Don't Believe the Hype: The Recession is Not Over

This Week: Don't Believe the Hype—the Recession is Not Over.

I travel a ton. Because of that, I’ve seen this financial crisis from some very different perspectives. It’s proven interesting—especially against the backdrop of today’s 24/7 business news. How financial news is covered affects how the viewer perceives good or bad economic data—and I’m not immune to that. So it’s useful to be able to compare not only various places, but to be able to compare on-the-ground impressions of these places with media reports.

Last fall, some of you may remember a photo used on the cover of practically every newspaper in the world, and run as a header on nearly every TV news broadcast. The shot was taken outside a Lehman Brothers office in London and showed the backsides of a row of financial workers who had just been laid off. It was the beginning of our credit-crunch freak out. I was actually in London when the events in that photo happened.

Last week, I returned to London to find the headlines of The Independent, one of the main British daily papers, declaring the recession over!

Well, there it is folks, that was quite the recession rollercoaster ride wasn’t it? All joking aside, there is an air of confidence building right now—and it is a bit stronger over here in Europe, where I’ve been touring lately. Part of that may have to do with the fact that in the UK and Europe the average citizen is not barraged with politically slanted financial news on a daily or hourly basis. Sure, MSNBC International can be found on your hotel room TV, but the recession and home foreclosures certainly are not a staple in the daily conversations of your average Joe over here. As someone said to me here last week, “We don’t freak out here like you do in the States.” And with perceptions, rather than fundamentals, playing such a significant role in our modern global financial system, this does indeed seem to make a difference.

I was on a plane from Geneva to London last week and the person next to me happened to be some big-time Swiss finance guy. He was going to London to try to poach a financial planner out from under some other firm’s nose. (Talk about confidence.) As we chatted during the flight, I wondered aloud why he shouldn’t give me the job—and I was only half-joking! I mean, when it comes to financial matters, I get stuff right at least most of the time.

But there’s a reason for that. I pay attention. There was a British pension fund that came under fire during my visit for not doing its due-diligence before investing in some Icelandic government bond funds last year. Iceland defaulted on its bonds in the wake of the global meltdown. I guess all I am trying to get at here is that you as an individual must do your own research when determining what is actually going on. That is true with your own investments and, importantly, with investments made for you by others.

Obviously, we can’t avoid mistakes. And there are fundamentals we can’t avoid being affected by. But it’s still important to make up our own minds, to gather our own evidence, to assess things based on our own perspectives. Financial news in America right now is plagued by an underlying political slant. May I suggest for now, close your ears and open your eyes. There is useful information all around you.

Another example: at the end of my stay in the UK, British Airways asked its 40,000 employees to work for up to a whole month without pay. Like I said, don’t always trust what you read—even if it is the fucking Independent. Recession over? Maybe not quite yet.

Previously: A Reconstituted GM Might Want to Look to Harley-Davidson as a Model