I was sent this letter from a very intelligent friend from Boston. I believe that it will help you understand the economic situation we are in at this moment in time.
Like much of America I followed the events of this past week on Wall Street with a sense disbelief and confusion. The following is one layman’s attempt to put it all in terms understandable to those of us, like me, who are not economists and who do not have a MBA.
In recent weeks we saw: (1) the federal seizure of mortgage giants Fannie Mae and Freddie Mac; (2) the bankruptcy of Lehman Brothers; (3) Merrill Lynch’s shotgun marriage to Bank of America; (4) the federal seizure of American International Group; (5) a fall in the stock prices of Morgan Stanley and Goldman Sachs of 24% and 14%, respectively; (6) the downgrading of Washington Mutual’s credit-rating to junk status; (7) the SEC issue new rules prohibiting the practice of short selling on financial shares; (8) the LIBOR rate jump from 3.33% to 6.44%; (9) Reserve Primary, the oldest money-market fund, post a loss; and (10) the Fed, in co-ordination with other central banks, pledge to inject $180 billion of short-term liquidity into the markets.
Wow, it’s no wonder that the Dow whipsawed up and down causing anyone who watched it to feel queasy. But why was the government saving some institutions last week, and letting others fail? There is a pattern in the government’s ad hoc response crafted and directed by Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke. Put simply:
Determine if the firm is so large or integral to the financial system that to let it fail would cause a catastrophe. If the answer is no, encourage a private sale, or let if file for bankruptcy.
If the answer is yes, then take it over and make sure that the taxpayers get first claim on the assets, and replace the current management.
Applying the above test the government took a hard look at the books of Fannie and Freddie and determined that they were woefully under-capitalized, which had been suspected, but not readily apparent due to the use of questionable accounting practices. Since these two giants buy up half of all US mortgages to allow them to fail would not only have been catastrophic to the housing market and the overall national economy, it would have had international political and economic ramifications. Now with the explicit backing of the government the hope is the market for mortgage backed securities will stabilize, allowing more loans to be made.
Unlike Bear Stearns, the government decided that Lehman Brothers was not so big or integral to the financial system, and thus could be allowed to fail if a buyer was not found. A buyer was not to be found without backing from the government, and so Lehman Brothers filed for bankruptcy and Barclays subsequently purchased some of its assets at fire sale prices.
But the fall out was horrific. As it turned out American International Group (AIG), an insurance company, had written a considerable amount of credit-default swaps (a type of guarantee against corporate defaults) against Lehman Brothers. The bankruptcy caused a liquidity crisis at AIG and the government had to step in and extend $85 billion in credit to AIG in exchange for a 79.9% stake in the company. The government could not allow it to fail as AIG has a $441 billion exposure in credit-default swaps.
The fall-out from the Lehman Brothers failure had further repercussions. Many Americans have money market accounts, thought to be the safest of investments. Money markets typically invest in short term corporate debt, the kind that banks and businesses float to fund their daily operations.
When Lehman Brothers filed bankruptcy it caused the Reserve Premier fund, which had invested in Lehman’s debt, to loose money. And because money markets are not insured, people started pulling their money out of the money market funds, causing a freeze up in the commercial paper market. Without this money many businesses and banks simply can not operate. It would be like you or me going to the ATM only to find there is no money in the account, and the bank has terminated our overdraft protection!
To cover anticipated withdrawals banks started hoarding their money and not lending to each other, sending the LIBOR rate through the roof. To quell fear, the government decided it would extend federal insurance to money market accounts, and in conjunction with other central banks, inject $180 billion of short-term liquidity into the markets (i.e., lend the banks the money).
Despite these extraordinary efforts to calm the markets, they continued to roil. Partly in response to the brutal pummeling the stocks of Morgan Stanley and Goldman Sachs were taking (despite better than expected earnings results) the SEC halted short sales against financial companies. Panic and, not reason, was thought to be the cause of such dramatic drops in share prices which were destroying confidence in the market.
This morning, Morgan Stanley and Goldman Sachs announced they were each filing for a change in their charters that will allow them to act more like commercial banks. They will now be able to increase their capital reserves by accepting federally insured deposits. In exchange they will be subject to federal oversight. This will certainly lead to more conservative lending practices, and lower future profits. There are now no stand-alone investment banks left on Wall Street.
Realizing that the ad hoc responses to the unfolding crisis were proving insufficient, Secretary Paulson and Chairman Bernanke determined it was necessary take the boldest step yet to avoid a collapse of the entire financial system. Over the weekend they have been working with Congress on a bill that would allow the Treasury to buy $700 billion of mortgage backed securities of questionable value from financial institutions.
The hope is that when financial institutions sell the debt to the government (at a discounted price) the government can hold the debt for a period of time until the markets stabilize, and then resell it at a profit. Another possibility is that once the government owns the debt, it can work out easier terms with homeowners that may allow them to stay in their homes and avoid foreclosure. This would have a positive effect on declining home values, the root cause of the mess we find ourselves in today. It would also increase the value of these securities, to the taxpayers’ benefit, when they are resold.
Sometimes an analogy is helpful to understand complex problems. Let’s say your heart is like Wall Street in that it pumps blood (credit) throughout your body (the economy) where it is needed. You go to your doctors Ben and Henry because you have some chest pain (call it AIG). Henry and Ben perform an angioplasty (a bailout). The next day you feel even worse. Henry and Ben tell you are about to go into complete cardiac failure because your heart and arteries are full of plaque (bad mortgage debt), blocking the flow of blood (credit). Ben and Henry tell you they need to perform open heart surgery immediately. This causes you to pass out, and Henry and Ben look to your family (Congress) to sign the consent form (the bill for the $700 billion bailout). That about sums it up.
Make no mistake that these past weeks have seen monumental changes to the ways in which finance operates in America. If the Paulson/Bernanke proposal is not enacted quickly by Congress the future of our economy is at risk. To put it in perspective, when asked by one member of Congress what would happen if the bill failed, Secretary Paulson replied: “If it doesn’t pass, then heaven help us all.” So stay tuned. Stay informed. It could be a difficult recovery.
Thursday, December 4, 2008
Wednesday, September 10, 2008
Inspiration The Final Frontier
Creating a goal is the easy part, finding the inspiration to reach your goals is the challenge.
Those of you lucky enough to see and hear Gary Keller’s talk about his new book “The Shift” will understand the dose of inspiration that was delivered at the event. I like many others found him to be fun lov’in and intelligent, full of great stories that illustrated the need for a plan, an inspired plan.
The problem is today is a new day with new problems and new distractions and in the afterglow of such an inspired day I am left with my old life. The uninspired me may have resigned myself to the standards of my past, but today I know that I don’t have to face this issue alone. That I can turn to the people around me, the community I work in, and look to them for inspiration, to find inspiration through both my contribution to them as well as theirs to me. Don’t get me wrong Gary is a great man, but it is all of you who bring me the greatest inspiration by allowing me into your lives and business on a daily basis.
My “BIG WHY” is that I love to contribute to the successes of others; it is not as selfless as it sounds though. I use my community to fuel me up with inspiration and to keep me moving forward towards my goals. It is my “BIG WHY” the drives me and inspires me to reach my goals, it is what fulfills me but is not my goal. The monetary gain the beautiful trip or the new car for example are the goals, but they offer no or momentary fulfillment. You all need to be in touch with our “BIG WHY” it is your inspiration. Keep it in front of you at all time, have it be the carrot to which you strive. Also use the community around you to find inspiration. Tap into the people around you; go beneath the surface to find the opportunity, the opportunity to share inspiration.
Those of you lucky enough to see and hear Gary Keller’s talk about his new book “The Shift” will understand the dose of inspiration that was delivered at the event. I like many others found him to be fun lov’in and intelligent, full of great stories that illustrated the need for a plan, an inspired plan.
The problem is today is a new day with new problems and new distractions and in the afterglow of such an inspired day I am left with my old life. The uninspired me may have resigned myself to the standards of my past, but today I know that I don’t have to face this issue alone. That I can turn to the people around me, the community I work in, and look to them for inspiration, to find inspiration through both my contribution to them as well as theirs to me. Don’t get me wrong Gary is a great man, but it is all of you who bring me the greatest inspiration by allowing me into your lives and business on a daily basis.
My “BIG WHY” is that I love to contribute to the successes of others; it is not as selfless as it sounds though. I use my community to fuel me up with inspiration and to keep me moving forward towards my goals. It is my “BIG WHY” the drives me and inspires me to reach my goals, it is what fulfills me but is not my goal. The monetary gain the beautiful trip or the new car for example are the goals, but they offer no or momentary fulfillment. You all need to be in touch with our “BIG WHY” it is your inspiration. Keep it in front of you at all time, have it be the carrot to which you strive. Also use the community around you to find inspiration. Tap into the people around you; go beneath the surface to find the opportunity, the opportunity to share inspiration.
Friday, September 5, 2008
Train Your Brain
This week I would like to reintroduce you to your brain. Like most other organs in your body the way you treat it will reflect its’ performance. As I get older I realize the importance of staying on top of a daily exercise plan for my brain as well as my body. In addition to meditation lite, painting, and great multivitamins there are some interesting websites that I visit to challenge several different brain skills. Let me know how you like or don’t. You will get better with practice. Joey
Traveler IQ Challenge
Skill Exercise
Guess-the-google
AND MORE
1. Brain Metrix A website dedicated to brain training with a collection of brain training games and exercises
2. Sharp Brains Lots of brain fitness resources, including exercises.
3. Braingle Braingle claims to have the largest collection of brain teasers, riddles, logic problems, quizzes and mind puzzles on the internet with over 12,000 items which have been ranked by the site's users.
4. Brainwaves Brain training exercises designed to build mental stamina and ability to organize new data.
5. Brain Arena Train your brain by competing online against thousands of other people. Site requires free registration.
6. Queendom Games and exercises to get your mind into shape.
7. Games for the brain Quiz, memory and brain games to train your thinking.
8. Miniclip brain training Flash based word games and other puzzlers.
9. Brain Gym® Exercises Some simple physical exercises which boost the brain, based on the work of Paul E. Dennison, PhD.
10. Matica Brain Gym Flash based Brain Gym.
Traveler IQ Challenge
Skill Exercise
Guess-the-google
AND MORE
1. Brain Metrix A website dedicated to brain training with a collection of brain training games and exercises
2. Sharp Brains Lots of brain fitness resources, including exercises.
3. Braingle Braingle claims to have the largest collection of brain teasers, riddles, logic problems, quizzes and mind puzzles on the internet with over 12,000 items which have been ranked by the site's users.
4. Brainwaves Brain training exercises designed to build mental stamina and ability to organize new data.
5. Brain Arena Train your brain by competing online against thousands of other people. Site requires free registration.
6. Queendom Games and exercises to get your mind into shape.
7. Games for the brain Quiz, memory and brain games to train your thinking.
8. Miniclip brain training Flash based word games and other puzzlers.
9. Brain Gym® Exercises Some simple physical exercises which boost the brain, based on the work of Paul E. Dennison, PhD.
10. Matica Brain Gym Flash based Brain Gym.
Four
I came across a book titled the “Four Agreements” by don Miguel Ruiz. In it he describes all of the agreements we have in life and how they determine what we tell ourselves who we are, how to behave, what is possible, and what is impossible.
Everything we do is based on agreements we have made - agreements with ourselves, with other people, with higher source and with life. But the most important agreements are the ones we make with ourselves. One single agreement is not such a problem, but through the course of life we have created many agreements that come from fear, deplete our energy, and diminish our self-worth."
When we are ready to change out of our old agreements, there are four deceptively simple, yet powerful agreements that we can adopt as guiding principles. Don’t be fooled by there simplicity.
1. Be Impeccable With Your WordSpeak with integrity. Say only what you mean. Avoid using the word to speak against yourself or to gossip about others. Use the power of your word in the direction of truth and love.
2. Don't Take Anything PersonallyNothing others do is because of you. What others say and do is a projection of their own reality, their own dream. When you are immune to the opinions and actions of others, you won't be the victim of needless suffering.
3. Don't Make AssumptionsFind the courage to ask questions and to express what you really want. Communicate with others as clearly as you can to avoid misunderstandings, sadness and drama. With just this one agreement, you can completely transform your life.
4. Always Do Your BestYour best is going to change from moment to moment; it will be different when you are healthy as opposed to sick. Under any circumstance, simply do your best, and you will avoid self-judgment, self-abuse and regret.
Everything we do is based on agreements we have made - agreements with ourselves, with other people, with higher source and with life. But the most important agreements are the ones we make with ourselves. One single agreement is not such a problem, but through the course of life we have created many agreements that come from fear, deplete our energy, and diminish our self-worth."
When we are ready to change out of our old agreements, there are four deceptively simple, yet powerful agreements that we can adopt as guiding principles. Don’t be fooled by there simplicity.
1. Be Impeccable With Your WordSpeak with integrity. Say only what you mean. Avoid using the word to speak against yourself or to gossip about others. Use the power of your word in the direction of truth and love.
2. Don't Take Anything PersonallyNothing others do is because of you. What others say and do is a projection of their own reality, their own dream. When you are immune to the opinions and actions of others, you won't be the victim of needless suffering.
3. Don't Make AssumptionsFind the courage to ask questions and to express what you really want. Communicate with others as clearly as you can to avoid misunderstandings, sadness and drama. With just this one agreement, you can completely transform your life.
4. Always Do Your BestYour best is going to change from moment to moment; it will be different when you are healthy as opposed to sick. Under any circumstance, simply do your best, and you will avoid self-judgment, self-abuse and regret.
Non-Negotiable Habits
I often ask myself why it is that I seem to have so much trouble sticking with my commitment to changing certain behaviors and habits; doing what I need to do to create the results I want for my life. Even though I desperately want to change something about my existence, it seems that invariably there comes a time when I simply stop whatever it was that I started.
Why we do that is a very relevant question for most people because the vast majority of us have a history of starting and stopping certain behaviors. In reality, most of us know what we need to do. And for a while, we do it. Then we stop. Masters of incompletion. We have enough reasons to do it, we have the time to do it (despite what we tell others) and we certainly have the potential to create amazing results.
Why do you take a shower each and every day? (Please tell me you shower every day!) It is programmed into our hard drive and is not an optional behavior. As a result, we have no motivational issues when it comes to personal hygiene (I hope) Cleanliness is one of our Non-Negotiable Habits. Same goes for parents changing diapers or rescuing a loved one from a burning building; there is no other option in your mind.
Something a little different happens when it comes to exercise or business goals, even though we know exactly what to do, and why we should do it? We haven’t made the relevant mind and body-changing habits non-negotiables in our life. On some level we still consider work goals and exercise to be optional.
Too many of us are out of shape (physically, emotionally, financially, professionally) because we haven’t made certain behaviors and habits non-negotiables in our life. You know the ones I mean. Somewhere in that lump on top of your shoulders you still consider some things to be optional, that’s why you continue to go around in circles in certain areas of your life.
You may not even be aware of your ‘optional mindset’ but if you have a history of almost getting things done, then I’m talking to you. Do you like ending up in the same place all the time? Didn’t think so. Until you and I make those occasional behaviors, Non-Negotiable Habits we won’t see forever results and we won’t see genuine change.
You know what to do.
Why we do that is a very relevant question for most people because the vast majority of us have a history of starting and stopping certain behaviors. In reality, most of us know what we need to do. And for a while, we do it. Then we stop. Masters of incompletion. We have enough reasons to do it, we have the time to do it (despite what we tell others) and we certainly have the potential to create amazing results.
Why do you take a shower each and every day? (Please tell me you shower every day!) It is programmed into our hard drive and is not an optional behavior. As a result, we have no motivational issues when it comes to personal hygiene (I hope) Cleanliness is one of our Non-Negotiable Habits. Same goes for parents changing diapers or rescuing a loved one from a burning building; there is no other option in your mind.
Something a little different happens when it comes to exercise or business goals, even though we know exactly what to do, and why we should do it? We haven’t made the relevant mind and body-changing habits non-negotiables in our life. On some level we still consider work goals and exercise to be optional.
Too many of us are out of shape (physically, emotionally, financially, professionally) because we haven’t made certain behaviors and habits non-negotiables in our life. You know the ones I mean. Somewhere in that lump on top of your shoulders you still consider some things to be optional, that’s why you continue to go around in circles in certain areas of your life.
You may not even be aware of your ‘optional mindset’ but if you have a history of almost getting things done, then I’m talking to you. Do you like ending up in the same place all the time? Didn’t think so. Until you and I make those occasional behaviors, Non-Negotiable Habits we won’t see forever results and we won’t see genuine change.
You know what to do.
Thursday, August 28, 2008
Starsky's thoughts on TARDINESS
Starsky: its 10 o'clock, you're late; I've been here since 8.
Hutch: 8 o'clock? I didn't even know this place opened that early.
Starsky: It's okay though, because crime called in sick, it's going to get a late start too.
Hutch: Crime called in sick, I like that...
I have always found Starsky and Hutch to be quite educational. So, that’s why I choose this quote to kick off this week’s article.
There are many things that S&H taught me some of which I have worked hard to erase from my memory, Huggie Bears fashion sense and an acute case of hair envy to name a couple. When I was a child I would start biting my nails hours before the start of the most recent episode. What I learned was that if I missed the first few minutes of the episode I missed the whole setup, the problem, the dilemma, the characters involved. There was no VCRs or TIVO; there was just me the TV set and time. I needed to be there when the first few bars of the theme song went down, when that yellow Charger flew in the air. When I missed that moment I was always left a hollow child with no recourse to recapture those lost moments that missed information. (Pause for several moments to reminisce or check the TVland schedule for upcoming showings)
Oh yes I do digress!!! The theme of today’s show is being ON TIME. Not only doesn’t crime call in late but neither does success. Being on time is part of the preparation of any meeting. If you are late then what it is saying to your client is that you did not prepare before you started your day. It doesn’t matter if there was traffic or another meeting went to long or some other scheduling problem. It matters that your client knows that there is a space between what you say and what you do. How that plays out for client could be any where from annoyance to apathy, neither of which you want to inject into any customer service based relationship.
Doug believes and I agree that we enable each other by excepting TARDINESS So how can we help, well, we the staff of KW Wilshire will commit to starting all education, office meetings and special events ON TIME. We hope by this example we can help the office community to show up in the appropriate light buy displaying a high level of respect for others time and work ethics.
Have a great week!!
Hutch: 8 o'clock? I didn't even know this place opened that early.
Starsky: It's okay though, because crime called in sick, it's going to get a late start too.
Hutch: Crime called in sick, I like that...
I have always found Starsky and Hutch to be quite educational. So, that’s why I choose this quote to kick off this week’s article.
There are many things that S&H taught me some of which I have worked hard to erase from my memory, Huggie Bears fashion sense and an acute case of hair envy to name a couple. When I was a child I would start biting my nails hours before the start of the most recent episode. What I learned was that if I missed the first few minutes of the episode I missed the whole setup, the problem, the dilemma, the characters involved. There was no VCRs or TIVO; there was just me the TV set and time. I needed to be there when the first few bars of the theme song went down, when that yellow Charger flew in the air. When I missed that moment I was always left a hollow child with no recourse to recapture those lost moments that missed information. (Pause for several moments to reminisce or check the TVland schedule for upcoming showings)
Oh yes I do digress!!! The theme of today’s show is being ON TIME. Not only doesn’t crime call in late but neither does success. Being on time is part of the preparation of any meeting. If you are late then what it is saying to your client is that you did not prepare before you started your day. It doesn’t matter if there was traffic or another meeting went to long or some other scheduling problem. It matters that your client knows that there is a space between what you say and what you do. How that plays out for client could be any where from annoyance to apathy, neither of which you want to inject into any customer service based relationship.
Doug believes and I agree that we enable each other by excepting TARDINESS So how can we help, well, we the staff of KW Wilshire will commit to starting all education, office meetings and special events ON TIME. We hope by this example we can help the office community to show up in the appropriate light buy displaying a high level of respect for others time and work ethics.
Have a great week!!
In the Beginning
Who I am is not that different from many others. I live in the great city of Los Angeles, of which I have a renewed appreciation for, with my wife of 10 years and two quirky and fabulous little girls, Lulu 9 and Presley 4. I work in the real estate business in management and I search everyday for a speck of meaning.
I do believe I offer a unique perspective in the fact that I am a creative in a big boys business environment. This allows me to view processes through the eye of a passionate connected mind. For me it is the success of the application more than a dollar driven mentality. Don't get me wrong I do like to make money, but I am passionate about contributing to the success of others.
In my daily life I come across situations and people who both inspire me and annoy me (my family included) and I hope by sharing, I can find peace with myself and maybe even help others.
I do believe I offer a unique perspective in the fact that I am a creative in a big boys business environment. This allows me to view processes through the eye of a passionate connected mind. For me it is the success of the application more than a dollar driven mentality. Don't get me wrong I do like to make money, but I am passionate about contributing to the success of others.
In my daily life I come across situations and people who both inspire me and annoy me (my family included) and I hope by sharing, I can find peace with myself and maybe even help others.
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