Greater Depression Watch #3

Remember this date... February 11th, 2009... It will long be credited as the day the Greater Depression really hit its stride. Why? Because Congress has got its head somewhere that you and I don't want to visit.

The gist of the problem is this. Congress, in trying to be seen as being 100% safe for children, has created a law called the CPSIA (I may have mentioned this before). This law states that lead and pthalates shouldn't be too high in children's products - which is a good idea. However, on February 11th, this law goes into effect nationwide on all products - even ones that are already on the shelves - and any children's product that hasn't been tested (and passed) for lead or pthalates must be removed from the shelves and destroyed. Unfortunately, what Congress didn't explain fully is what a children's product is. They are leaving that to the CPSC to decide. The CPSC hasn't even formulated rules to figure out how they're going to figure out what's a children's product or not, much less given any sort of clear definition. Should they happen to come up with some workable guidelines in the next hour or so, that would give manufacturers exactly four days to test every single product they have for lead and pthalates or have their products removed from the shelf and destroyed.

Now, lest you think I'm exaggerating this problem, I'm telling you that this will effect the entire country in profoundly disturbing ways. Teachers will have to basically strip their classrooms of all toys, books, furniture, rugs, and any other product created for the use of children - and destroy them - or face fines of up to $100,000 per offense. And good luck replacing all those items, because the stores that sell the items will be pulling them off the shelves (Micheal's is one chain that I know of) and destroying them, then asking the manufacturers to reimburse the store for the lost merchandise. And the manufacturers? Well, without the ability to sell new merchandise to anyone until they have their products tested and with requests to reimburse their customers for all the products sold, these companies will have no choice but to declare bankruptcy and close their doors. Which will mean that not only will millions of people lose their jobs in the next month, but the banks which thrive on the money they lend manufacturers will collapse as well taking the rest of our fragile economy with it. So basically, its pretty much financial armageddon.

Now, the CPSC has tried to resolve this conflict. They've said that there will be a stay of enforcement until February of next year. But yesterday, the Federal Court in Atlanta basically said that the law will remain in effect come February 10th. And Congress's reaction? They've called for the resignation of the head of the CPSC because of her inept handling of the law (thus making it virtually impossible that any clarification will occur between now and February 10th, by the way). So, basically, we're screwed.

I'd like to think that cooler heads will prevail, but I think people have become so blase to doom and gloom pronouncements that they simply refuse to see the writing on the wall. I've been dealing with this problem now for four months - trying to steer my company on a path that will ensure its survival - and everytime I've thought my pronouncements of doom and gloom were over the top, I've been proven wrong. It'll be much worse than I've ever thought - but only so long as the people in charge of implementing this law continue with their heads in the sand. If cooler heads and wiser thinking prevails, this need merely be a small blip in the business world (tougher testing, yeah, okay, we can handle that - no problem). However, these people are not keeping their cool and seem intent on bringing this situation to the brink. They are barreling towards a precipice despite all the danger signs simply because they refuse to believe that the danger exists in the first place. And by the time they go sailing out into the void, it'll be too late to undo the damage.

So, keep your fingers crossed and hope for the best, or come February 11th (four days from now) watch as every news channel in the country starts talking about empty shelves and manufacturers folding left and right and wondering how this could possibly happen.