How the World’s Most Powerful Company Really Works – and How It’s Transforming the American Economy
Author: Charles Fishman
WHY I READ THIS BOOK
I do not like Walmart, yet I shop there. It is messy and dreary, yet I plan a trip to Walmart every few weeks. It is expansive, yet crowded and claustrophobic. I feel like I’ve spent just as much time there looking for either a product or an employee to assist me as I have actually shopping. I try to minimize my time there but the trip always ends up over an hour and I’m beat by the time I leave. Why do I keep going back there? To make things worse, all these stories about Walmart’s secrecy and unethical business practices keep popping up. Yet that has not stopped me from shopping there. The fact that Walmart has become ubiquitous with middle-class (and poorer) shopping has led most people to subconsciously accept it. So what is going on with Walmart?
THE AUTHOR: CHARLES FISHMAN
It must take someone with guts to take on the Walmart behemoth; especially after you read the book and realize that for most of its history, Walmart has considered any type of publicity and media a threat to its business model. But Fishman has been known as an investigative reporter that attempts to bring to light the workings of institutions or groups that have been relatively unknown. According to the book’s website, Fishman has spent the past 20 years investigating organizations such as NASA and Walmart. He was also the first reporter to be allowed inside a Tupperware factory, and first in 30 years inside the nation’s only bomb factory.
In an attempt to understand the inner workings of Walmart Inc. and its effects on job creation, global economy, work environments, suppliers, competitors, communities and other issues, Fishman talks with everyone that might be affected by Walmart but Walmart itself. Due to the secrecy of Walmart and the lack of transparency in its statistics, Fishman is forced to rely specifically on his investigative acumen. What he finds out is that Walmart is the ultimate definition of a dichotomy, a contradiction that baffles all levels of society; from the individual to the community to the country to the global economy. On one hand, Walmart is unpretentious, is no frills, provides hundreds of thousands of jobs, provides the cheapest prices for consumers and has always stuck to its core values. However, on the other hand, it has a dictatorial grip on its suppliers and competitors, kills almost as many jobs as it creates, indirectly destroys local natural ecosystems, promotes cheap labor and unfair labor practices, has no transparency or guilt and chips away at the core values of the free market system. It pushes the limits of good and bad capitalism and is the poster child of globalization.
This book really does a good job of trying to understand the Walmart effect. However, although Fishman tries to stay neutral on the positives and negatives of the issue, it is more common that his investigations lead to a negative perception of the company. It’s hard not to have a more negative view after reading the book. There is only one major positive about Walmart, it provides the lowest prices for many of the things families need. However, this is a huge positive and is shown even more during this recession. Walmart’s growth in same store sales have been increasing for the past 22 months while Target’s have fallen the past eight months (Source: Walmart vs. Target: No Contest in the Recession, Time Online). It’s not even a contest and shows that this positive is all that consumers need to turn a blind eye on all the other issues. And for sure, there are a lot of other issues, which Fishman does a great job of detailing and bringing out.
The book flows really well, from the beginning to the end… although the last chapter is the required “so after all this investigative work, what should we do or care about Walmart to make this world a better place?” The first chapter is pretty much a summary of Walmart’s influence on society. The rest of the book goes into detail about each issue by discussing academic studies on the company dating back to the mid-1980s, successful and failed interviews with former supplier executives from big and small companies, the impact of Walmart on things we take for granted now (like deodorants that sell without the useless boxes they used to come in) and talking to opponents of Walmart, from environmental groups to factory workers of their suppliers.
The most damaging against Walmart has to be that a lot of the investigation leads to the same conclusion, Walmart is a big cheapskate. Which was fine when it was a small company, but now that it is the biggest in the world, this sense of being cheap at all costs seems somewhat unfair. Unfair to other companies and unfair to the ecosystems and poor countries’ lax labor laws it depends on to produce such massive quantities of products. Fishman tries hard to not take a position, but the writing is in the book. There are no positives about Walmart that can be concluded from the Chilean Atlantic salmon farms, or the countless companies mentioned in the book that went belly-up after becoming a supplier of Walmart. There’s just too many examples to list. And it’s quite obvious that even the large companies that work with Walmart are under the control of Walmart.
There are some interesting stories in the book. The one I like best is about the company that decided supplying to Walmart was detrimental to its future existence, so it decided to end the relationship. However, Fishman argues that companies that don’t supply to Walmart are highly affected by them anyways because of the devastatingly low prices. Another interesting tidbit was that Fishman believes Walmart may hit a ceiling at some point and there could be, what he calls, Walmart saturation and exhaustion.
This is a very insightful book. Although there are only a few unbiased and encompassing studies on the Walmart effect, Fishman does a good job of investigating and doing his own research. This book sums up my initial motivation for reading about the world’s largets non-oil company. Walmart is such a dichotomy it’s really difficult to come to a conclusion on whether it is good for society or bad. It has changed so much of everything that it is beyond anyone’s control. Many of the numerous statistics in the book are downright unbelievable. The book is a quick read, very interesting to read and will make you think twice about globalization and also your personal moral responsibilities to it.
The book was written in 2006 and only talks about the perceptions and actions of Walmart in the context of 2005. The major views of Walmart has not changed since then. However, the signs of Walmart exhaustion have gone out the window now that we are in a recession and most people have turned even more to Walmart for cheap prices. Walmart also has done more to improve the negative perception against it. Just a few days ago Walmart announced that they would be awarding $2 billion dollars to their employees. If Walmart decides to also target the higher end products, like Target, this might create a whole slew of new problems.
What is going on with the world today? Many of the institutions and systems we grew up with and believed in have crumbled faster than a crumb cake in front of Santa Claus. This morning sports fans were shockingly (or not) met with news that one of the few remaining baseball superstars to not be tainted by the steroids scandal, Alex Rodriguez, failed an MLB steroids test in 2003. Considering that this news was corroborated by four independent sources, and based on past evidence of such news, this story likely has meat behind it. As the Barry Bonds’, baseball’s all-time home run king, steroids perjury trial heads to court, we wonder if there is anything sacred anymore in sportsmanship and fair play. The list now includes Bonds, Arod, Marc McGwire, Sammy Sosa, Roger Clemens and Raphael Palmeiro. All were heroes and idols to millions and millions of kids and sports fans.
Sports is nothing, however, compared to the deepening economic crisis affecting the country. But, then again we need to ask ourselves how did this country fall into such a dire situation in the first place? With news of unemployment reaching 7.6%, worst since 1982, most Americans are sensing a pessimism in the country and its leadership they have never felt before. Corporations that have long been stalwarts have wilted after years of trustworthy service. Fannie Mae, Freddie Mac, Bear Stearns, Lehman Brothers and AIG, just to name a few. Even General Electric has fallen on tough times due to untrustworthy leadership expectations and financial exposure. Then there are the frauds of individuals, such Bernie Madoff, and corporations, such as Enron and Global Crossing.
Polar bear cub
Then there is the global warming and energy crises. Due to the irresponsible and rampant use of oil and other natural resources, and the irresponsible output of chemicals into the air, river and ground, the natural balance of Earth has come under question. Dire predictions of sea levels, global temperatures, forestation, glacial coverage, droughts and diseases have left us wondering is there any hope left? Will there exist a viable Earth in 100 to 200 years?
It is truly amazing that all three of these problems have one major thing in common. Greed. Greed. Greed. What is most disturbing is that the situations did not become problems until the ultimate greed kicked in. Arod was already a once in a generation baseball player back in high school. It is fair to say that he did not do steroids as a teenager as his body structure was simply too small. Bonds was a skinny player with the Pirates but was already a five tool player on the path to the Hall of Fame. McGwire was an amazingly talented rookie with the Oakland Athletics. Why did they feel the need to use steroids and become even better than they already were? Why risk already amazing career trajectories with such greed?
Similarly, the financial companies that have gone bankrupt or bought up were very viable and successful companies (some for over a hundred years) before the ARMs and hedge funds became en vogue. Why the greed to do such risky investments in order to raise the bottom line and stock price? Was it all due to increasing stock compensation packages of executives? Was it all worth it? To dupe millions of unknowing citizens just for more personal money? What about Madoff? An already well-respected and wealthy investor; what caused him to risk everyone’s money (including hundreds of other wealthy individuals and companies), just to make more money for his firm?
Finally, the earth has remained relatively stable ever since the existence of man. However, since the Industrial Revolution and especially since the widespread use of combustible engines, there has been this disregard for the side effects of using such resources. Coupled with research in biochemistry and synthetic compounds, the effects of pesticides, mercury, lead and carbons have led to a precarious global balance. Millions of animal species extinct or on the brink of survival.
Are humans, the supposedly most “intelligent” species with opposable thumbs, in fact, the dumbest species ever? Just imagine outsiders writing about the history of man and what they would write about, especially the past 150 years. Just imagine what they would write about western civilization. Just imagine what they would say about the population numbers. Or about technology and medical research? Is this the final goal of evolution? We have reached the ultimate in special survival… our only enemy is ourselves? The whole purpose of natural selection is the survival of the strong. However, part of natural selection is natural balance. A species never wants to become too powerful because then their food sources and natural enemies would disappear. Humans have, in essence, overcome both these natural laws. Through natural selection (our brains and opposable thumbs) we are far and beyond the most powerful species. In a relatively short time, our population and power increased beyond control. Humans have no more natural enemies. The machines we have created are unmatched and only destructible amongst ourselves. So what does this all mean?
The human world does not have a checks and balance system. Nature and other species have always acted as the equalizers. The closest thing that comes to that is the United Nations, and everyone knows how ineffective it is. Additionally, idealistic political systems such as communism and socialism have proven futile. Even checks and balance systems, such as the one in the United States, has a limited efficacy, as witnessed by the politics, lobbyism and other issues. Nature is having a difficult time balancing the effects of human greed and power. Diseases and natural disasters are becoming minimal in damage due to medical research and better disaster predictions. Without any natural enemies, we are left to govern ourselves and our future. As exciting of a possibility that is, the track record of that has been phenomenally pathetic.
What’s going on with gold today? Gold prices touched above $900/oz today and by mid-noon was trading over $40 higher to $899 an ounce on February deliveries. The highest levels since October of 2008. As of 12:52pm, the SPDR GLD is up over $4.00 to above $88 (4.00+%). The volume of 24 million at 1pm is already twice as much as the average daily volume of 12 million. What is also surprising is that the EURO to Dollar index is dropping today, signifying a strengthening US Dollar. In most cases, these two measures should move inversely proportional to each other (Well, technically, gold rises when the EURUSD=X also rises). So what to make of this move today?
One, it’s easy to say that the huge movement up is all due to the stream of negative economic news. Most daunting was the release of Britain’s GDP, showing the country’s most severe contraction in nearly 29 years. Which also officially pulled the UK into a recession. Additionally, bad earnings from a stream of companies have made today a safe-haven buying day, which lends credence to why both the gold and silver prices are rising, and why the US Dollar is also rising, due to an influx in US Treasuries buying.
However, there are two technical signals that are also resonating quite nicely with the tech gold bugs. Let’s first look at the trading band GLD has been trading in since it’s low back in Nov 2008. I have drawn in the magenta bottom trading boundary which GLD prices essentially hit three times (11/08, 12/08 and 01/09). I have also drawn in the magenta top trading boundary which GLD prices hit twice (end of 11/08, 12/08). In order to keep within this linear rising trading band, GLD would have had to make a move to the upside in the next week or two. Today’s rise only keeps GLD within this trading band and does not signify a breakout. However, because it is a rising trading band, then that bodes well that GLD will continue to rise in the coming weeks. Should it break above the top trading band, we might see a very strong move upwards and well past $100/share. If it breaks below the bottom trading band, then the fundamental breaks and we can see GLD once again test its lows in Nov 2008. Because there is strong buying interest today, this bodes well for GLD.
GLD trading band since Nov 2008 low
The second bullish signal might prove stronger than the above signal. Let’s look at the 50-day EMA and the 200-day EMA for GLD since 2005. Something is happening here that hasn’t been seen since September of 2005 when gold began it’s next bullish leg up from the $400s/oz to $1000/oz. The 50-day EMA breaking above the 200-day EMA. Although the below chart does not show it, today’s bounce up definitely will push the 50-EMA above the 200-EMA. This is a strong signal and it is coupled with strong volume, which shows buying conviction on the upside. When two long EMAs cross each other they signal long-term trends. You can see that when the 50-EMA crossed under the 200-EMA back in Sept of 2008, GLD dropped for a few months. This break back above 200-EMA could signal strong upside for GLD prices. Coupled with the trading band shown in the first chart, and we major bullish signals for gold in the next few weeks. As in my 2009 Predictions in my previous post, I expect gold to top $1000/oz at some point this year, possibly in February.
10. Yahoo rejects Microsoft’s $45 billion takeover offer – February 11, 2008. This one has to rank as one of the most stupid business decisions ever. Since Yahoo practically started the internet search business back in the 1990s, they have quickly given up their dominant position to Google in the past ten years without a major fight. By the middle of 2007, Google had a 53.6% market share of the search engine business, versus Yahoo’s rapidly shrinking 19.9%. Microsoft’s $44.6 billion in cash and stock offer was literally a lifeboat and gave Yahoo the best chance for long-term survival. Yahoo rejected the offer and a later offer in May valued each Yahoo share price at $33. Yahoo’s share price had been languishing around $19 in recent years. Yahoo’s CEO and founder Jerry Yang demanded $37/shr! Eventually Microsoft got tired of Yahoo’s demands and pulled all negotiations off the table. What is Yahoo today, end of 2008? The share price is $13.03 and Yang was ousted in November. Although Microsoft still has lukewarm interest in Yahoo’s search business, the main opportunity for Yahoo has passed.
9. Housing prices continue to go down town - It’s amazing how so many analysts and normal people knew that the meteoric rise of housing prices was due to risky ARMs and other loans that were impractical and ticking time bombs. It’s amazing the federal government did not see this coming or chose to not do anything about it. Because of the dot com bust from a few years ago and the recession soon after, the Feds turned a blind eye and let free credit run rampant. The bomb went off in 2006, and median housing prices have gone on a free-fall from an inflation-adjusted high of $275,000 in 2005 to near $200,000 at the end of 2008. It will take a good while to sort this thing out. Housing prices are still historically high and with high unemployment rates, increasing foreclosures will continue to flood an already over-supplied realty market.
8. Unemployment rate - The United States has been pretty lucky in terms of unemployment rates for the past two decades or so. Ever since the recovery from the high inflation, 9.0+% unemployment rates of the early 1980s, the rate has stayed well below 8.0%. Since 1995, the rate has performed even better, only touching above 6.0% once during the short recession recovery in 2003. In January 2008, the rate was around 5.0% but had already been steadily rising throughout 2007. Since this January, the rate has put on the rocket boosters and is now at 6.7% nationally, with no signs of slowing down. Several states, such as Michigan (9.6%) and Rhode Island (9.3%) already have unemployments rates above 9.0%! Another five states have rates above 8.0%! Stats were from Nov 2008 and look to be higher when December stats come out.
7. What happened to the commodities bull market? – Oil, gold, silver, platinum and copper. All were at multi-decade highs in 2007 and even in 2008. Since then? Crude oil prices have dropped from $150+/bl to $37/bl! Most commodities lost more than half their values. Exchange-traded funds such as SLV, GSG, and XLE all dropped more than 50%. The one exception so far has been gold. Although gold prices have dropped from a high over $1000/oz, they have not dropped below $700/oz, and have recovered into the $800s since then. Gold is an unique commodity and it appears that it mostly trades as a safe-haven currency than a physical commodity. In looking at the chart of GLD (below), gold prices have solidly bottomed out at $70/shr and is looking like it will have a strong 2009.
6. Remember the $168 billion original stimulus package? - That amount seems so little nowadays especially when Obama is bandying around an $800B to $1 trillion stimulus package. Add to that the $750B bailout package given to financial companies and automobile companies. This is a year of bailouts and stimuluses and so far they have not helped the economy. Instead, the state of the economy is at its worst at the end of 2008. The expected package by Obama will be an early focus of the Obama administration. I think most people could use an extra few hundred dollars in their pockets.
5. The survival of American automobile companies – General Motors, Ford Motor Co. and Chrysler became the poster child of the current economic crisis hitting main street. On display was the millions of jobs, especially blue-collar jobs, in America at risk of disappearing due to the recent decades of mismanagement, overhead and foreign competition of the US auto industry. With the finance industry easily getting a $750B bailout, it seemed absurd that an industry that for decades represented hard working Americans and unions had to literally beg for a few billion dollars to survive. It was obvious where the attention of politicians were. Although Bush recently said that $18B of the $750B bailout would be immediately used to prop up GM and Chrysler, the long fought battle was wasted time and energy by the attention garnering and bureaucratic Congress.
4. Bernard Madoff arrested on $50B Ponzi fraud scheme – When the $50 billion Ponzi fraud scheme by Bernard Madoff was revealed in early December, it was the main headline of major news websites for a mere few hours. Since then, as more details trickle out, the fraud continues to take a back seat to the macro-economic recession covering the globe. In any other year, the news of a legendary and consummate businessman (and a former NASDAQ chairman) being arrested for a fraud-scheme covering possibly the largest dollar amount in Wall Street history would ripple for weeks, if not months. However, with white collar crimes dominating the post-dot-com era (Enron, Worldcom, Martha Stewart, Tyco and the 2008 unraveling of the hedge fund industry), the public is now immune to financial fraud. Quite unfortunate. (See here for What is a Ponzi scheme)
Corporate bankruptcies on the rise in 2008.
3. Bankruptcies and those near it - It has been a sad year for many corporations as they head towards bankruptcy. Many of them well-known with years of solid profits. The list continues to grow and the impact of the recession on the consumer and his/her buying habits is only beginning. Circuit City, Linens ‘N Things, KB Toys, Frontier Airlines, Mrs. Field Cookies, Steve & Barry’s, Whitehall Jewelers, Mervyns, Sharper Image and Waffle House are some of the big name bankruptcies. And this list doesn’t even mention financial companies, which I discuss in #2. See this list for a more comprehensive list of corporate bankruptcies in 2008.
2. The demise of the hedge fund and mortgage finance industry – The derivatives market has become a multi-billion (if not, trillion) dollar investment industry that is complicated and largely misunderstood, even by the most astute financial advisors. Derivatives, as its name suggests, are investment products that are created off of actual traditional investment products. That means their intrinsic value is conjured up and their existence puts them closer to full-blown gambling. The current financial laws and oversight are not suited for such trading. Over the years hedge funds and derivatives took on more and more of the investment strategy of major financial corporations. Derivatives that were based on risky mortgages and insurance eventually collapsed as housing prices plummeted with lendees’ inability to pay the mortgages. The result has been a credit lockup unforeseen in decades. Major financial companies toppled and its effects are still not fully known. Major companies that totally collapsed include Bear Sterns, Lehman Brothers, Washington Mutual, ANB Financial, Fannie Mae, Freddie Mac, and AIG. See this list for a more comprehensive list of financial collapses in 2008.
KBW Philadelphia Bank Index - performance since 2004
U.S. Recessions since WWII (Courtesy of CNN)
1. Recession or Depression – Which leads to the number one financial news in 2008. Are we in a deep and difficult recession or a depression? In early December, it became official that the U.S. went into a recession in December 2007. To some analysts, this is good news because it means we are closer to coming out of it. As you look at the chart on the right, most recessions last around one year. Based on the official Dec 2007 start date, historically we would already be on the tail end of the recession. However, to other analysts, this is bad news because the worst is yet to come, and we are already twelve months into it. With no light seemingly at the end of the tunnel, these analysts portend a long recession. Bad news from around the world keep coming in and the bottom of the current economic crisis still has not occurred. Oil prices continue to drop, gold prices have since rebounded (bad for economy), and the dollar index has begun dropping again. Signs of major inflation on the horizon are evident, especially with the massive bailouts and the Feds lowering the overnight interest rate to its lowest level ever, 0%-0.25%.
The entire 2008 Top 10 in Finance is all bad news. Most of them have to do with the current economic crisis. The key hope is that the Bush administration is finally over and 2009 brings a more adept and intellectual administration that will do just about anything to get America out of the economic dump. An administration that seems focused on the middle class and job creation. However, with it comes more and more national debt and the mortgaging of the future. There seems to be no alternative. This will most likely lead to long-term inflation when countries such as China, India, Russia and other Asian countries continue their rise to redefine the existing economic world order. This is not to say that the United States is doomed to be a second-bit player, as we know that is unlikely. However, the country needs to refocus on what made it a superpower in the first place, investments in technology, jobs, science, and innovation.
The economic turmoil the past two months has sent some very mixed signals to people who do not fully understand the commodities market cycles and global economic forces. The global economic train is now in the midst of a long and dark recession tunnel. The actions taken by the large economies of the world, such as the United States, and European countries, the past two months have made the average investor skittish and scared. They see stalwart financial companies like AIG, Wachovia, Washington Mutual and General Electric either crash and burn or bought out by other companies or halved in price. Their 401Ks, Roth IRAs and other investment accounts tumbled. To make matters worse, they see high crude oil prices that had peaked above $140/barrel go on a crash dive to barely above $60. Wasn’t the global demand of oil, especially from China, India and other emerging markets suppose to keep gas prices above $4.00 for good? Now they are back well below $3.00. Other commodity prices, such as silver, copper and platinum followed suit. All tanked from multi-year highs just reached not long ago this year.
However, contradicting this gloomy wave of news was the ‘strengthening’ of the U.S. dollar and the 30%-plus drop of gold prices. Gold was supposed to be seen as the safe haven when things go bad. Well, now things are really bad so why is gold also dropping? And why is the dollar strengthening when the U.S. economy is tanking? How can this be? In the simplest explanation, although quite wrong and unsubstantiated, was that the commodity bubble had bursted. Gold dropped because the demand for commodities was over. Many people began believing this and even some gold bugs were confounded by what was going on.
Their is a very simple explanation for it, and all the reasons for the dollar strengthening and gold prices crashing are all temporary. As a matter of fact, it provides the best opportunity to buy gold in several years. The recession is in much deeper quicker than anyone thought. Many investors are being forced to sell even their safest haven assets in order to cover for their losses on the risky side, such as stocks, houses, hedging, etc. This includes the liquidation of gold. They do not want to do this but are forced to. This is a major factor in the instability on the down side of gold. Second, the safest non-gold haven for money is U.S. Treasuries. They are one of the only things that guarantee still a net positive return, albeit a small interest rate, at this juncture in the economy. Countries have no choice but to buy more Treasuries because the faith in other fiat currencies is still not strong enough since this is a global recession. This temporary strength in the dollar against other fiat currencies also has a downward push on gold prices and other commodity prices since they are all priced in the dollar. That means $100 now buys more gold than before.
The thing is these two actions are only temporary. These actions are only to save the global recession from a global depression right now. These are short-term reactions to a longer term problem. These actions are known as deleveraging. It is allowing the new economic state to take root. It is a finite process and will soon come to an end. Why? The federal reserve continues to pump lots of new unbacked dollars into the economy. And the $700 billion dollar bailout begins this week. The Feds announced that they will give the initial $125 billion dollars to nine banks. What does this all mean? INFLATION! And soon, HYPER-INFLATION. U.S. Treasuries will have no choice but to increase their interest rates in order for countries to continue buying them. Mortgage rates will rise, as they already are, even though recession takes root. The dollar will reverse trend and weaken due to inflationary pressures. More dollars will come home to roost from other countries. What does all this mean? Gold will rise, rise, rise.
Update 6:15pm: So the Dow Jones goes up 890 points (10.88%) today, with the NASDAQ and S&P500 posting similar percentage increases today. The two main reasons for such a historic rise (second largest point increase of Dow Jones ever) is due to bargain hunters and an expected interest rate cut by the Federal Reserve. Although the cut might help in the credit and liquidity crisis, this is another long-term inflationary signal. If Treasuries have lower interest rates, who will buy them? More Dollars will come back to America, which means a weaker dollar. Although this might help the current local minimum (credit and liquidity), the entire graph continues to head towards a weaker dollar and a continuation of the commodities bull market and a rise in gold prices.
Disclaimer: This is a commentary by an amateur investor and is not meant to be taken as professional advice.
Most people in the country still have not felt the impact of the economic troubles, but make no mistake, the economy is teetering on the brink of a major crisis. When financial stalwarts like Bear Stearns, Merrill Lynch, Lehman Brothers, and AIG collapse, you know something is brewing. The last two recessions, both during the two Bush presidencies, never saw the collapse of major corporations. What most economic followers know is that they should have. Instead of letting the recessions naturally play out, the Bush administrations and the Greenspan Feds interfered too much by playing with our futures for the sake of the present. The early 1990s recession ended because of a huge increase in credit card use and personal loans. The early 2000s recession ended because of easy access to home mortgages and personal loans. Both recessions saw a huge infusion of dollars onto the world markets. Both of them are now biting us in the butt. This is a major credit crisis on our hands. The government must let it play out. Another band-aid and we will just have a more devastating crisis in the near future.