Are you encouraged by the Federal Reserve's actions to purchase $100B debt from Freddie Mac, Fannie Mae and Ginnie Mae?  Government leaders say this is necessary to "get the markets moving again" (read article here). 

Unfortunately, this action is really no different than if the government purchased $100B of SUVs from GM, Ford and Chrysler to "get the auto market moving again."  Or, if they purchased $100B of coffee from struggling Starbucks, whose per store sales are predicted to fall all through 2009 (read article here) to "get the coffee shop market moving again."  Or if they purchased $100B of homes, now that prices have fallen over 17% in the last year and sales are down at least that much (read article here) in order to "get the real estate market moving again".  None of these actions will help the banks, or the auto companies, or Starbucks or homebuilders be more competitive.  At best, any of these (including the Fed's planned action) is a stop-gap effort attempting to protect the status quo – in the middle of dramatic market change. 

When markets shift, the impact is often delayed by ongoing efforts to Defend & Extend the status quo.  Eventually, however, the market shift is unavoidable – and in what seems a very sudden shift change is very dramatic.  The market moves from one equilibrium to another.  And it is at this shift point (what's called a punctuated equilibrium) that the weaknesses in old competitors become highly visible.  Like Citigroup, GM, etc.  At the same time, the opportunities for new solutions become visible as well.

When violent market shifts happen, efforts to return to the old status quo never work.  Look no further than Japan's economy in the 1990s – which suffered a recession for more than a decade as the country's leaders refused to adjust to the changed competitiveness of Japan in the global economy.  Today, 15 years after Japan's recession began, that economy has still not recovered on a consistent growth plan because the leaders keep spending resources trying to protect old business practices which do not work in today's global economy.  Consequently, Japan keeps falling further behind China, India and other more competitive economies - and the companies in those economies.  Is this the direction we should lead America today?

Future success depends upon changing to meet dynamic market requirements.  So far, none of the TARP activities, or the spending by the Treasury or Federal Reserve, are meeting this need.  While Congress denies aid to everyone else, a situation likely to change, the spending on financial assets is not creating any new jobs, nor helping the advancement of any innovations in technology, or business practices.  Increasingly, however, people are beginning to realize that attempts to shore up these old industry practices are not preparing the American economy, and its companies, for global competition.

What's needed is leadership that will use funding to improve competitiveness – not attempt to preserve the past.  Spending funds on unnecessary business trips, unnecessary perquisites, bonuses and dividends does not increase the likelihood of having a vibrant competitive set of industry players in 2010.  What does work is installing leaders willing to develop new Success Formulas which are more competitive – by intensely focusing on competitors, Disrupting current practices and using White Space to innovate.  If Congress is going to make citizens stakeholders in these businesses, it is within their purview to demand Disruptions – or create them – so the recipients move forward rather than waste money in a vainglorious effort to find the past.