s all they’ve done,” says Dunk. “Look at earnings reports coming in and we’re not losing money or jobs as badly,” Dunk says. “We’ve slowed the nosedive. But we paid a price for that stabilization.”
Greenspan thew money at every crisis
Dunk blames Alan Greenspan for getting us into the current mess, with both Clinton and George W. Bush “co-conspirators.” Greenspan, says Dunk, “Never saw a bubble he didn’t want to throw money at. He threw cash at every crisis.
“That’s what the current administration has done too. It’s better founded and has better purposes, but they did the same thing, throwing cash at the prospective meltdown of the financial system. But at least this administration wants to regulate some things and begin to bring some these jockey’s under control.”
Dunk says one of the problems with shoring up the big banks and financial institutions is that they don’t have to go through even a partial bankruptcy and clean up themselves up. “They haven’t been trimmed down to size by getting rid of businesses they shouldn’t be in with a decent system put in place.
Bank bailouts didn’t fix their problems
“They’re just badly run,” says Dunk. “The average person can tell from day to day dealings with them.” Dunk related a story about how a branch of his bank made an error with one of his credit card payments, but could not correct it at the local branch where the error was made.
“If the error can’t be rectified where the mistake is made, it’s a sign that things are running wrong.”
Giving them a subsidy means they don’t have to deal with their problems, Dunk says. “We’re giving them life support. I would think we can expect more troubles. They’re operationally and strategically on the wrong path.”
Dunk says things are unlikely to get better without better political leadership. “Things are rocky enough in enough sectors that it takes a good hand at the tiller to do things.”
Y2K really happened
He also says that Y2K-that big flap about computer clocks not turning over with the new century-really happened, just not to computers. “It was a humongous systematic change in what the U.S. in a global economy is all about,” says Dunk.
Dunk says the 21st century marked an end to the mass market economy, “Yet most of our large institutions are still trying to operate by mass market rules. That’s what big companies know now to do. It is so imprinted in their DNA they simply don’t know how to operate in a post-mass market eocnomy where you have to deliver unique products and services.”
Dunk’s major advice to both government officials and companies alike could be summarized as invest in the future, not in the past.
Tomorrow: Dunk on investing, small cap public companies, energy, private equity and venture capital.
Online: Dunk’s Web site (be prepared to spend some time browsing here): www.globalprovince.com
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