Is the Sky Falling on HealthCare Art?

Addendum: November 22nd, 2008
There are now over 30 comments to this post. To read them click the underlined word "Comments" at the bottom of the post. To read them all, once you have gotten to the bottom of a page, if you see an icon that is an underline under two right carrots, click that to go to the next page. It looks like this:
 

The news says the sky is falling. The stock market and the housing market are crashing. Major companies are going out of business. Yet, this week at the HCD08 conference I saw no hint of dark clouds on the horizon. I talked with many designers and art consultants in healthcare who are overwhelmed with work. When I go out to dinner at night here in DC the fancy restaurants are full.

What is the truth? Is the sky falling? What impact will the economic crisis have on the use of Art in HealthCare?

I asked Charlie Peltason to give me his take on the economic outlook. He has spent his entire career in finance. He has been a good friend of mine since High School. Here is what he wrote:

1st of all I am very pessimistic. I think things are going to be simply horrific. Yes HealthCare may be relatively protected, but not all aspects of it will be ok. You know all those high priced plastic surgeons charging $5 grand for breast augmentation....forget about them and their nice shinny new offices. Discretionary surgery including cosmetic is history! Unemployment means less health insurance, who needs plastic surgery when they are worried about keeping their homes?

Hospital occupancy? History. Home health care is way cheaper.........and it implies trouble for the nursing home industry as well. So...unless it's an emergency, hospitals are going to see way less admits.............they can't hold em longer cuz they can't get reimbursed, etc.............Why would anyone in their right mind concern themselves with pretty pictures on a wall?

Like I said....even within safe industries there are going to be huge challenges.

Unemployment at 8 1/2%-9% and I may be LOW!!! DOW Industrial Average 6500! Initially, interest rates low to lower but not necessarily at the consumer level. Taxes moderated near term, eventually going much higher. Interest rates going a lot higher in a year or so.

Massive continued bankruptcies, both personal and public (i.e. Circuit City). Massive continued home foreclosures which imply continued decline in home prices. Many (a majority) of home mortgages will be upside down, in other words people will owe more than their houses are worth. This is a simply dreadful outlook because it implies so many other horrible outcomes over time.

HUGE rates of closings of restaurants, travel and entertainment will take HUGE hits. Large air carriers may go broke along with auto companies which mean either one of two things. They will be nationalized or gone, poof, gone! State and local municipalities will be unable to fund Medicaid/Medicare. Ditto other obligations. We're talking deficits at the state and local levels not seen in our lifetimes with implications that are equally horrific.

So pretty much end of the world scenario in my opinion. Cash is and will be king. Huge deflation.....before we are all done and said, huge inflation, then stabilization. I'm thinking at least 5 years of hell, maybe more. This is going to be a 21st century version of the great depression. Baby Boomers will have to work longer and or sell retirement assets at values far below what they expect or need to fund retirements.

So, don't buy stocks now, don't buy bonds now, don't buy commodities now. Think tech names and consumer durables (i.e. Microsoft, Cisco, P&G, Clorox). If you don't buy it yourself don't buy the stocks or funds who invest in those kinds of names. The PC pipeline is devastated as are the related industries. Starbucks is an example of a company who may be gone after a while! Who the hell needs a $5 cup of espresso when they can get a good cup of coffee at McDonald's for a buck? There's still huge unrevealed structural challenges and there's no end in sight. You are in a full employment city right now Henry....gov't jobs! I looked at the Federal Job sit yesterday and the wages they pay are huge by comparison to the private sector!!!! I'm betting after Christmas a lot of shopping centers will begin to close and at the least loose a lot of paying tenants.

There is no delay Henry....this is hitting the fan right now, BIG TIME. The other day DHL ceased operations in the US. A small town in Ohio, Middlebury I think it's called suddenly lost 10,000 jobs overnight and unemployment there is now 50%!!!! Think maybe that will presage a shit storm for the local grocery stores and other business's there?

There are a few areas that are relatively safe, now and for the foreseeable future. Health care and consumer durables including supermarkets. Just about everything else is going to get creamed. Art in HealthCare will get hit but only because it's discretionary not a required aspect of health care

I'd hunker down if I were you....be scared, I mean it. I know it's a self fulfilling mind set but if you don't you will regret it. Too many people have VERY real reasons to be scared and they will act accordingly and spend accordingly. Be glad you live on a farm, live near the state capital and could go back to medicine if you chose to. The sky might be puffy with patches of blue to you but I'll bet regular folk like me are going to be suffering big time, for a long time. Barack Obama can't fix this any time soon, no one could.

Reasons? For 12 years or so the economy grew because a lot of people used their home values to increase their standards of living. This was the linchpin of the whole economic expansion. Now...the birds are coming home to root (no pun intended) and we are going to have to reverse direction to make up for the massive deflation of housing values. It's a titanic disaster and one that isn't going away any time soon.

You know for example that the St. Louis Art Museum 'postponed' their $24 million capital improvement program, right? Think maybe they don't see getting the pledges any time soon? Think this is an isolated case? It's not and we are closer to the beginnings of this than the end.

This is what I think and I seriously doubt I am going to be wrong. What would I do right now? Even though I don't know the specifics, I'd be willing to bet that you and Lorna will be supporting more than one family member within a year.....and this will go on all over the US. The worst part of this is the unknown....which is that we aren't alone. The rest of the world's economies are going to get trashed and it's hard to say how much worse that will make matters. Aren't you glad you asked? :(

Comments

[Kim]

Don't hold back -- tell us how you *really* feel...

Yikes!

[Charlie Peltason]

FYI. Henry asked if he could post a private email exchange between the two of us and I agreed. I didn't mince my words or craft them for public consumption or acceptance. What I wrote to Henry I truly believe and unfortunately I may be too optimistic if anything. I am deeply concerned. I would raise cash, not necessarily sell assets (at distressed levels) but raise 12-18 months worth of household expense's in the form of cash. Several days ago Ford and General Motors were worth less than 2/3rds of what Starbucks was worth. Despite Starbucks stock price being pulverized in the past two days it's still worth 15% more than the combined values of the 2 largest car manufactures in the USA. GM is burning through 25% of Starbucks total market capitalization EVERY month. I didn't hold back Kim because I am not a Pollyanna and my advice which is worth what you paid for it (zilch) is that everyone better hope I am wrong but plan on me being right. That way we all will be able to eat, live in our homes, etc. If I am right, all bets are off.

[Kathy Hathorn]

I do think that the economic crisis will impact healthcare design and purchasing decisions if for no other reason than good stewardship of hospital funds.

I don't believe that many hospitals will do away with art programs, but I strongly believe that healthcare leaders will feel compelled to have a more enlightened due diligence process when hiring consultants/artists for projects.

There will be an even stronger emphasis on spending money wisely in terms of expertise in the field, being able to deliver what is promised, and making decisions that can be justified when put under the scrutiny of boards and senior management.

Kathy Hathorn, CEO/Creative Director, American Art Resources

[Naomi Sachs, ASLA]

Henry to me: "What do you think this economic crisis might mean for Healing Landscapes? For you personally?"
My response: I've definitely been worried about it. At a time when people are supposed to be hunkering down, I've decided to start a new non-profit, and it seems like utter madness. But then again, I know that business in landscape architecture as a whole has dropped off, and in my own private practice as a landscape designer, the phone has basically stopped ringing. I've got clients in tears asking me to stretch out their payments because they can't afford even a $400.00 invoice. I know lots of L.A.'s who are getting laid off. Unless you're a tenured professor or have some other really secure job, it's an uneasy (if not downright scary) time, and yes, it will probably get worse. So, why not pursue what I'm passionate about and hope that a) I can survive while doing it and b) that it gives back to the world in some small way.

I'm not in the financial sector, but one of my clients is, and he recently quoted Donald Rumsfeld (loosely), regarding this "perfect storm" of an economic crisis, and why he is nervous: "There are the things we know, the things we don't know, the things we know we don't know...but the scariest are the things we don't know that we don't know."

That said, I do think that the healthcare "industry" is somewhat protected - not immune, mind you, but buffered. No matter what, people are going to need medical care. A friend of mine who runs a headhunting business for the tech industry told me a couple of weeks ago that she wishes right now that she were in the healthcare industry, where business is still (for now, at least) booming. I'm sure there will be cutbacks, and that things like art and gardens will be looked upon by some as amenities rather than necessities (and I suppose if I were choosing between nursing staff and art or a garden, I'd have to agree). Nevertheless, now that the idea of patient-centered care is here, it's going to be hard for the industry to just ignore the importance of holistic healthcare, which involves providing environments that nurture patients, family, and staff in myriad ways. Just as one example, they are going to want to reduce staff turnover - healing gardens have been found to be very effective in this regard - and to keep the workers that they do have happy and efficient.

Will we feel like we're rearranging the deck chairs on the Titanic as it sinks? I don't know. The only way I can cope with most disasters is to try to remain calm, and to be sensible but not buy into the panic too much. Recessions, terrorism, acid rain, HIV, anthrax, ebola, avian bird flu, nuclear war, global warming...it's all horrible. We do what we can, and we try to trust that while some of it may be very real, some of it is also (hopefully) hype, and not all of it will hurt each one of us all the time.

[smays.com]

"The only really bad news comes on a lab report." I still believe this. Speaking of which, if you go back to being a doc, Henry, save me a spot on your patient list

[Steve Knight]

I'm with Steve May on this. Don't mess with my trip down da nile.

[Tim Ernst]

We don't forecast - we just work as hard as we can and do what is needed and whatever good fortune comes our way, that is great and we live with it - our business does not rely on the economy since our overhead is so low and we spend very little on fancy things (on cameras, yes though!). We also don't advertise - items like the feature article in National Geographic last month, the slide programs we do each holiday selling season, and all of the photo workshops I teach all help spread the word and drive folks to our web pages.

I also spend a great deal of time working on new picture book projects like the new ARKANSAS LANDSCAPE picture book just published - I'm working on two new picture books for the fall of 2009 - that keeps me out and producing fresh material all the time. Book and print sales continue to be brisk this year - we don't rely on mega sales, and 90% of our print business is to individuals which does not seem to be slowing down (most folks can afford one of our special Print of the Month images for $29, and we like to have works of art available that even single moms can afford or during economic downturns).

It is great to get the big checks for high-price corporate sales, but it is equally satisfying to deal with individuals who fall in love with an image and get to enjoy it each day - I continue to be a "starving artist" and thrive on the feelings from folks who cherish my art instead of just worrying about the almighty dollar all the time. Our business model is people and art first, and the dollars follow in whatever quantity happens to come in. Smiles and warm hearts mean a great deal to us!

[hdomke]

Steve,
You wrote " if you go back to being a doc, Henry, save me a spot on your patient list..."
Thanks for the kind words.

Even though I remain licensed as a physician, I plan to stay with art for the foreseeable future. I am bracing myself for the possibility of a couple of tough years. I'm guessing sales may decline by half next year.

There is no way to predict the future, but as you know I am a big believer in "expectation management". If I expect it to be very difficult and it turns out to be better than that, I'll be happy.

[Vaughn Wascovich]

Henry- your blog post on the economy has me searching the internet for a decent assault rifle, and I'm only half joking. We're in a hell of a jam aren't we? I was sitting in a little burger joint the other day, eating an egg burger for breakfast, listening to the table of old guys talk politics. In their minds it's all the Democrats fault. Keep in mind that in East Texas 75% of the people here voted McCain, and just after the election there were reports of several Confederate flags flying. Frankly I don't blame either party, I blame the two-party system itself. That and the idiot we had in the White House for the past eight years. Good Christ. No taxes to pay for an unending war we can't win and government deregulation yet huge buy-outs if the deregulated companies become gluttonous pigs and make stupid mistakes. Personally I don't really know what's going on with the financial buy-out, but those bastards who were in charge of all of these failed institutions should be in Guantanamo for a few years. And the auto buy-out? Curiously I find myself on the side of the Republicans. If this country has money to burn, I say let's pump money into successful companies, not unsuccessful ones, assuming we can find any. We give GM 25 billion dollars for what? So they can make more Cadillac’s and Hummers? And 25 billion will last GM exactly how long? I have to wonder how much money do the execs that work there, that drove the company into the ground, take home every week? And the taxpayers are going to give the same executives that drove the company into near collapse more money?

When I was a kid in Youngstown, Ohio, they built a GM plant in nearby Lordstown. (LORDStown...get it?) Anyone that could get a job there did, and everyone knew that it was an easy job that paid well. All the workers drove big cars and pulled big boats. People on the line were making 100k a year to put a bolt in a hole. Several of my friends worked there. One of them was an electrician who would talk about going in on the third shift and playing cards all night long, He laughed about how little work he had to do. He drove a big GM car and had a boat too. Imagine, making 100k in the 70's, without even a college education...

Frankly, I don't and won't drive a GM car. I think they’re awful. GM completely ignored global warming, pollution standards and did everything they could to reduce fuel economy standards. That company, like the cars they make, are dinosaurs and nothing that we do is going to save them from extinction.

This new generation is going to have to relearn everything that our grandparents knew; how to save, how to be resourceful, how to be respectful. My grandmother hung clothes out on the line to dry them, no need for a clothes dryer. She'd open a can of food, take the label off the can, flatten the can with her foot and recycle it, all before we knew what recycle meant. My grandparents had a huge garden. They knew their neighbors and had respect and love for their community. I really think that we need to return to those days if we're going to survive as a country.

Where is the accountability, the individual responsibility in this country anymore? “I can’t afford my mortgage, buy me out, we make terrible cars and are horrible managers, give us a handout.” Good lord, is this the country, are these the people that we’ve become?

[Jerry Hirsch]

I saw the comments of your friend. He does indeed paint a very dire picture. However, he offers no explanation of why things have to turn out this way and why he thinks nothing can be done about it. I would find his dire picture not only depressing, but convincing if he had offered the analysis of "why," it has to be this way, which I don't find.

It is true that the New Deal did not bring the United States out of the depression until WWII forced the government to engage in this kind of massive deficit spending. It was not a war that was required but only a war that could justify it. Now maybe the situation is totally different. On the other hand, maybe massive deficit spending would work this time to. And maybe there is the political will to do it now. I have noted that Morton Feldstein, Harvard U, advocates massive deficit spending and he was once the greatest deficit hawks. Now he says, spend, spend, spend, and then we will deal with the deficit after recovery. T

This reminds me that the extraordinarily conservative, Judge Gary, one of the heads of U. S. Steel, said in the 1920s we are all socialists now. What he meant by socialism was more of a benign and beneficient corporate feudal capitlalism. He argued in the 1920s that U. S. Steel should engage in corporate welfare capitalism. What he meant by that was that the great corporations should provide pensions, unemployment insurance, vacations, etc., to workers through company controlled unions. Only a few of the largest corporations ever did this in the 1920s and then as soon as the crash came they cut out such programs, but workers eventually sought such things on a much wider scale through New Deal programs and CIO unions.

So if someone like Feldstein is now in favor of massive deficit spending, we might update Gary for our times: We are all Keynesians now. At least more and more economists are whether or not they were conservative or liberal in the past.

If someon convinces me that there is absolutely nothing we can do to prevent the dire events your predicts, I will accept his portrait of the future, but without an explanation of why it has to be he is more of a Cassandra than an economist. That doesn't mean he won't turn out to be right. Cassandra was often right. But I am more interested in reasoned arguments than just dire propehcies.

Jerry

[Monte Nagler]

...our business will be up 15-20% for 2008 and I predict an increase for next year. True, sales of fine art photography are down some, but our healthcare sales are doing well and I don't see a let up.

Wow, your friend is really negative in his thinking. And I believe that if one's thoughts are limiting, then you will become very limited in what you can accomplish. You kind of bring on what you're thinking. On the contrary,thinking positive (new avenues to explore, new ideas to pursue, a new way of doing something) will result in "positivity" (no such word, I just made it up but it sounds good). John Assaraf is a well known author and business advisor and he says "and so just when we think that resources are dwindling, we find new resources that can achieve the same things". Mickey and I do this and it's working!

Monte

[Dan Sroka]

This is a good question. I did read your post, but felt that your friend was a bit too negative in his predictions. This will be a tough time, but I do not think it will be all doom and gloom.

I am sure that my sales will be impacted -- but I have no idea how much. I am trying to remind myself that the economy is cyclical, and this is a temporary situation. So I am trying to use this time of slow business as an opportunity to grow. I'll be investing more in my marketing efforts, so that when the does economy picks up, I'll be ready. We fine art photographers are lucky because we are in a low overhead business: I have one employee, no inventory sitting in warehouses. This makes it easy to bunker down, cut expenses, and focus.

[Kevin Sink]

In a nutshell, I kind of get stimulated at times like this.

There's nothing like a crisis that hits everyone hard to wake up the old ingenuity & oh shit motivation!! I guess I'm lucky in that I have a good cash position in my personal accounts, and we have had some good sales as of late. My new book is set to arrive a week from today (the advance copies look great! Great printing job!), and I have had good luck so far in marketing that book (700 pre-sold so far).

I just can't let myself get as pessimistic as your friend. Yeah, its gonna be really bad, but why bitch & moan & be all scared - get out there and kick some ass & find business. Besides, I in now way can control global financial markets, never have never will. But I can control my day to day behavior and attitude. At the VERY least, we are all in this together. So if you go down, so will I.

It sort of levels the playing field which feels good in a way. As far as a forecast, I'm sure we will be down, especially towards the middle or end of next year because I think thats when stock sales and people will be really hurting. People are going to run out of cash. I don't know, when things get really tough I tend to get a Pit Bull attitude of "I will survive!" Even if the business crashes, I'll still probably be able to eat & love, the latter being the most important in life anyway.

I wish I had more earth changing words, but the above is the best I can do for now. I've got to get back to work!!

[Charlie Peltason]

I already posted that Henry asked and I agreed to let him post a private email between the two of us. It was not intended for public consumption. That said, I could easily defend my outlook. It can also be said that others could post equally compelling arguments to support a less dire consequence. I suppose that's why the G20 just met for the 1st time in a zillion years to figure out how to navigate this mess. What do they know one has to wonder? This isn't about GM, or politics. It's about jobs and confidence. Unemployment is rising, confidence is waning and if you need convincing read a paper, watch any news channel. Retail sales just fall off the planet...and so it goes. Before I retired I got paid a ton of dinero for my advice. This advice is free. Hope I'm wrong but plan for what to do if I am right. I can count on one hand the times it wasn't a terrific idea to be 100% long (invested) in my life time. This is WAY worse than 1974 in my opinion. Opinions are like a**holes, everyone has one. I am hardly a Cassandra. Like I said, I could post enough evidence to choke the proverbial horse. Would that change an optimists opinion? I would hope not, just as I would hope that I was wrong. However, if any of you readers had taken my advice as recently as this past April you'd be way better off financially.
Charlie

[a.musia]

on this.....I agree with Kevin.......get out there beat the bushes and make things happen. I feel this time in America is to let people know that one has to WORK and be creative to maintain their job-no matter what it is. It is a time to get rid of the FAT!! And there is plenty of that. It always just astounds me that a union job (which, I feel unions are beyond their use and are no longer needed. They have taken us out of the market in many of our factory jobs--ie autos)..anyway, that a union supported job can tout such a high wage. Heck fire, the guy that comes and puts a new pipe fitting on my water pump makes $60 an hour. Holy crap. And he can not even read and that skill is not a brain twister....(now before I get bashed for that example....it is only an example...I do those things myself, and it was just to make a point).......something is not right with wage structuring......and we can really see how skewed that is if we get into large corporations.
Art will always be strong......it is what defines us as a civilization. It is our voice for generations to come.
As far as the economy.......make yourself valuable and indispensible....or stand in line for that government handout.

[Charlie Peltason]

I do advocate being an optimist, but being one that IS prepared for something less rosy. I wouldn't sell any financial assets right now; it's too late (generally speaking).

I would build up my cash reserves. There are going to be great opportunities in all this mess for people who are mentally able to 'catch the fire'. I for one am doing quite well, but it's because I have been on the 'short' side of things. I hate being short, I am a buy it and forget it type. I have had to reinvent my psyche simply because the situation has warranted it, not because it turns me on. I am however VERY stimulated by all this chaos. I am finding more people to help who have less which is what I really like to do. The more I have the more I can give.

I wish I felt less dreary about the current financial situation. I do not like rewarding people who bought homes they couldn't afford. Then again, what about those people who bought homes they could afford but got laid off or had a catastrophic medical problem, etc.? Let them loose their homes? Naw....that makes no sense and especially now it doesn't.

This is one of those times that will define this country as a nation in my opinion. Massive damage has occurred, more will. From this quagmire I can only hope and pray that out if it will spring a new and hopefully better paradigm to build our collective futures upon.

I told Henry I would moderate a discussion area if there was enough interest. Let’s be clear about one thing however. Before this past April unemployment was 5% or less nationally. Now it’s a lot closer to 7%. I think we are headed a lot higher. You all know the canard…”a recession is when your neighbor is out of work, a depression is when YOU are out of work.” After Christmas and before Barack Obama’s inauguration I fear we will see a HUGE jump in unemployment. This will affect confidence in all the wrong ways. Companies will reduce spending and hiring even more and the consumer will spend even less which is frightening in and of itself.

I really, really hope I am wrong. We have already spent a TRILLION dollars and while not much has changed (that anyone can see, structurally that is) it’s more about what hasn’t happened. What hasn’t happened is that we didn’t have a financial meltdown which is exactly what we would have had on our hands. BTW….that’s not just my opinion or other financial ‘experts’. It’s a direct quote from our President elect, and he said as much last night in a 60 Minutes interview.

[Byron Jorjorian]

I have been in the nature photography business for more than 30 years. My wife and I have seen our business grow steadily year over year during that time. 2008 has been no exception. We are currently up a shade over 26% from the same time last year.

Thus far we are not seeing any slow down. I think our industry may be lagging a little behind the rest of the country and so it might be a few more months before we are seeing the evidence of the downturn in our sector.

That said my life experience says that things are never as good or bad as they seem. Will this be the baby boomer depression or just a minor economic bump in the road? I think that the truth will probably play out somewhere in between.

I do agree that cash will be king. I also believe that sound business practices will lead us through this.

Byron

[Charlie Peltason]

another tired cliche...

When the sky is falling...
sell sky.

Byron is most likely right. This will play out somewhere inbetween total disaster and unmitigated disaster. :)

Watch those leading indicators though. They are what's got me so riled up and have been. I'm sticking with 8 1/2%-9% unemployment and that's an unmitigated disaster.

Artists and especially people who cater to the health care industry will most likely be 'lagging' indicators. I'm not judging worthiness....I'm just thinking a whole lot more bare walls will be seen than hospitals and related facilities reducing staff and services.

[Mary Ellen Putignano]

I think that the sky is falling, put for a positive reason.
It is a wake up call to all of us as consumers that we have lost our way.

We have consumed too much and forgotten what is truly important in life; friends, family, our relationships, and the planet we live on... all of nature.

I also think we have forgotten to take care of ourselves.
In my opinion, healthcare will be even more important but
people will now find cheaper ways to take care of themselves.
Instead of joining a $150.00 a month health clubs, they will now workout at home or walk.

Spa finder magazine listed sleep or lack of it as one of their top 10 spa trends for 2008, which in the wellness industry, it has been. With this recession, I see people sleeping even less and being more stressed. However, they no longer have the money to afford to go to a sleep spa to get help. They will start helping themselves thru self help books and websites.

Healthcare art that is holistic based is going to have even more meaning to the patient, who is now seeking a more meaningful connection to their life and their surroundings. When they are sick, now more then ever, they are going to want to be comforted and comfort always begins with ones environment.

There is that reality that health facilities will need to cut their spending and art budgets could get cut. Hopefully as both consumers and patients themselves, hospital facility buyers will see what is truly going to be of value.

I believe beauty in all forms, but especially in ones environment, will be more important then ever.

I also believe with this recession, people are going to desire that
their experiences of a product, brand, health care facility, or any other thing in their life, have content and substance. They are going to demand that these experiences be meaningful, authentic, sensory and affordable.

In my opinion, our focus will be on Environment, Wellness, Education, Technology, Government and Entertainment. Entertainment has always remained a consent during a depression because it uplifts the spirit.

The optimist and marketer in me sees incredible potential in the future for holistic art and photography.
And I see it being much more important in industries outside the healthcare industry.
I see all industries kind of melding into one common wellness effort.
I also think technology and media will play a major role, so flat photography and artwork will perhaps take on three dimensional forms.
For example, I see a company like Disney joining forces with a major health and wellness company to creating a multi-media experience based on patterns and sounds in nature, that offers both a sensory and educational experience.

And I see them bringing it to people via the internet so they don’t have pay to travel. Or perhaps it is something aimed at the youth, addressing the issue of nature deficit disorder and shown in schools.

I think we will see companies who can afford to, giving more and taking less. (Which ultimately would actually work in their favor).

As companies, in all industries, try to reach this new wellness consumer, they are going to need visual and sensory support to convey their message. People may no longer be able to afford to shop but they will not give up their computers and they will still be on the internet and they are going to be looking for something, something of value to them, in my mind that is anything that gives back.

All the worlds most famous people, writers, scientists and philosophers have left so many quotes behind for us.
you would think we would pick up on some of their wisdom.
Here are a few of my favorites:

“Look deep into nature, and then you will understand everything better” Albert Einstein

“I go to nature to be soothed and healed, and to have my senses put in order” John Burroughs

“Nature makes nothing in vain. “ Aristotle

“Tell me and I will forget, show me and I will remember, involve me and I will understand.” Confucius

Mary Ellen

[a.musia]

yes, Charlie, I agree and others should heed your insight and my optimism :)....be prepared for a less rosy life and work/commission opportunities. Being an artist that relies on commissions and special projects, much of what my sector sees at present has been budgeted out for this year. And many healthcare and corporate budgets for fine art are at best secured for next year. But the year after and maybe even a change of venue for next year??? Take heed--"Make hay while the sun shines! And put it in the barn!"
More hours and more commitment at this time might help the artist's studio business at this time. Charlie is right, cash is king and it is wise to stockpile what one can. Personally, I take all the work I can. At this point, much of my time is involved in procurring commissions and working with my rep in this area. My studio is very occupied at present. I am a one person operation, using suppliers and hiring in when needed. I design and create site specific, one of a kind sculptural fine art for corporate, healthcare and private spaces. Now my rep here does not see a slow down at present and way into next year. With that being said, requirements are being modified.
Sales for me took a turn this year around May. In advertantly, I began sharing my long time interest to a few people. Before long clients were responding and began purchasing my large scale photography. I think because they get more bang for the buck and because it fills the space so successfully. Noting that original sculpture, paintings and graphics are much more costly, photography will probably continue to be of interest to many corporate and healthcare entities for spaces. The affordability of this medium will maintain itself to meet their present needs and those in the near future. That is until their budgets must be trimmed or cut out entirely. Those states that have " percent for art " programs in place will be saviors for many artists and keep them afloat. However, I do see some sectors pulling back....especially those whose budgets are supported and comprised of funds from estates and trusts.

So our table has been set....we will just have to see how many courses will be served over the next few years. Otherwise there are going to be alot of hungry artists.

That is my take from the studio!

[Charlie Peltason]

Amy
You are a beautiful person...so is your art. You have a lovely attitude and it will help see you through this and most everything else that may lay in the way of your journey. Henry is a very lucky man to have such a spectacularly diverse collection of friends. You too Steve...you were always so upbeat and positive. The years haven't tarnished your rosy attitude at all. I am pretty much in awe of Henry and what he's done with his life. I am equally impressed with the people I see on his blog, you are all the best of the best and YOU are what will save the day when all's said and done. People like me come and go, we are replacable. You folks are very special, keep on trucking as we used to say. I am just so impressed with everyone of you.
Charlie

[a.musia]

How kind of you Charlie.Thank you for the kudos. However, I do not agree with you on something you just wrote...people like you are NOT replacable. Without your knowledge and caring enough to get involved and help where you can----well the world would be a sad place without people like you. Sharing your knowledge and lending a helping hand is what makes our communities stronger....like zoos and the arts and education....It makes all of us stronger and healthier so that we are able to weather storms...financial or personal.
So I thank you for being who you are and contributing to our society as a whole. Few people help...more would like nothing better than to have others fund their lives without giving anything back......they do not contribute to society. You seem to be i one that does and that, my friend, is irreplaceable in my book!
Amy

[hdomke]

Charlie,
Thanks for trying to help me understand the implications of the expanding economic crisis. One issue that you have referred to repeatedly is unemployment. "Unemployment at 8 1/2%-9% and I may be LOW!!!"

If I'm not mistaken, most of Europe has had unemployment at that level or higher for decades. Has that been a disaster for them?

During the Great Depression unemployment was higher than 25%. How can you speak of this being " a 21st century version of the great depression."?

Thanks for helping to explain this to me.
Henry

[Charlie Peltason]

I answered this privately. There is no reliable data for the great depression....so far as unemployment goes. There was no bureau of labor nor was there statistical information gathered by reliable sources. Europe is a red herring, it has nothing to do with us here. Besides, if you added the GDP of the entirety of Europe up it would be smaller than the US....by a lot. China's economy is smaller than the State of California's is. 'Our' standard of living is much higher than Europe in general. Forget about global...this is important, think local. For right now, the rest of the world's economies feed off of ours. If ours has a hiccup, what do you think happens to them? Why did the G20 just have an extraordinary meeting in DC...that neither they or their predecessor organizitions have had in close to 70 years? These people didn't come to Washington DC to look at the cherry blossoms! They are afraid of something and unless one assumes they are all a bunch of twits we all should worry about what they obviously are worried about.

I like sunny days at the beach and or brisk walks in the mountains. I really, really do, it's been a hallmark of my life. That said, when there's a hurricane off shore or a mountain blizzard coming my way.....I get the hell out of Dodge. After the storms pass....it's back to the beaches and mounatains for me. I am not however foolish enough to stand in their way and let them have at me.

The rate of change in the unemployment numbers domestically is unprecedented...look it up. From 4.9% in January to 6.5% this October, and it's headed higher. That's a 30% increase in unemployment in 10 months!!!! My math is right isn't it? That's an eye popping change in a very short period of time.

Anyway, as Robert Hastings said in his "The Station". "Regret and fear are twin theives who rob us of today.

So, stop pacing the aisles and counting the miles. Instead, climb more mountains, eat more ice cream, go barefoot more often, swim more rivers, watch more sunsets, laugh more, cry less. Life must be lived as we go along. The station will come soon enough."

I live by this little ditty...and hope every one of us can as well. I also buy home owners insurance and car insurance and health insurance. Go figger!

[Laura Hayes]

Henry, Excellent commentary on "the sky is falling." Your friend is knowledgeable and articulate. Our country has lived beyond our means for a very long time. Other than tightening my own belt, I don't see much I can do about it.

I think we must do what we always have, give every day our best, work hard and view life that the glass is not half empty or half full.....but the glass is full. If I take a breath tomorrow, it will be a good day and the glass is full. Laura

[Guy Kemper]

I read the blog- boy that guy is a pessimist! He could be right, or so could Warren Buffett.

My own business is going well at the moment. I figure the shit won't hit the fan for me until a year or so from now, if it is going to.

I sure hope your business stays strong as well as the healthcare industry.

Guy

[Marie Kowalchuk]

Contract's staff is just returning from our 4th annual Design Forum where our editorial advisory board meets with industry guests from various design disciplines to discuss a timely topic. ... much was discussed about our current economic state... and you will be seeing reports from this Forum in upcoming issues of Contract.

The near future seems dismal for most at the Forum, but on the optimistic side was the fact that it is during these times, innovators can more easily present new products and many start-ups usually ensue.

Marie Kowalchuk
Contract Magazine

[Deanna Dikeman]

I really don't know what to say about the economy. I think we are in for some lean times. Everyone in this country has lived in such wealth for so long that it may be hard to adjust. I like to talk to my depression-era parents about how they lived. They grew up with a fraction of the cush life I live. My dad talks about only having popcorn for supper because there was nothing else to eat. But life goes on, and money isn't happiness.

I don't know what will happen to the art world and art sales. It is easy to fear the worst. I just don't know....

[Charlie Peltason]

Dow closes under 8000 @ 7997, off 427 points. I think the last time it was this low was 2003. There's not all that much selling pressure but there are no bids, i.e. no one seems to want to buy. If it makes anyone feel better 20 years ago the DOW was in the 2000's. 20 years ago Henry and I had a whole lot more hair, well Henry did, I still have most of mine. :)

[Peter Haigh]

I don’t disagree with anything that Charlie wrote — except one thing which I think was a slip. He included ‘consumer durables’ as a safe area, citing supermarkets. I suspect he meant to say ‘consumer staples’ instead — consumer durables can be put off for a long time, e.g., automobiles.

What I DO take exception to is the tone of his response. He may well be correct about where we are going, but responses like his can in fact seriously help ‘cause’ these end results. He poses as an ‘expert’ in later replies and I don’t doubt that he is. But, when you get an ‘expert’ freaking out, what are the rest of us to think.

It’s one thing to be concerned and to council cautious behavior. Charlie, though, sounded very emotional. While his remarks definitely seemed based on reason, it was the emotion behind them that made reading them really scary. I admit to feeling upset and unsettled for a bit after reading them. I even burdened Nancy with his thoughts when she came home for lunch and she got upset. (I do realize that his remarks weren’t initially meant for public consumption.)

But, how can I say that remarks made in this fashion may actually help ‘cause’ these dire predictions to come to pass? The really big bugaboo in economic forecasting is ‘expectations.’ Expectations, consumer or otherwise, are, first of all, subjective and, therefore, pretty difficult to quantify. In this case, though, the real problem is in how volatile they can be which is a result of them frequently being self-reinforcing. This fall has shown us just how quickly there can be a massive change in expectations and in behavior based on those expectations.

I retired from teaching a year and a half ago with a big decline in my income. However, I currently find myself holding more cash than I have at anytime in my life (probably at least 5 times as much) and I also have no debts (also a recent first). I have consumer desires and stuff I need for my photography business on the other side. Why, then, am I not buying. CONFIDENCE — or the lack thereof. While there are strong fundamentals that have gotten seriously out of whack and need to be put in order — and this will take quite awhile — the worst of what Charlie is talking about can be largely forestalled if only we all had confidence in the near term. We do have to learn to act responsibly and that will be hard after the years of excess. But, if people were to spend money responsibly for the things they needed, the downturn wouldn’t be nearly so great and people wouldn’t feel the need to stop spending for anything but necessities. As it is, people — like myself — are not spending, even responsibly, which reduces sales, which reduces the need for production, which reduces the need for employees, which causes layoffs and business failures, which causes even more people to retrench, maybe irrationally, and pretty soon we could have a full blown depression. The expectation of something occurring can cause that to come about if enough people believe it and act on in.

So, it’s the tone of Charlie’s remarks. An expert saying the sky is falling is like throwing gasoline on the fire rather than slowly starving the fire by removing combustible material (or thoughts). I have the same philosophy as some of those responding on the blog — I see this as an opportunity for constructive change and activity. And I also believe that what we expect in life will tend to show up on our doorstep. So, in the long term, I’m a Pollyanna — personally and for society as a whole. I think when we get through all of this, and I think it will take years, and that we will be stronger as individuals and as a society with, hopefully, a more social orientation and a somewhat less (narrow) self-interested focus.

Peter Haigh

[Charlie Peltason]

Peter

Not intended as rebuttal but in response.

You are correct, I misspoke, and I meant Consumer STAPLES, not durables. As previously disclosed this all began as a private email from Henry asking my opinions as to what I thought was going on. He said he thought things looked pretty good from where he was viewing them. Henry decided unilaterally to publish my response which was the initial basis for this current 'discussion'. I have known and been friends with Henry for 38 years and because I know him so well I made a decision to try 'wake' him up to various concerns I had as well as others have. This is the context for what you describe as my alarmist tone. Frankly I am alarmed. Mass psychology often becomes an important 'driver' of markets as well as economic outlooks. I don't happen to like it but I am not about to bury my head in the sand so to speak and say, because it is irrational it isn't note worthy or important.

My expertise shouldn't be an issue but to be honest if I am not an expert I seriously wonder who is? I have the experience and credentials to back up being an expert but I do not make that assertation on my part, far from it. I began as I said to respond to Henry as a concerned long time friend. That said....before my retirement this past spring I was advising some pretty wealthy and sophisticated folks who had aggregate net worth’s in excess of 10 billion dollars. I was a Senior Vice President at the largest Bank in the United States (U. S. Trust/BOA). So far as they were concerned I was an expert and to make my point a bit more relevant I am considered one so far as some people in the St. Louis Federal Reserve are concerned as well as the U. S. Treasury Dept.

The above is self serving and wholly out of character for me but frankly the reason I am concerned is because I do have the experience and back ground to be concerned by what's going on. Yes, there is a herd mentality to what's happening but that doesn't change the fact that this herd mentality has cost people their jobs, ravaged their incomes and their wealth. People have and will continue to loose their homes because of this herd mentality for goodness’s sakes. Imagine trying to tell them that they shouldn’t be ‘alarmed’ or emotional!

What has been happening to Citigroup is as good an example of a herd mentality run amuck as I can conjure. I am intimately familiar with this company as I worked for them at a high level for 17 years. They have 250 million customer accounts, $2 Trillion in customer assets and a balance sheet to die for. They are also one of the largest credit card issuers in the world. Citigroup has one of the largest global banking footprints I know of. Yet...despite all these things their stock price has declined from $55 a share in April of 2007 to $4 a share in November of 2008. They ARE too big to fail and because of the herd mentality (and short sellers) their stock price has declined so precipitously that if push comes to shove the U. S. Treasury, the Federal Reserve and the OCC will move heaven and earth to save them. This is not idle speculation, it is in the news currently and the implications of the 'failure' of a Citigroup greatly overshadow a similar concern for AIG. FYI...I don't agree with the $4 a share pricing of Citigroup but that IS the current price for all the reasons you are worried about, i.e. fear and negative perceptions getting in the way of sound judgment. Fear and greed are the fundamental drivers of markets no matter what the wise guys say. Most people are wrong about investing most of the time. When prices are high we should be sellers and when they are low we should be buyers. These 'truths' however are seldom followed by the many and it's left to the few who do the profiting.

I admit to having ‘emotion’ about what is going on. I am under educated. I do not have a college degree; I do not have a BA, BS, Masters or PhD. after my name. I never learned the art of ‘making nice’ and polishing the proverbial apple. It’s said (and true) about me that I am often as subtle as a heart attack. That hasn’t prevented me from being useful to a whole lot of people for a whole lot of years where these kinds of issues are concerned. As a point of fact, I have personally been ‘short' Citigroup SINCE April of 2007 and ‘short’ the entire U. S. Market since April of 2008.
Meanwhile….I have always hoped I was wrong. So far I haven’t been. I am not the prophet of doom as you opined. I simply call them as I see it and how I have seen things and how I DO see things is that we are in deep doo doo. Yes, I am often far too colorful for my own good. That said, had my oh so colorful advice been taken back in 2007 a whole lot of people would have a whole lot more money than they do today. I accurately forecast the demise of the insurers of Municipal Bonds, certain insurance companies as well as financial institutions and banks. This is almost exactly like 1974 with one exception. That lone exception is that in 1974 the financial institutions that we needed to navigate our way through that mess were healthy in most ways, unlike today when we find that they are in the exact opposite condition.

I despise those who cry fire in a crowded theater. However….we do have a fire, it is global and it’s spreading. I don’t disagree that maybe we shouldn’t have a fire but since it’s awfully damned hot in here I’m a very strong advocate of getting out of harm’s way, sooner, not later.

Things will get better, they will improve. This horrible mess probably shouldn’t have happened and perhaps could have been avoided. Just like the snowball rolling down the mountain I think it’s going to collect more mass along its way before it crashes. I so hope I am wrong, for the last 18 months I haven’t been. The Hedge Funds still haven’t unwound their positions in many cases. Collateralized credit card debt (CDO’s-bonds) haven’t fully collapsed. So yes, I am concerned and between myself and a friend I am emotional because I am scared and I have NEVER been scared financially before. I wasn’t scared in 1974, 1987, 1998 or 2001. I am today and that’s my story and I’m sticking to it until this gawd awful trend stops and begins to reverse itself.

Confidence is key as you said Peter. My hope is that President Elect Obama can instill confidence by his leadership and the choices he makes about those who will assist him in making choices. So far I am buoyed by his early moves. Time will tell if it’s enough. I am hopeful that the worst is behind us but I am continuing to look over my shoulder to make sure nothing insipid is gaining on me. Between two old friends….I am not going to ‘pretend’ that my concerns are artificially induced concerns. People have been acting out their concerns which among other reasons are why we find ourselves at the present fork in the road. I believe in optimism, financially I believe in pragmatism. When the choo choo is headed down the tracks I don’t say to myself, it shouldn’t be on the tracks in the 1st place. I get my old butt off the tracks as fast as my old legs can take me.
Charlie

[Charlie Peltason]

I am not clairvoyant.

http://biz.yahoo.com/ap/081124/citigroup.html?.v=16

I said as much this past Saturday however. Too big to fail indeed! Add it up, this is close to $400 billion just for Citigroup.

I am not sure what I think of this personally but financially I'm positive it had to be done.

...and the snow ball gathers more mass as it rolls down the mountain.

Happy Thanksgiving one and all. Despite everything we all have a lot to be thankful for.
Charlie

[Charlie Peltason]

to read more detail on Citigroup and the MASSIVE rescue...

http://www.bloomberg.com/apps/news?pid=20601068&sid=aP4OqmI48VQ8&refer=home

[Peter Anger]

How bad is it?

First I believe that the world is suffering from what Joseph A. Schumpeter called creative destruction. With the advent of digital photography the commercial photos I did and got into print 25 years ago took 20-25 people to produce the final product now it takes 2-3 people to do the same work digitally, most likely by an in house graphic designer who takes pictures too. The internet is another form of creative destruction. How many of us buy from a local retailer anymore? The internet has changed the whole playing feild. Schumpeter claims that technology and creativity dsstroys the old way of doing things. In doing so I maintain that there will be a lot less work and need for labor. I sort of envision very small homes with a internet connection and something to do on it, and everything comes to you by some type of delivery system so you don't have to drive. In a very real way the internet destroyed most of what we hold dear on an intelectual level, and the question becomes how should we live? Three leading economist were asked if the glass was half full or half empty on C-Span the other day. Two said half full, the third said there is no glass.

[Charlie Peltason]

having asked about the glass half full or half empty during my time at the Santa Fe Institute, I offered another 'choice'. The glass simply IS. A zillion computations on their super computers later using gawd knows how many simulations...the answer still eludes.

[Milt Garber]

I read your friend Charlie Peltason's screed on the current economic situation, and I think he is more pessimistic than the situation warrants; however, I agree we are experiencing the worst economic and financial crisis since the Great Depression. Still, I think we will return to something approaching normal in 2010 or at latest 2011.

I agree with Peltason that health care will come through tolerably well; howeve, health care art may be hit hard. You could be optimistic on your 50% reduction in sales estimate for the next two years.