In this installment of my series of posts on the Great Comeback, I’m going to outline the worldwide government actions and plans that you need to consider when planning for your organization’s post-recession strategy.

Already I have outlined a five-part process for the Great Comeback, or returning to increased market share, growth and prosperity when the Great Recession ends. This post explains more about the environmental assessment part of that process and specifically, how government involvement can affect your business.

There has been much presented on the specifics of the approaches taken by the major industrialized nations of the world, so a discussion here of the dollars allocated does not add much value. What is of value, however, is to understand the underlying philosophy of economic stimulus in the different countries.

The United States, several countries in Europe, China and many other countries have all created a stimulus spending plan and have a strong desire to stabilize the banking system.

The three main economic stimulus weapons these governments will use are:

* Interest rate cuts

* Tax cuts

* Direct government spending

The quickest and most certain stimulus weapon is direct government spending. The vast majority of the government stimulus in the United States and China is direct government spending; whereas in Europe, the majority is in tax cuts.

Let’s break down each country or region specifically, and also consider the impact of the G-20 Summit and its financial strategies:

United States - The United States government has characterized its efforts to reverse the economy’s downturn as a three-legged stool:

◦ Economic stimulus

◦ Minimize home foreclosures

◦ Bring stability to the banking system

Real U.S. government spending will grow between 2.5 percent and 3 percent in 2009 and into 2010. The impact of this spending will be a growth in 2009 GDP of 0.6 percent to 0.9 percent, and in 2010, a GDP of 1% to 2%.

This U.S. government spending points to a budget deficit in 2009 and 2010 of over $1 trillion. This budget deficit presents a real threat of inflation which must too be considered when developing the Comeback Plan.

In the United States the dual objectives are to preserve and create jobs (transportation, infrastructure and health care) and to pursue the agenda of "Change" of the new administration (financial industry recovery, energy/green initiatives, tax burdens, trade regulations and labor).

The United States Treasury has put in place plans that are assuring both investors and banks of its commitment to resolve the banking crisis. Good progress is apparent here, which further enhances the claim that the worst of the Great Recession is behind us, and we are beginning the recovery. Just yesterday (mid-April), Treasury Secretary Timothy Geithner provided the assessment that "the vast majority" of the banks could be considered well-capitalized.

However, we need to look at the U.S. housing market when examining the end of the Great Recession. The home foreclosure challenge is, unto itself a United States problem, except it has a significant impact on the third topic of banking system stability. The banking stability issue is truly a global problem and is being addressed by the G-20 (Group of 20 Industrialized Nations, which I will touch on below).

China - Global organizations intent on finding growth despite the Great Recession will do well to review their China strategy when they develop their Comeback Plan.

In China it is helpful to understand that the Chinese term for "stimulus" implies "rejuvenation plan." China, more than any other country, views the Great Recession as a great opportunity to enhance their industrial competitiveness.

China stimulus is going directly into the economy in the form of upgrading energy sources and technology, reducing pollution, upgrading China’s rail network, providing for rural development, providing investment incentives for innovation and expansion of R&D, and spurring export promotion and competitiveness.

Europe - The goals of European countries are more to protect small to medium sized companies from the impacts of the recession while increasing spending on energy efficiency, infrastructure and innovations.

The G-20 Financial Strategy - On the topic of bringing stability to the global banking system and resolving the financial sector problems, although not in total harmony, the April, 2009 G-20 Summit does show some promise on:

– A unified front on dealing with the toxic bank assets.

– Regulating hedge funds and other financial institutions.

– Being committed to getting banks to lend again and therefore to restore growth.

Government Spending and Your Great Comeback Plan

The greatest direct government spending over the next year will be in China, then the United States and then the countries of Europe. The large amount of China’s direct government spending in 2009 will result in real China GDP growth in 2009 of 6-7% 7-8%.

The implications of these government involvements with recession recovery may have a very important impact on your organization’s Great Comeback. It is paramount that you understand these impacts and build them into your Comeback Plan.