Archive for the ‘Credit Crisis’ Category

Has The Economy Hit Bottom Yet?

March 18, 2009

bottomyet

This graph is very interesting (from The New York Times). It shows the price-to-earnings ratio and gives us hope for the future as well as some relief that the bottom is not far away – if not here already. On the other hand, you can see that there is a possibility we will get to the lows of the 20′s, 30′s and 80′s – which means more pain on the way.

What explains the huge run up from the 80′s to the early 2000′s? and why was this period very different from the previous ups and downs? The widespread adoption of new technologies. Some of the gains from applying technology have been overrated, however for the most part these gains have resulted in significant increases in productivity.

Even if you don’t follow the markets, you are impacted by them. When the market moves up (prices rising) it is a lead indicator of what we will see on the street in the not too distant future. What happens to stocks usually preempts what happens in the overall economy. Prices rising indicates optimism, prices falling indicates pessimism. The better the future looks, the higher the ratio of price-to-earnings will go.

You may be thinking, “wow, sounds like the markets are run by emotion”! You are right, with the two primary emotions being fear and greed, with a diverse range in-between.

To be fair, there is more at play in the markets that emotion… there is also the data, the facts, the ratios. Emotion without facts is irrational. Facts without emotion are inaccurate or incomplete. As you can see, it takes both to be successful.

For those of us born in the 70′s and 80′s this is a new experience (in the 2000′s). I was born in the 60′s, so you can see the slide down to the 80′s. The benefit of the graph is that you can look back a hundred years or so and see the repeating pattern. Which brings me to the good news; we will hit bottom and the wild ride up will begin again!

© Goldzone Education. All rights reserved.

I.O.U.S.A.

March 17, 2009

This video is very well done. I.O.U.S.A. boldly examines the rapidly growing national debt and its consequences for the United States and its citizens. The graphics are awesome and the content is very well presented. The full version is available (highly recommended) on DVD from PBS.

youtube-i-o-u-s-a-byte-sized-captioned

youtube-i-o-u-s-a-byte-sized-captioned

This movie requires Adobe Flash for playback.

© Goldzone Education. All rights reserved.

The Financial Crisis: Eroding High Standards

March 9, 2009

This article describes a phenomena that is behind some of the largest corporate collapse we have seen in history. Corporate collapses, particularly those caused by massive financial losses are not often the result of a single action or cause, but rather a combination of factors. This complexity can often cover up the most significant aspect of what went wrong. A thorough investigation by people who know what to look for can often reveal lapses in standards, honesty and ethics long before the entire collapse of the organization.

These lapses often (but not always) begin at the top – with the leadership and then filter down throughout the organization.

The Lower Truth Phenomena

We are writing here about businesses and organizations, however this same scenario plays out in interpersonal relationships with a similar effect.

Whenever you work for or with a person who operates at a lower level of truth, honesty, values and standards than you do, you will be pulled down to their level of lower truth, honesty, values and standards.

This does not happen overnight, it occurs slowly and insidiously over time.

Here is an example of this mechanism in operation:

Lets say you are a high standard, high truth person who values honesty and you enter into a business partnership with another person. This can also occur when you work as an employee for lower standard management. In the below example, we are using a partnership where each partner has equal say, in situations where management has more say and power over you, this phenomena is greatly exaggerated.

Your partner purports themselves to be the same as you, they say they value honesty, have high standards etc. On the surface this appears to be true and you believe them.

Taking them at face value you proceed to invest a significant amount of money, time and energy in the venture. In the course of doing business, you make a lot of promises and agreements on behalf of the partnership.

When things are going well, everything is flowing and proceeding to your satisfaction. And then one by one, things begin to go wrong. There is no apparent explanation for the small failures so you proceed forward regardless of the “taps on the shoulder”.

As things deteriorate, and more and more stress comes into the project and the partnership, you are unable to keep all your agreements and promises. This does not happen overnight, it occurs one small thing at a time. A supplier doesn’t get paid on or before the date promised. A client doesn’t get the exact order as promised. A team members salary is a few days late with no communication. A deposit is made late. A check bounces etc.

Slowly but surely your high standards and ideals have been compromised and you find yourself out of integrity with yourself. This causes you to feel ashamed and can be very painful.

In order to deal with the pain of violating your high standards and ideals, the first thing you do is lower your standards and justify these lesser ideals. These lowering of standards come through your language as justification statements that sound like this: “oh, you can’t do such and such in this business and be successful anyway” or “everybody has this problem in this business” or “in this country, it is normal to pay a few days late and no body takes any notice of it, so it is no big deal” or “it is my intention that matters, I am not deliberately misleading people” etc.

Eventually a few days late on payments becomes 30, 60, 90 days etc. If the cycle continues unchecked, you will even justify not paying people at all, in order to pay others. This is often called, “robbing Peter to pay Paul”.

The next thing that occurs is that you don’t get paid on or before the date promised. A supplier doesn’t get you the exact order as promised. A payment to you is a few days late with no communication. A deposit is made late. A check bounces on you etc. In other words what you have done to others comes back to be done to you…

For you, as a high standard person, you take all this very personally. Your partner appears upset too, however is more aligned with these lower standards anyway and will lower their standards further in order to “make it work”. This leads to conflict between you and your partner over keeping agreements and maintaining high standards of conduct and honesty.

At first you take full responsibility that it must be your problem and your partner reaffirms this. Your partner somehow convinces you to be the front person as your standard of responsibility is higher than theirs. So they will naturally tend towards blaming you and abdicating responsibility to you.

As your standards continue to decline, it becomes more and more painful.

In order to deal with the pain, you lower your standards more and deny that you had higher standards in the first place. Before you know it, you are operating at a very low level of truth, honesty, standards and much reduced in your power, charisma and confidence to the point of giving up.

It is often at this point that the entire project fails and you experience a paradigm crash. Everything stops working.

To recover from a situation like this takes personal courage to review what actually happened and to reclaim your level of truth, honesty and high standards.

To maintain high standards it is imperative to connect, work and associate with people of similar or higher standards than you.

© Goldzone Education. All rights reserved.

Towers of Glass, Feet of Clay

February 25, 2009

 

royal_bank_building-smallI have been reflecting further about the “financial crisis”, and recalling a book I read in 1982 called Towers of Gold: Feet of Clay – the Canadian banks, by Walter Stewart.

In a conversation about this with my colleagues I happened to say towers of glass and perhaps 27 years later, Glass is more descriptive. In 1982 I was working in the oil and gas industry in Canada and this book was written about the Banking Industry, the mortgage crisis and the oil prices. These themes are again relevant in 2009.

In Towers of Gold the title was based on the Royal Bank in Canada with a gold colored glass tower in Toronto. Gold had more relevance then as some of the money (not much even then) was actually backed by gold bars. Many eons ago most of it was either made of gold/silver and later backed by it. Now most of our money is floating around electronically in bits and bytes, and the cash is made of plastic, paper and mostly cheaper metals. I have a special account (premier customer – which means more money deposited) with a major international bank and the interest on this was very low and now has dropped to 0%).

I used to have judgements about people who keep their money in or under the mattress and now I can laugh at myself because there is not much difference. Judgements are often like that, what goes around comes around. I wish I had some gold bars.

I feel this title reflects what is happening very accurately, now there are even more towers of glass. There is competition between top cities about who can build the tallest tower, one about half a mile into the sky. Now most of these projects are compromised and construction financing has been choked almost to death. Containers of steel and glass which were in such short supply (some orders 3 years ahead) were turned around from China and returned to their origin. Each one of these events has an impact on multiple people, industries, and countries. These really are the waves of impact. The waves move around the world faster than the earth spins.

These towers are built to be earthquake proof, tidal wave resistant, fire resistant and all these events are insured. This is where the foundations (the feet of clay) are being stretched beyond anything imaginable. And most will fall short in the test over time… I am refering to the financial foundations and also that of people, relationships, organizations, communities, and countries.

Like the banks, we all have glass towers that we build (what we show the world; the act, the ego, the stuff) and feet of clay (what we are at the core of our being; the real self, the essence, the ordinary humble person). Glass towers are fragile, and someone can always build a taller one.

I see all this as an opportunity to lead where it matters. When the waves of impact hit us, we cannot control the wave, only our response. By building personal foundations that are deep, strong, resilient and mostly invisable to everyone else, we can withstand the waves and even become better human beings. We can choose right action no matter what prevails.

Waves of Impact

February 24, 2009

underwater3

Nearly everyone is feeling the financial crisis, not all at once, but rather in waves.  These waves or fluctuations go in and out like the ocean. Each one bringing more insight, more truth, more change and with each contact ever greater connections that impact our reality. Eroding the illusions and ideas that we took for granted.

Ideas like banks are stable and real estate is a safe bet.  Ideas about the hedge funds, insurance companies and finacial guru’s to name a few.  Ideas about government and capitalism and private business.  Ideas about retirement and security. All of these ideas are being challenged, exposed and the bottom line, once so clear is a hazy blur. No one seems to know exactly when and how the whole experience known as the financial crisis will end. As quickly as solutions appear, yet another wave appears and the impact keeps growing.

More than ever it is time to lead not follow.  Calling this a financial crisis does not do justice what is really going on and how many areas of life this will impact.  Relationships are being torn apart, stress related health issues are prevalent, mental illness, lives in transition and more things than I can write about. Money or lack of money is not the core cause, and neither is it by itself the long term solution.

People and organizations will have to go through transformations to win. Getting by is not enough.  I believe this an extra-ordinary opportunity to step out of the trance of mediocrity and into the ideals we desire. Cooperation, harmony, compassion and truth will have a greater audience than competition, greed, self-interest and illusions of reality designed to serve a few.  We can choose to evolve to our highest potential together  and rise above the waves. Or we can choose to do nothing, step into fear and denial and eventually drown in them.

Now is the perfect time to re-define who we are.  To internalize our self-worth as seperate from our net-worth. To find fulfillment in life and not just on paper (bank statements, share certificates etc). Time to play the game no matter how challenging…play to win!

DOW Jones Over One Week Versus Six Months

February 21, 2009

dowjones_oneweekvsoneyear

Check out this chart!  What I find interesting is that the one week view of the Dow Jones Industrial Average looks very similar to the six month view. The chart shows a slow decline, then a cliff, then a slow decline again. The down trend looks at first glance to be very similar.

Some conclusions:

  1. All data must be read within a larger context
  2. Patterns are clearly repeating
  3. The trend appears to be downwards
  4. Have we hit bottom yet? Tell me when you figure that one out!

What Is The Credit Crisis?

February 21, 2009

Check out the below video about the credit crisis, what caused it, how it is escalating and what the connection is between house owners, brokers, bankers and wall street.

Even if you understand the dynamics of the crisis – this video can help you to explain it clearly to others.



Follow

Get every new post delivered to your Inbox.