Belt and suspenders

Rushfield hits the nail again in the middle of a general news column:

= = = = = START RUSHFIELD:

We’ve been living in an environment of very low-risk speculation thanks to a decade of low interest rates, also known as a speculative bubble. That affected entertainment as much as anything else, as people poured money into building up all sorts of things in a way they might not have done if money was more expensive.

Now that the bubble has popped for everyone in the economy, the appetite for endless speculation has diminished. There is less money in the consumer world for things that now look a lot more like luxury purchases…

Problem is, everything in entertainment is speculative. Not just speculative, but entirely so. Only on the rarest of occasions is past success an indicator of anything.

= = = = = END RUSHFIELD.

It’s rare and refreshing to see any writer grounded in hardass economic reality. Especially a writer who is not trying to be “radical” or “independent”. Rushfield is Establishment in his tastes and political preferences, but has a rare gift for seeing reality ANYWAY.

As for the last part, entertainment and business somehow managed to support speculative projects for several thousand years before QE/ZIRP.

It’s an old trick. Build up savings first, then use some of the savings to run SMALL speculations. If the SMALL speculation works, reuse its profit to expand the speculation.

Nash is the shining example. Charles Nash cut loose from Billy Durant’s Wall Street centered GM in disgust at Billy’s free money habits. Nash started out with a belt-and-suspenders approach to management and a belt-and-suspenders approach to car design. Save first, invest in efficient factories and loyal workers. Amortize tooling, amortize skills. When you have a solid foundation of smoothly running production, it’s much easier to try an occasional visionary advance.

Crudely:

When you know your pants won’t fall down you can run and jump and use your hands freely. When your pants are always falling down you have to move carefully, reserving one or both hands to avoid disaster.