Daily TV news programs report that the United States and other countries are in a terrible recession. The U.S. is in the worst state it’s been in since the great depression.  The pointy fingers of blame are out and the common workers of Main Street say it’s Wall Street’s fault.  The CEO’s and ghosts of Wall Street blame real estate, sub prime loans, or avoid responsibility all together, and the government seems to be blaming capitalism.

Still, this is not the first time that the U.S. has seen hard economic times.  Financial hardships affected millions in 2000, 1980′s, 1970′s, 1930′s, and yes there was even a depression before the Great Depression in the 1890′s.  Surely, any historian could show the people of today that there have been plenty of times when trade, commerce, and livelihood were severely disrupted from every kind of malady that Pandora let escape from her box.  The world did not end on that mythical day, and it will not end now.

Just take the experience of two entrepreneurs trying to build a capital-intensive tea company in the book The Republic of Tea.  On the day of October 22, 1991, Bill Rosenzweig described the market and his situation:

“It seems that in recent days when I open the New York Times the pages are filled with gloom and pessimism. The recession (feels like a depression) isn’t coming and going the way people expect everything to do these days.  It seems like this will be the decade of emotional growth, not economic growth…My hunch is that things are much worse economically than the ‘indicators’ indicate.  The numbers are all politically manipulated.”

Without knowing this excerpt was written in 1991, one would guess it was published yesterday.  Back then as well as today, the numbers have never been so bad since the Great Depression. It’s strange that news networks don’t paint the situation more optimistically by saying, “At least the numbers are not as bad or worse than the Great Depression days!”  What’s worse is that politicians are trying to convince Americans that Capitalism has failed the world, and the only solution for companies is a new form of indentured servitude and increased regulations.

Even if such measures are passed unanimously, it will not improve the economy now nor in the long term. Why? The reason a nation gets into any recession is due to human nature.  If you focus your telescope further, you’ll see that the major indices are just charts chronicling the repetitive behavior and emotions of people.  When humans feel safe and that the times are good, they also think risk and consequences vanish.

The risk of being burned with matches is the same, whether or not mommy is there to tell you so.  Humans also want more of what they like and they want it faster.  Stock market investors want exponential quarterly earnings growth right after a good or great quarter has been announced.  Stocks, like people, run out of breath after an intense sprint like that.  It is no wonder then, that deceptive executives break laws to fulfill the demand and just plain over-enthusiastic businessmen abandon reason to fulfill it as well.

So, for politicians, don’t make capitalism walk the plank just yet.  It’s still the most realistic way for many developing nations to improve their condition.  And for entrepreneurs, this is the best time to start up and bootstrap your companies.  Many key products and services you’ll need will be more affordable, and industry experts are more willing to dispense their knowledge, share their time, and perhaps accept an invitation to be an advisor on your board.  When angels and venture capitalists get to investing again, they will see a company that made headway in tough times and has acquired great advisors.

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