By Dennis Cannelis
By Dennis Cannelis
Dennis is an entrepreneur, business coach, and business consultant. His website is www.small-business-blog.com. You can email him at dennisc@emipartners.com
December 9, 2007
Let's not kid ourselves. Save the sugar coating for the holiday baking.
Bush's subprime mortgage rescue plan will exacerbate, not alleviate, the problems in the housing market. As the plan will sharply reduce the ability of new buyers to make purchases, it really amounts to a lot of 'fluff' and no real solution to the problem.
Although there are mountains of uncertainty as to how the plan will be structured and implemented, there is no question that as lenders factor in the added risk of having their contracts re-written or of being held liable for defaulting borrowers, lending standards for new loans will become increasingly severe (higher down payments, mortgage rates, and required Fico scores, lower loan to income ratios, and perhaps the death of adjustable rate loans altogether). The result will be additional deflating home prices, despite the fact that in the short term fewer homes will be sold in foreclosure than what might have been without the rescue plan.
Most homes temporarily saved from foreclosure will continue to depreciate as new buyers fail to qualify for loans. As a result, lenders will be on the hook for more losses than had the foreclosures taken place sooner. Of course, as these chickens will likely come home to roost after the next election, thatıs a trade-off incumbent politicians will happily make.
What do you think those sub prime borrowers with frozen payments on loans that exceed the values of their homes will likely do. Likely, they will choose not to pay property taxes, condo or homeowners fees, or maintain the condition of their properties. Were these properties to be sold in foreclosure now, at least their new owners would have financial incentives to maintain the value of their investments. Upside-down sub prime borrowers will have no incentive to throw money down a black hole: why should they make additional payments on properties in which they have no equity and which they will likely lose to foreclosure anyway? When these homes do go into foreclosure, back taxes and other fees on dilapidated properties will inflict even greater losses on lenders.
Subprime borrowers with frozen resets will be unable to either borrow additional money against their homes or sell them. As rising credit card payments, higher food and energy bills, and stagnating wage growth or unemployment make even paying the frozen rates increasingly more difficult, this lack of flexibility will prove fatal. Also, the moral hazard inherent in offering help to only those who can demonstrate an inability to afford the reset rates, or restricting the bailout to borrowers with low credit scores, guarantees that borrowers will alter their circumstances to qualify for the aid. Therefore more loans will be frozen than are currently forecast, and the financial circumstances of the borrowers will be that much more impaired as they endeavor to pile on added debt or reduce their incomes to conform to the requirements of the bailout.
What is not being discussed is that few subprime borrowers have any skin in the game in the first place. Having put nothing down or having extracted equity in previous refinances, most subprime borrowers will lose nothing if their homes go into foreclosure. In some cases the teaser rates were so low that borrowers actually paid less than what they might otherwise have paid in rent. In fact, those who have already extracted equity have received huge windfalls from their homes and will leave their lenders holding the bag.
Also missing from the dialogue is the fact that those individuals and companies that sold these homes to subprime borrowers in the first place pocketed large sums of money they never would have received if these exotic loans were not available. Is anyone going to ask them to give some of that money back in order to compensate the lenders for their losses?
Then there is the other '800 pound gorilla' in this financial mess that no one is talking about. Delinquencies on auto loans are now at record highs, and with no home equity left to extract and a weakening economy, this problem can only get worse. What is next, a moratorium on car payments? Of course if the government can "require" private parties to rewrite contracts, what about the government's obligations to re-pay its debts? After all, the Federal government is the biggest subprime borrower of all and it has committed the American taxpayer to the mother of all adjustable rate mortgages. With the majority of our near 10 trillion dollar national debt financed with short-term paper, what happens when interest rates rise? Will the government extend the maturities of one-year treasury bills, tuning them into 10-year treasury bonds, forcing holders of government debt to accept below market returns for extended time periods? These are real risks that will not go unnoticed by a world already saturated with depreciating U.S. dollar denominated debt.
On the surface, this plan is being offered in an attempt to stem the tide of foreclosures that might otherwise cause further weakness in home prices. The reality of course is that current home prices are still too high, having been a function of the lax lending standards and rampant real estate speculation that got us into this mess in the first place. A return to prudence in lending also means a return to prudence in pricing. Everyone seems to agree that a return to traditional lending standards is a good idea, but no one seems willing to accept a return to rational prices as a consequence.
The governmentıs attempt to orchestrate such an outcome is doomed to failure, as it is impossible to maintain bubble prices after the bubble has burst!
The final absurdity is the Government's attempt to portray their plan as voluntary. Of course the authorities point out that if their "suggestions" are not adopted by lenders, much more draconian legislation will surely follow.
During this holiday season, focus on the real value in your life - appreciate your family, friends, and loved ones and have a real sense of the things that no one else can sugar coat. Happy Holidays !
Which of the following two articles is your reality?
Holiday outlook bleak as Americans see more economic troubles
Amid expectations of falling home prices, foreclosures, job cuts and concerns about toy safety, Americans are girding for their gloomiest holiday season in years.
The struggling economy, tighter credit, high energy prices and the calamity in the real estate market are just part of the bleak picture as the year-end holidays approach. Consumers are expected to be cautious in their holiday spending plans; gifts and toys are under close scrutiny because of numerous safety recalls, which may also lead to shortages of popular children's items, say analysts. Not surprisingly, US consumer confidence has slumped to a two-year low amid weakening business and job-market conditions, a Conference Board survey showed. The business research company said its consumer confidence index fell to 99.8, down from a revised 105.6 in August.
The outlook is troubling at the approach of the Christmas season, when consumer spending -- about two-thirds of US economic activity -- is the greatest. To make matters worse, oil prices are near record highs around 98 dollars a barrel, and home heating costs are surging: one survey showed heating oil up 28 percent from last year and natural gas up 10.5 percent.
"With lower home prices, lower home equity withdrawal, a credit crunch in mortgage and consumer credit markets, high oil and gasoline prices, falling employment, lower consumer confidence, the saving-less and debt-burdened US consumer -- that spent well above its means for years -- is now on the ropes. If consumers retrench, a recession becomes a sure outcome," said Nouriel Roubini, a New York University economist who has been predicting a bleak economic outlook for the past year.
Holiday Outlook
Americans plan to spend an average $839 during the holiday season, up 17.6% from last year. It's going to be a joyful and profitable holiday season for retailers, according to surprising findings by this survey.
November 12, 2007
I have tended to be sober and bleak in my recent blogs on the economy. Perhaps; but I sense a strong urge to awaken as many as possible to find their truth in all of this, as the media, the news, and the 'business as usual' attitude has lulled most into a false sense of security, into a sense of status quo, and into a mindset that this country and every other great nation could not be toppled by something like what we are seeing today credit and derivatives risk. The unraveling is finally upon us, and I am convinced that breathtaking losses could be revealed any day now.
But as Ellie wrote, "Alas, it's all a game". It is being played out in the program by players in the role of profit and greed driven corporations and governments. Growing your consciousness will discover answers, review old patterns, and awaken to final outcomes. Just as history played out in ancient Rome, where greed and overextension of credit and expansion led to its fall, the human record reflects that economies and societies have risen from the ashes and fallen over and over again. But this time the souls are going home.
We need to understand what we are dealing with past the veil of this illusion; then act to help ourselves in this situation as our wisdom dictates.
To summarize: The U.S. "prosperity" of the past five years has depended on one thing and one thing alone: cheap, easy borrowing, by consumers, home buyers, businesses, gamblers/bankers and government--cheap easy credit for everyone.
This was funded by capital inflows of billions each and every day. Foreigners poured trillions into U.S. markets, buying up risky mortgage-backed securities, supposedly "safe" U.S. Treasuries, and U.S. stocks, bonds and derivatives. But as a result of the policies of the Fed and Treasury to continue to spread credit risk to unqualified debtors and to package these risks as 'safe investments' here and abroad, the U.S. dollar has devalued rapidly and this has created a very tenuous situation. Making more debt available to bankrupt entities, be they investment bankers or homeowners solves nothing. It's called "putting good money after bad," and it simply guarantees ever-larger losses. Now ask yourself, if a 2002 Treasury note is worth 35% less today in value as a result of these policies, how anxious do you think the world is invest in more of our "investments" denominated in the sinking dollar?
You cannot properly anticipate the coming wealth destruction unless you understand that the entire model rests on derivatives that come into play with fund managers and banks which mask and distort risk.
Inherently risky bets were encouraged because they were "hedged." That's what Hedge funds do: place bets on both sides so they collect gains whether the markets go up or down. But the risks of the gamble didn't really change; the introduction of low risk to a high-risk bet was an illusion. The whole risk-management model depends on somebody being able to pay off the hedge. If they can't-- the game is over. The risk has been played up many hundreds of times the actual values of these 'safe investments' sold off abroad, and now are worthless for the reasons stated. The insurance can't possibly pay off these bad investments. Look at Citicorp and Merrill Lynch, the giants of the investment world. They could be declared insolvent, because actually they are. The game is now over, and the players shuffling losses can only last a few more days or weeks.
While I am not an investment advisor, I can only urge you to go into the next few months, even weeks, perhaps days, with your eyes wide open, and with an educated outlook on what is going on around you, and make some possible tough decisions on protecting your finances. These are tumultuous times.
To assist you further in gaining a rather different perspective, here is a very, very blunt statement coming from Jim Sinclair's blog of November 3, 2007
Dear Friends,
If you have not started to protect yourself do so on Monday please. I am quite concerned for all of you as inertia usually prevents people from protecting themselves. I always wondered how a certain ethnic and religious persuasion could remain in Germany as Hitler was clearly coming into power. I would have been out. Even then, many of those who remained in Germany saved a great deal of their fortunes by certifying their investment shares in international companies, then burning the paper certificates.
What I am getting at is that the signs of an international financial accident are in those incidents that have recently happened. There is no hiding place as this is a product of the greed and avarice of the new geek kids on the block who have killed themselves, their industry and hurt everyone everywhere. I am sure that in years to come derivative traders will be seen as pariahs and criminals deserving of prison - not as the multi-millionaires they are today.
On Monday start to protect yourself to the degree it can be accomplished by removing people and institutions between you and your assets. This is the real thing. This is what was discussed in the 1970s but did not happen. It was discussed by many in 2000 but it is happening here and now. There is no functional tool to stop a derivative meltdown. It will like the grim reaper clean out many financial institutions and start a domino effect that I do not want you to be caught up in.
You understand by now that I have the wherewithal (experience/industry contacts/etc.) to know these things before others. Call it cell memory, genetics or my historic access to some of the best teachers on earth in finance, risk management and markets. It's simply ingrained in me. Truth be told, Bert Seligman, my father, knew before the market knew; Jesse Livermore, one of the greatest traders of all time, knew before the market knew. Who knows how? I generally know before the markets figure things out. I tend to know the end at the beginning. It has been so all my life. This is why I am able to do the things I do, take the risks I take, and build the companies I have built.
I want you to be safe. What can it cost you to take precautions? I believe that the cost to you is nothing. I am telling you to take less risk, not more. I know the central bankers will burn the dollar before all this comes down. What concerns me is that all this could easily get out of hand.
Operation "White Noise," is getting hair thin as more and more financial institutions fess up to their ignorant greed-driven self destruction. But first some advice:
Reduce - if not eliminate - your margined position even if that means selling down to rid yourself of debt on your securities or gold assets. The swings in gold now are going to become so violent that most people will not be able to tolerate it when debt is attached to their positions.
November 6, 2007
These are a powerful combination of verbs that define who we are - but too often we tend to focus on the "DO" part in our lives. We are so busy feeling we need to be "doing" to accomplish the "HAVES" that we lose sight of the reason for our wants and needs (Goals are the 'HAVE' part of these three words - goals like losing weight, having the perfect relationship, achieving a profitable business, or getting that big promotion.).
For me, it comes down to happiness. Everyone, if asked why they want to lose weight, or why they need to make more money, or why they need to find a new partner - could agree that it is happiness they seek in feeling and in thought.
Focusing on WHO you want to BE (or who you really are spiritually) first before having what you want is key. Take the case of the person who wants to lose weight and attain a great body shape. What most people do is, especially after watching Oprah, rush out to Barnes and Noble and buy the latest diet book, follow a regimen, and start going to the gym. This lasts for a few weeks and then they go back to their steady diet of high carbs and fat; fast food and sweets; instead of the gym they decide to hang out on a Sunday to watch football (it's the reason many gyms make profit - because they count on those members not consistently going to the gym, so they can sign on as many as possible). Itıs not the diet that counts - it's who you have to BE to follow that diet that counts. Yet, each year, millions sign up for diets looking for the perfect solution to their weight problem; they focus on WHAT they have to do; rather than on who they have to BE.
In business, most owners concern themselves with WHAT they have to do before the most critical factor for success - What CAN I BE the best in the world at - what is the key message I am sending my clients as far as being the intended solution to their problem? What makes them motivated to want me? It comes from the place of knowing WHO you are as a person or as a business.
The good news is that it doesn't cost much to change your thinking in this process. The bad news is that sometimes its hard for us to change our thinking, beliefs, and fear of consequences because we have been conditioned from childhood with hard core thoughts of 'work hard for an honest days pay', 'get a good job with benefits', 'you can't do that, no one else is doing it'. We have been exposed to different conditioning patterns to money, to relationships, to success etc through schooling, mindsets handed down from generation to generation, and our religions.
But by strengthening your thoughts to BE who you want to be (or who you really are spiritually), you can then have the power to take the action (doing) that will enable you to be happy in your life or successful in your business.
Now, you may have been exposed to the Law of Attraction. It says that (simply stated) if you can think the right thoughts you will attract to yourself the right things. In other words, like attracts like. Although this can be very self-empowering towards your goals, there are several caveats without which you need to be aware of.
Please remember that you are a spiritual being having a physical experience, not the other way around. Your higher self is directing traffic here. So, if you can step outside of the box, be in tune with your higher self, your soul - do your deep inner work, clean out the memories, traumas, old belief systems and agreements, etc, that limits your channels of perception and hinders your growth ... if you can let go of any attachments to the outcome of your manifesting ... if you can clear your mind of the negativity to allow your mind a creative space in which to envision ... then perhaps you can make these laws work for you. If you get that clear, you probably won't care making the world work your way - you will perceive the world differently.
Here are some critical truths to keep in mind to BE what you want:
October 22, 2007
As I searched for some inspiration about this week's blog, the theme of "fear of action" in my recent business coaching and consulting engagements came to mind. As I thought about that theme, my screensaver suddenly popped up with pictures from a memorable trip. At this very same time last year I had gone on a retreat to Teotihuacan, Mexico to explore the pyramids of the ancient Toltec's (precursors to the Mayans) and their philosophies and approach to life. Upon reflection, that screensaver made me realize how appropriate this was for an article on how to conduct business Toltec style.
Before I integrate the idea of how the Toltecs are relevant to business, let me point out that the Toltec way is not a religion. It is a way of life that can dynamically change how we see our world, and ourselves. There are no rules, no doctrines. It is more a path of action offered for your review, and it gives each one of us an opportunity for self-improvement and self-empowerment. Everything I have seen in this approach is also compatible with the wisdom of masters and spiritual paths from all cultures, religions, and philosophies.
The self-empowerment process of the Toltec uses your awareness to discover how you are distorting your situation, perhaps sabotaging it, then deciding if it serves you, and changing it if it does not. Your skills in finding and healing wounds from the past will improve, your relationships will improve, and you will soak in more happiness - isnıt that everyoneıs impulse anyway whether in personal relationships or in business?
For those of you who may be familiar with the works of Carlos Castaneda who wrote in detail about Toltecs of the past - their rituals and power seeking methods of the supernatural - this is not the Toltec way I am describing.
I was led to make a trip to Teotihuacan (simply called "Teo" a maze of paths and several large pyramids pointed at the sun and moon) by the best selling book the Four Agreements by Don Miguel Ruiz, MD, himself a Nagual, from a long family lineage of Toltec shamans.
Don Miguel describes a living energy system in the human mind that generates and feeds on fear. This fear is created by our own self rejection - we are conditioned into societal beliefs, domestication of the mind so to speak, from early childhood, that to many of us seems "normal" or goes unnoticed. Our ego mind ("Inner Judge") creates the fear to keep us protected. It is this FEAR - fear of being accepted, fear of failure, fear of being rejected, etc, that Don Miguel calls the "Parasite" that keeps us from our personal freedom. Through awareness, understanding, and re-conditioning you become the "The Spiritual Warrior." As the Spiritual Warrior, symbolically you become like the Jaguar, stalking in the jungle of your inner mind, searching out the Parasite, including its fear, judgments and other distortions. The intention is to remove their influence so that you can experience true freedom and happiness. You ultimately choose self acceptance and love over self rejection and fear.
So how does this relate to our business subject? How you relate to yourself in life is how you relate in your business environment. In my business coaching and consulting engagements, FEAR and CYNICISM are the two major OBSTACLES TO SUCCESS I have encountered.
Many of my business clients some entrepreneurs, some corporate senior managers, take the safe road either indecision - status quo - out of FEAR of FAILURE. They donıt realize that this fear is coming from the Inner Judge who says "Stay small, donıt risk, donıt change and you will be safe." Understand that failure is just a component of success. It is there to sharpen some skill or knowledge you simply did not make yourself aware of at that time an experience to grow from. It is NOT a reflection on your talents, your abilities or your acceptance as a person. Being aware of the 'failure' experience and looking at the root cause of your pain are the first steps in the Toltec business having the courage to change based on that experience, asking questions, forming new strategies, expanding are the measure of the Toltec Warrior.
Another is a FEAR of MONEY the fear that money will run out, or that losses will occur if certain actions are taken. Too often, the power of money controls them , failing to ask themselves if what they are doing makes sense for the longevity of the company, rather than living for another day. As they have been domesticated to think that working harder and longer hours each day is the answer, they reinforce this mindset through perceived 'bad consequences' and as a result are unable to change. If they took a personal inventory, as the Toltec Warrior would do, to identify this cause, they might say, "Does this make sense²? All too often, instead of trusting their inner wisdom, that genius that is unique in all of us, most go with the crowd. They do things because they model behavior on others, whether they are companies or individuals.
As a Toltec master would say - You have been outer directed for so long that being inner directed is a challenge.
You learned not to trust your feelings and emotions now you can un-learn them.
The Toltec path in business is about getting in touch with what is truly real your inner truth. Your feelings are your truth. Know you are always right for you there is nothing to defend. You do not have to get it ³right² for anyone else. You define what is your truth, not based on beliefs or emotions but on wisdom that is calling out to you from within. How does this play in the business world? Ultimately a business leader , after weighing all the information presented, will need to rely on his/her intuitive sense, a sense that the decision is based on wisdom, not what all the outside noise may be saying. I learned in business experience to trust my intuitive side for my decisions, especially because it is so critical to put yourself in the mindset of your employees and your clients what are they perceiving is their problem? How do they view you? How do you engender trust? What are their body motions telling you that their words arenıt?
Another consequence of awareness of these fears, then releasing this behavior, is the fact that you now make room for creativity. Without this reconditioning, the Inner Judge is controlling the patterns of fear to the extent that you are not open to creative impulses. However, by delaying your reaction to negative emotions, you give yourself a chance to think and to ponder a possible different path or decision.
Overcoming cynicism is an equal task to overcoming fear. The Toltecs say - Whenever you judge, you are seeing yourself as the victim. The path to empowerment is the knowledge that we are only self-perceived victims because we have created ourselves in this light. We create our own doubts and cynicism. All of us have doubts. Our doubts often times paralyze us into indecision. "I am not good enough" or "I canıt do this". Perhaps it is "What if the economy falls as I invest in my company, or I hire new workers?" In order to grow your business, you have to have self growth in this area. Recognizing that all of this is just 'busy' talk, an avoidance to the real issues it goes back to the FEAR of FAILURE, and hence analysis/paralysis. First of all, you canıt forecast the future, you have to know that you have the power to chart your own course, and to have acceptance for what you have decided. I know I have breathed easier when I decided to overcome some cynicism, to move forward with my plans, and to actually visualize the result and obstacles. When you do that, and also imagine the consequences and really feel them - the FEAR of action dissipates.
Lastly, I want to focus on the ramifications of Don Miguelıs The Four Agreements book, his definitions of the Agreements, and its relevance to business:
Agreement 1 BE IMPECCABLE WITH YOUR WORD Most importantly, to be impeccable with your word is to never use it against yourself. Putting yourself down will stop the creative process in your business. With other, speak with integrity. Say only what you mean. Your word is your bond you will create consistency in the delivery of your service or product, and create a trust with your clientele, empowering you to expand. Use the power of your word in the direction of truth.
Agreement 2 DONıT TAKE ANYTHING PERSONALLY In business, as a leader, you have to let things roll off your back - nothing others do to you or say to you is because of you. It is their perception or belief. Being attached to your opinion is where freedom is lost. When you are immune to the opinion of others, you can clearly focus on objective avoiding drama and time spent at the water cooler.
Agreement 3 - DONıT MAKE ASSUMPTIONS It is critical to your business to communicate with others as clearly as you can with your intentions to avoid misunderstandings. In my eBook, Small Business Success by Design, I talk about the importance of follow-up and verifying the communication links with employees and clients to firm up next steps, actions, or consequences. Also, have the courage to ask questions and to express what you really want from your employees, vendors, and clients. You will see huge strides in your business success when you do this.
Agreement 4 ALWAYS DO YOUR BEST You will avoid self-judgment, self-abuse and regret.
If you have a small business or are a corporate manager interested in learning more about Toltec wisdom, OR , if you are interested in getting together for a journey to Teo to experience the path of the Toltec , please visit my website or contact me at dennisc@emipartners.com
October 16, 2007
I have such fond memories of growing up in Bay Ridge - Brooklyn, NY in the 1960's. As a kid, we played stickball with a pensy pinkie that you could buy for 10 cents (for those of you not in my generation itıs a pink rubber ball we used for baseball we would lose at least one a day, hitting them through the windows of irritated residents) and enjoyed the magnificent views of Narrows Bay as it linked up with the New York Harbor.
But my fondest memory and perhaps the greatest impact on my childhood was the Presidency of John F. Kennedy. This had nothing to do with affiliations of political parties.
Little did I realize it at the time, but JFK would become a pillar in the foundation of my adult life. I guess it started when Mrs. Jacobskind, our fifth grade teacher (we had great visionary teachers in the N.Y. public school system in those days) would wheel in a monstrosity of a cart holding a TV set with rabbit ears so we could watch the goings on at the U.N. and see President Kennedy give his many speeches to the citizens of our country and on the world stage.
Even as a boy, JFK embodied for me what a great leader was made of. What rang through for me was his passion, his vision and his commitment to his goals. My fondest memory was the speech he gave at Rice University, Houston Texas, on September 12th, 1962, when he delivered his address about the Space program:
Shrewdly, he used the exploration of space not only for defense and economic reasons, but to UNIFY people. His unifying message is in talking about being the strong leader that takes the responsibility to get things done even if they are difficult (not because they are easy). Another trait of strong leadership was his inclusiveness of all peoples with different views (His comment: Why does Rice play Texas, 2 big football rivals?).
So how do these experiences play into the business world?
Because great leaders play the same way in business as they do in life with passion, commitment, determination, courage, faith; and inspiring and motivating the teams and people around them.
There are a group of great leaders in the corporate world who have created great companies (I will detail characteristics a bit later) but let's look first at what we have been impacted by corporate greed at the top with egotistical "leaders".
Tyco and Enron come to mind, as millions of honest working shareholders put their retirement savings into these companies, believing their hype. And how were they rewarded? CEOs who drew millions in salary but also used corporate funds secretly to buy expensive personal items (yachts and condos) and secretly 'cooked' the books to show non existent profit; the most tragic part was witnessing thousands whose life saving were instantly wiped out.
So what does the right leadership look like?
The right leadership will build a repeatable and sustainable ethical business model.
They will observe how their target customers perceive their problems and environment; they will envision the solution to that problem in terms of a product or service they will sell. They will then deliver that solution in an innovative way so that the customer views that company as their differentiated solution every time. The right leader, in a spiritual perspective, is very careful of looking through the eyes, the feelings, the emotions and needs of the customer.
The right leadership focuses on long term quality service or products, delivered the same way, every time. Predictability engenders trust from customers.
The right leadership sells solutions and products - not by deception or by false claims, but by engendering a partnering relationship built on mutual trust.
The right leadership builds great teams by creating a context of accountability and responsibility in which all members can 'play'. Every employee wants to 'play', that is, feel that they are part of the business game. If team members canıt play, they will make up their own games (gossip etc) at the water cooler. All should be heard, and the right leadership celebrates all wins.
The right leadership weaves a path for advancement for their people - recognizing that expansion in energy is necessary for those who display right-leadership qualities themselves. The right leadership creates new teams for those leaders with expanded responsibilities.
The right leadership inspires their employees to shift their behavior (to one of accountability and excellence). They remove FEAR from the equation.
The right leadership has humility about them, and is self-effacing. Gargantuan egos that mandate, and do not set an example are definitely an ingredient for mediocrity or company collapse if that leader were to move on.
However, the right leadership is also feverishly driven by the need for results.
The right leadership provides an environment for employees to grow and advance.
The right leadership takes full responsibility when things go wrong, and when things are successful, they look to factors in their employees, other than themselves as the reason for their success.
October 9, 2007
Global business exchange has now surpassed politics and government as the primary cohesive (or divisive) force impacting the planetıs well being.
Information and high technology, as well as oil based economy, has created a quantum leap in advances in communication, transportation, information exchange, and in food production and housing virtually eliminating barriers and boundaries between countries.
Historically, wars were fought based on the need for ideological (fascism, communism, empire building) and cultural (Crusades, Islamic expansion, Manifest Destiny) supremacy to dominate other countriesı physical resources and to exert its power over their masses. This old energy was, and still is attempting to, consolidate a base of power and dominance then expanding it.
Today, we are seeing a mixing of the old energies focused on the need for power (i.e. United States hegemony in the Middle East in Iraq, etc for oil) with the new consciousness of entrepreneurs in small to medium sized businesses to bring a Quantum Shift in how business operates and affects the world today.
This new focus and consciousness about the way they conduct their business, based on customer satisfaction, concern for the environment, creating trust and transparent synergistic dependencies between customers, vendors, and other companies, is helping to forge new rules and laws that can only benefit planetary harmony and a better quality of life for all of us. This new exchange of energy and ideas is making headway thanks to the glaring examples of a purely greed, corruption and profit oriented focus we have had to suffer through recently (Tyco, Enron, U.S. Debt/sub-prime mortgage fiasco, manipulation of currencies to keep export prices low).
What does this business environment look like today? There is a blend now of a new consciousness with old patterns of doing business; A sense of higher awareness and spirituality with the traditional business world mindset is taking hold.
This is because the conducting of business is really about people it is the exchange of energy. For the past twenty years there is evidence of a greater awareness or consciousness due to this global environment, engendering concern for others in major tragedies, even coming together to work past tragic events.
Entrepreneurs are now beginning to express this higher consciousness through new start-ups, and new strategies and policies that benefit people their employees, their customers, and their vendors.
As a Partner with Ardour Capital Investments in New York, I have seen evidence of this in a number of high technology entrepreneurs who are sensitive to how we impact the environment, and are diligently working on new products and services in alternative and renewable energies to alleviate our dependence on a purely oil dependent economy.
Letıs look at how this energy is exchanged within a business. Energy is exerted through marketing and selling solutions, customers perceiving a need and exercising decisions to buy product, companies engendering trust with quality service, customers responding by conducting business long term with vendors.
There is a major paradigm shift in money exchange as well. Money is energy, being exchanged really as an expression of appreciation for goods or services. Since the Internet, the fact is that money is more digitally exchanged through electronic bank accounts, electronic stock trades, and electronic currency trades and instantly appears ( or disappears) in your electronic accounts! The ability to trade, to grow, is now unbounded by the old limitations of paper and other barter thanks to Internet Commerce! Leverage this concept into the way you expand your business.
The Entrepreneur Shifts
At the core of the new Entrepreneur is the inherent ability to put themselves in the target marketıs shoes How does the customer perceive their market? How can your new idea for a solution be delivered in an innovative way, so as to be perceived as differentiated by the client?
Once you have that idea, you hold on to that dream. It is a seed to germinate into your new business holding the DNA to replicate with quality and to be sustainable and grow.
There are so many rising entrepreneurs with innovative ideas and inventions solutions to problems. There are innovative services to offer as well.
But to apply the new energy the Entrepreneur must first conquer the main culprit to both his/her inner and outer success FEAR. Most entrepreneurs will either suppress it or stunt their growth because of it. Fear of Failure we donıt realize that Failure is but an awesome energy experience to point us in a different direction to reflect back to us what we might improve. But all too often in the past, we have let fear fear of competitors, taxes, litigations, our own perceived LACK of talents/skills/education, or no start-up capital to defeat ourselves before starting.
Most Entrepreneurs are afraid of Failure they want it to work the first time every time without pain!!
The answer is really simple. Get out of the old mindset of fear. What you focus on expands. Focus on your idea, your concept. Envision - see its solution out there in the marketplace, as if it has already succeeded. Allow it to unfold give it its freedom it will evolve into things you might not understand today. Then, bringing yourself back to your current situation, begin to visualize the resources you need to succeed. The new Entrepreneur allows higher realms to work with them as part of the process. So take a moment to bless all of the aspects of your business give gratitude for all the resources you have been given family and business. Really feel the expression of thanks it helps to invoke your energies. Bless your creation for expansion of ideas and processes. This will allow you to expand that energy into others in your business.
As the Entrepreneur, you are envisioning, planning and ready to execute. You realize that your first priority is to lead, inspire, motivate, and also to sell the solution or service. To invoke the new energies and let them expand into your business and marketplace, you must create a context around your business i.e., HOW you deliver your products and services is more important than the product or service itself.
Why? Because, creating a context for your business invokes the non-physical energies of attraction and expansion to sustain your business and to positively impact your surroundings.
How? First, you must create a context of accountability and respect that flows into all employees, vendors, and customers you have contact with. In my business, I termed it the Code of Honor (detailed in my eBook, "Small Business Success by Design"), which not only set standards for product or service delivery, but also more importantly, provided a RESPONSIBILITY context within which to operate. This included such points as reinforcing the team concept, communication, etc.
You transform behavior to get RESULTS instead of fear based action.
We need to be cognizant of the fact that we are where we should be at the present moment. None of you would be in an opportunity if you didnıt have this energy to make a difference.
Stay focused on your intent; Let go of your attachments to desired outcomes. You are blazing the trail for your employees, customers, as well as other new conscious entrepreneurs you will start to attract. You need to remove the boundaries of limitation to free it to take shape.
Donıt waste time analyzing and writing the perfect Business Plan. Create then ACT. Getting out there with your product or service will help to validate your strategy and will eliminate costly mistakes. It will also invoke higher energies that will expand your business faster and in ways perhaps you never dreamed. Writing a business plan later as you evolve your business will serve a better purpose of refining your clarity.
Keep in mind that your expanded energy will have to co-exist with the frustrations of the old way of business financial needs, tax ramifications, worrying about the bottom line, etc. Three aspects to consider here First, Focus on positive strengths and circumstances. What you focus on expands. Focusing on what is right and on strengths dramatically improves your chances (See Kurt Wright's book, Breaking the Rules). Second, humor is critical to your expansion as a business to offset this. This energy provides a creative environment for ideas, growth, and overcoming sticky situations. Third, only focusing on the profit to shareholders, and the ROI will drain your energy and take the joy of creativity out of the equation. Instead apply your energy to the lifeline of your business focusing on the betterment of your employees, the quality of communication and care for your customers, and in building and maintaining strong relationships with like-minded vendors. This will balance your company and the bottom line should take care of itself!
Your word is gospel, it is your truth. How powerful are words? Words are a communication of energy. Being insincere or conveniently hiding glaring facts generate strong repercussions and negative energy that can doom your company. It is essential in your interactions with clients to communicate truthful energy. Make it a priority to engender trust from your clients. Recognize they have a consciousness establishing yourself as their partner in their business solution rather than convincing them that youıre great that they need to buy from you , is the key to expansion.
October 2, 2007
For the past weeks, I have spoken about my concerns and the effects of the credit crunch along with a much weakening dollar. All of these factors impact our daily lives as workers, consumers, and caretakers of our families.
But for those with private debt (which would be a majority), these factors loom large on our ability to improve on, or even keep the status quo on our daily existence. I have recently spoken to several local small business owners who are now impacted in their personal lives for loans they have made against their personal equity in their homes or other assets. Now with an uncertain economy, the ability to repay may impact their ability to hold on to those personal assets. So many are disconcerted, depressed, even panicking.
From a spiritual perspective, we have to look at this financial mess as the darker energies in the old grid patterns. Debt is deeply ingrained as patterns to keep you hooked into sustaining the financial system so others can benefit, not you ultimately. Observe. Trust your sense of disconnection from these old grid patterns as your consciousness moves into the new. Question the mass media hype of things like Big Government coming to your aid - "Fed Cuts" solving market problems. These are designed to keep money in the system and money in your bank accounts. Instead, go with what your intuition based thinking tells you. As Ellie has said, "Do you know truth from fiction?"
Where are we at Today?
To separate your truth from what is being told to you; letıs look at how well we have been inundated with "easy money", the ability to live beyond our true means etc. With all this easyı money, debt grows as if there were no real consequences to borrowing, and no limit to what can be paid back in the future.
I will comment on the American situation because I have lived in it my entire life so my apologies to Ellie's foreign readers. But private debt vis a vis banks behaves the same way in every country.
When I grew up in the 60's, there was a spirit embodied by leaders such as John F. Kennedy that Americans could work within a framework of innovation with trust and honesty. I truly considered it the 'richest nation on earthı, a country that could make a difference with other proud nations. The sad reality is that the American people today are living on borrowed money fostered by greed this is the programming of the old grid pattern.
There is not one sector in the U.S. that has shown any measure of refrain. Government, corporate, and consumer debt are all at record levels. Private debt, which is debt from a private entity, such as a bank, has skyrocketed in the last three decades alone.
The Real Facts
Here are a few tidbits gleaned from the Mother Jones magazine article on U.S. Debt:
In 1970, 51% of Americans had a credit card, compared with 93% today. The average cardholder has 7 cards.
Americans owe $850 billion in credit card debt. The world's 54 poorest countries owe $412 billion in foreign debt.
A "preferred customer," according to one MasterCard vice president, is someone with a "taste for credit" who's "willing to make minimum monthly payments-forever."
60% of Americans have been in credit card debt for more than a year.
The average U.S. household owes $9,659 on its credit cards.
If you owed that much on a card with a 14% APR (the average interest rate) and made 2% monthly payments, it would take you more than 6 years to pay offand you'd pay $4,922 in interest.
1/3 of Americans claim they pay off their credit card bills in full every month.
Inside the credit card industry, these customers are known as "30-day wonders" or "deadbeats."
The average American household spends 14% of its disposable income paying off debts. It puts negative 0.5% into savings.
Last year, banks sent out 8 billion credit card applications, a 30% increase since 2005. Credit card companies spend an average of $58 to sign up a new customer.
Credit card companies earned $90.1 billion in interest last year. They earned $55.2 billion in fees.
A Coming Depression?
I have spoken for several weeks on factors that could produce a Perfect Storm of the financial crisis kind. With the credit bubble, real estate bubble, weakening value of currency, and declining buying power of the U.S. consumer, we also have DEBT problems of the magnitude that were present in the Great Depression.
If a Recession or even a Depression begins, it will be more difficult for households to come out unscathed, and much more difficult for people to recover.
What Can We Do?
The first should be obvious - do everything you can to minizimize your debt. There are many web sites that can help you do that as a strategy ("Google" on 'minimize your debt'). You may want to re-think assets as a way to eliminate the debt and start cleanly.
Now, I am not an investment advisor and this article is not investment advice, but commentary only. I can only lay out some of the opportunities that exist in todayıs market that might be worth your time to investigate.
If it is true that financial markets liquidate, and real estate is already liquidating, then a simple strategy is to be liquid.
Muse on whether the following might resonate: it might not be so bad to park some cash, perhaps some of it in foreign currencies that are strong and stable (Swiss?).
As another option, you may want to look into the idea of gold and gold stocks (mining companies). Gold is a special case, as it is fundamentally money, and money (cash) is at a great premium in depressions. Gold and gold stocks fared quite well in the Great Depression of the 1930's. Commodities did terribly, as did stocks. Gold is now jumped over $700/ounce; some predict will be over $1000 an ounce by next year.
When the US real estate market (and the other real estate bubbles everywhere) drops by perhaps half or more in 2 or 3 years, you can then go buy property again. The same holds for stocks.
Suppose that you like ABC stock. After the stock declines, you can buy back into ABC for perhaps half what it is now. I All stocks will go down if there is a world recession. Maybe gold stocks would do well after the initial stock drops.
But, in any case, consider that many stock indexes are at all time highs, and a major correction is due anyway. If the market is bear, then being liquid is a risk free strategy.
In any case, you don't have to get rid of all stocks or such. But you could move a portion to cash and see what happens. You might be happy having done that.
One thing about the USD and stock markets is that they can both still hang in there for a while. But the odds appear to be well in favor of major stock corrections emerging this year anyway.
September 25, 2007
Last week, I spoke about the credit crisis. However, there are really three major phase changes happening in world financial markets today. These are:
This week I would like to discuss the problems with currencies in our global economy, since much of the problem is tied to the credit crisis I discussed last week.
The dollar has taken a pounding since the Fed slashed its benchmark rates on Tuesday by half a percentage point to 4.75 percent.
The deep US rate cut has raised concerns about whether it can ease the credit squeeze.
According to one analyst at Sumitomo Mitsui Bank: "Appetite for the dollar is weakening due to receding hopes that rate cuts can resolve the credit crunch².
I watched the Fed chairman Ben Bernanke make his testimony at a Congressional hearing on the Fed decision. I noticed a distinct sense of fear and anxiety while he was discussing the Economy. He said that the US economy and markets had reacted to a wave of foreclosures in the US sub prime, or high-risk, mortgage sector in a manner that has "far exceeded even the most pessimistic estimates."
As I pointed out last week, more homeowners face difficulties making payments on adjustable rate mortgages that are being reset with higher interest rates.
The expectation of bigger interest rates cuts in the US is now having a huge affect on global currencies.
The US Dollar is weakening relative to other currencies in the world.
Why is this important?
Because there is a delicate balance of currency values which determines the global trade in the world. To illustrate, China's booming economy is based on its export of manufactured goods - mainly to the U.S. So, U.S. dollars are spent on Chinese goods in places like Wal-Mart. The Chinese are paid in U.S. Dollars. Because so much money changes hands internationally, the U.S. and Chinese agreed to set ('pegged') their currency, the YUAN, to the U.S. dollar's value. Without this, their exports would become more expensive to buy! In addition, they have to invest in our currency to keep the machine going.
The Chinese have bought $800 billion of our treasuries!
The Japanese have bought over $3 Trillion!!!
Why would a foreign government buy so much of out currency?
TO KEEP THE VALUE OF OUR DOLLAR HIGH SO WE CAN CONTINUE TO BUY THEIR EXPORTS!!
This setup can only work if the dollar stays high relative to the economy. What we are seeing now is a credit crisis (also trade deficits) that is touching the ability of the dollar to stay above an established index (over 80, relative to other currencies).This has been a sort of benchmark for the economic order of things since 2002, a low. With the current credit crisis, China has an ongoing conflict with the US regarding the Yuan, which is now trading higher relative to the dollar. The Chinese have threatened to dump USD reserves if the US pressures China further on trade issues. If that were to happen, we would be obligated to repay this debt, our dollar value would fall perhaps 40%!
We are increasingly seeing the weakness of the dollar now relative to other currencies.
Yesterday, for the first time in many years, the Canadian Dollar is on a par with the U.S. Dollar.
Russia is in the process of building the strength of the Ruble into a super resource currency, and is getting rich selling resources and oil with record prices in these.
And take a look at this comment on the strengthening Euro:
"It is all about dollar weakness and Euro strength this morning again, with Euro/dollar touching a new record high of 1.4120," said Audrey Childe-Freeman, economist with the Canadian Imperial Bank of Commerce in London.
The Euro is gaining status as an "alternative Reserve Currency" for the world banks - as there is concern the USD is losing its advantages. The OPEC oil exporters threaten to use Euro as a standard, sidestepping the U.S. Dollar. Again, as I spoke about, this is due to the weakening US economy and huge trade and fiscal deficits and record debt. Also included is declining US interest rates which will reduce the interest rate premium US bonds have enjoyed, and supported the USD.
And probably the most impact on global trade is now the increasing strength of the YEN, Japan's currency. Most of us have never heard of the "Yen Carry Trade². Because the interest rates in Japan have been about 1% forever, investors and the like borrow money in Yen to finance trade in other currencies. When the interest rates and value of the Yen go up, this affects the ability for all those debts to be repaid. So the Japanese bank is intervening to keep the ratio of the U.S. Dollar to the Yen steady, no small feat.
WHAT DOES ALL THIS MEAN TO US?
A major change may for the world economy, trade balances, and just about everything economic. The whole system has been based on a relatively strong USD.
A proactive approach would be to begin investigating GOLD and alternative currencies (i.e., Euro) as other investments for your portfolio, which we will investigate in future posts
Thursday September 20, 2007
Wednesday September 19, 2007
Today -- U.S. Real Estate Bubble and Credit Crisis:
How did We Get Here and What Can We Do?
September 18, 2007
As a reader of this site, you may realize by now that this whole game is being played by Consciousness -- the opportunity is to play through Consciousness, not in the illusion of 'drama and lack of' in human life. Ellie's work has helped me to shift my own Consciousness (Higher Self) in how I deal with 3-D "realities".
Likewise, you need to transform where your power is invested in the illusion. This includes an area which most people focus heavily on – their financial situation. I would like to spend the next several weeks writing articles specifically on the Economy and Finances.
The goal is to empower you in this area - to bring a shift in Consciousness to achieve clarity to your thought process and to your decision making.
In her August 25, 2007 article, Ellie put the economy in context:
"Trust that everything about this reality is shifting with forces so strong it is all we can do to keep afloat in the rising flood waters that shift everything. Look around ... the weather ... the people ... the economy ... politics ... religions ... the Earth changes and shifts."
A 'bubble' exists when an asset's (whether it be home, stocks or liquid cash)
perceived or psychological value exceeds its real economic value. In the last 5
years, the real estate market shot up 80% while real income only increased 2%
and population barely grew at the same rate, in the same time period. The
reality is, if the most fundamental drivers of real estate prices –
increasing income and growing population are simply not present, there was no
rock solid basis for this increase. While itıs true that perceived value is the
only value that matters when buying or selling (such as hot housing market
prices until now) , it is true
that sooner or later, you cannot fool all of the people all of the time.
We were fooled, or chose to ignore once again (as we did during the Internet stock craze) that we could build our wealth upon a frenzy of unrealistic speculation. But once again, as in previous times in history, much of this speculation was fueled by the complicity of banks and government to provide easy credit which would drive huge profits to those who engineered the mess in the first place. These are old, recurring patterns of energy in the illusion which focuses on profiteering by greedy individuals and companies at the expense of the many.
In 2000 and on, investment bankers realized they could gather a bunch of mortgages
together and sell them as securities and derivatives packages. The funding of
the mortgage universe shifted from originating banks (In the 'old' days –
you had the originating loan document from the original local bank) to the
general investor (Big banks, insurance companies etc and even companies and so
on). The investment bankers found
an insatiable appetite for these mortgage derivatives. All of a sudden, banks
realized they could make lots of fees originating mortgages, and just offload
them to the insatiable market for mortgage derivatives, and this market was
world wide.
[The Mortgage Backed Security - MBS was invented by investment banks to allow investors to pool money into the mortgage markets as these were seen as very stable and predictable and marketable. The mortgages were gathered together into a large pool, and then a security issued for them and sold to investors. It was seen as a way to get around lending restrictions that banks usually had. It was wildly successful and popular, generating huge fees for investment banks that issued and underwrote them. These were rated as "AAA" the highest secured debt investment that Hedge Funds, Retirement Funds, Pension Funds and even Money Markets would invest in for higher returns for themselves and their shareholders. There was also tremendous demand for the so called AAA rated securities world wide.]
It was no coincidence that, while this market vigorously gulped down every issue of these MBS, credit standards relaxed significantly. First, bankers reduced the down payment requirements to 5% or less. Then, they used teaser ARM's (Adjustable Reset Mortgages) so people could qualify with the lower payments initially. Then they flooded the sub prime market (Those who traditionally would not have qualified for a mortgage based on credit scores 620 and below) with financing, and so on. The sub prime applicants also share responsibility for this mess - by knowing they could not ultimately afford their payment.
Now, while the housing bubble continued to rise, everybody was fine. If borrowers got behind on credit cards or whatever, they could get a home equity loan and pay them off. And as you know, people used their appreciating homes to build more debt.
The total debt outstanding for US mortgages roughly doubled in the past 7 years, from roughly 10 Trillion to 20 Trillion! Many home markets doubled in price in a short time period. So, new buyers had the same houses, but now with double the mortgage payments on them.
Many of the ARMs have reset, meaning formerly interest only loans have now compounded with higher interest rates and principal payment, often times tripling the original payment.
This is now becoming a collapsing credit bubble world wide centered on one of the biggest credit markets - mortgages, and then spreading to other huge credit markets.
Right now, home prices have not seen the full extent of price drops due to the collapse of the credit markets that funded them.
These price reductions will result in less consumer spending.
The US consumer is 70% of the US economy. In fact, the US consumer
accounts for an incredible 30% of world GDP!
Lenders have raised credit standards significantly. Many critical credit markets are freezing, and the damage may be spreading world wide. Money has stopped flowing to mortgage markets, and to other lending markets.
This could lead to a complete slowdown in the economy leading to recession or depression.
Don't just buy into a false sense of security or the illusion that a "benevolent" government will protect your assets, provide insurance or measures, or has the power to stop forceful market volatility with interest rate manipulations and the like , in the credit crisis we are seeing right now. Begin to proactively assess your asset allocations for investments susceptible to large fluctuations in the market based on what I have described above.
Re-invest power (your power to make decisions) based on facts and assumptions from your own research. Develop a trust of your own inner wisdom and gut sense of what you think. Learn to resonate with intuition, or Consciousness. I have seen ³talking heads² on financial networks such as MSNBC and Bloomberg go from spinning a robust economy, and 6 weeks later, painting a doomsday scenario. Remember, all are talking from their own experience and reality - including me!!
Here are some areas to evaluate in your asset holdings:
Money Market Funds: Check to see if these funds are FDIC insured. Some interest checking accounts in regular banks may be called Money Market Checking but are FDIC insured up to $100,000 per depositor. In brokerage houses, these are most likely NOT insured. Think about moving your liquid cash to an FDIC fund or a CD account. And, guess what? Most Money Market Funds are NOT guaranteed a $1.00 per share value. And, most are invested in --- MBS!! This means that even Money Market funds are susceptible to LOSING VALUE!
Get Liquid: You should have quick access to cash for short term expenses (at least 3-months) through ATM or electronic banking means. You can't assume that there wonıt be panic setting to withdraw funds if there is a real downturn in the market. Some investment accounts, like Vanguard, actually put a 30-day wait period on withdrawal requests, others have promised to move requested withdrawals but delayed them!
Investments in a Credit Crisis: Other than the home you may live in, avoid future mortgages on property. If possible, invest in property or other income producing assets with cash. We havenıt talked yet of other liquid assets, ie. Foreign currencies, Gold Bullion as a hedge to the credit crisis - but I will do so in the next several weeks.
ALPHABETICAL INDEX OF ALL FILES