Category Archives: Industry

Needed: A Psychic Stimulus Package

Following is an interesting and relevant blog post from Tim Sanders, one of the most influential and engaging speakers i have met.

What this country needs is a psychic stimulus package.

The current focus is only part of the solution. The “system” that the government is trying to fix is comprised of a set of rules, regulations and transactions that make up the banking system and central economy. The government’s stimulus package pours adrenalin into the system, along with a few sparks, and waits for a beating heart.

Meanwhile, the individuals crumble as they conduct their in-house run on the piggy bank. They break open 401(k)s, and then stuff the cash into a mattress. They turn in their car and buy a bus pass. They cancel the family vacations, new fall clothes and their church tithe.

Each act of prudence on their part reinforces the gravity of the situation. The shopkeepers that served them see the till getting skinnier every day. They start to layoff the newbie’s and non-relatives. The newly unemployed turn in their cars, put off any new things like clothes and the downward spiral deepens by a factor of one family.

Eventually, all of our creativity is poured into shrinking the flow of pennies out the door. If things are really as bad as the news-folk are telling you, this is only going to stave off your bankruptcy by weeks. You think you are rearranging your finances to survive the storm. I think you are rearranging deck chairs on the Titanic.

The politics of scarcity haven’t served us well, and the nonstop fear-sell has worn us down to a spiritual nub. For the first time in our lives, we truly have to have faith to do anything: spend, lend, invest or replenish. With each passing day, the dread inside us drains energy until, at some point; we just glaze over and adopt a new mantra: whatever.

Meanwhile, scarcity spreads from stuff to success. Jazz idols (Etta James) and blockbuster writers (Stephen King) lash out at young successful competitors in the new world of “there’s not enough to go around.”

While this example comes from the entertainment pages, you likely see this at work as the employee of the month is slagged at the break room table by forlorn office mates who’ve lost their ability to share a little success. Eventually, scarcity will spread to our concept of time as we are asked to do twice as much with half the help. We’ll go from hustling to frantic scrambling as we feel like we are sinking in the sands-of-no time. We’ll cancel meetings, special dinners, Saturdays with the kids and the summer getaway. Checking email at the dinner table, we’ll resent our employers (who put food on the dinner table) and sink further down into the spiral of helpless self-doubt.

At some point, this psychosis will snake its way into every company, city and church—until the entire nation is embroiled in personal competitions for all remaining scraps: Jobs, profits, friends, awards, lover and time. It will be dog-eat-dog.

I get that our evolution is more environmental than genetic as I again point to the need for a psychic solution to our crisis of scarcity think. Person by person, or family by family, we need an injection of confidence and daring-do back into the collective consciousness of this nation. We need to spread the message of abundance: that we can find enough to go around. To really stimulate the economy, we need to restore their ability to trust and dream. We must help people find a better perch or perspective, one that gives them the confidence to declare “there’s enough to go around”, even when the manna has not fallen on their yards (yet). We need to promote a new way of thinking.  Currently the gurus of personal finance promote a new way of acting. But that’s not addressing the root of the issue.

We’ve got to react to the outside world from a different starting point: “If we are willing to work, adapt and trust each together, I believe there’s enough to go around.” Please join this conversation by hitting the “Reply” button and telling me how you promote this paradigm shift. I’m especially interested in your personal stories of how scarcity has impacted your life, or the life of someone you know. I’m really interested in your stories of how people are rising up like a Phoenix from the ashes, and inspiring you to believe in abundance.

Deleveraging the U.S. Economy

The Chinese government, the biggest buyer of U.S. debt, expressed concern about American deficits and its impact on U.S. Treasury obligations – a budget that will raise the national deficit to nearly $2 trillion dollars. That’s $2,000,000,000,000.

Bernanke views this intervention strategy as critical and necessary to avert a deeper downturn. But as you know, spending money you don’t have can come with it some dire consequences.

This economic jump start strategy of spending America out of this downturn will need to be repaid one day, hopefully from economic growth and fiscal restraint. But deficits generally spawn higher inflation, higher interest rates and a weaker economy.

Top Issuers End Year with No Growth

The top four issuers of Visa and MasterCards, posted an annual gain of only +0.2%. In addition to extraordinarily weak holiday spending and lower fuel prices, growth was dampened by proactive risk management actions such as tighter credit standards, reduced credit lines and closed inactive accounts.

BofA, Chase, Citi and Cap One reported $510 billion in year-end credit card outstandings, compared to $509 billion for year-end 2007. Chase posted the strongest gain of 3.6%, excluding its recently acquired WaMu portfolio. (WaMu outstandings were $28.3 billion for year-end 2008.) BofA was down 0.8% to $182.2 billion, including about $20 billion in non-U.S. cards. Citi’s outstanding declined 3.6% to $95.1 billion and Capital One inched up by 1.7% to $70.9 billion.

Overall, the average credit card balance per carded household ended 2008 at $10,728 with a median per household of $7,066.

Mailbox Lighter?

Yet another positive development during this gloomy economic environment. Apparently the financial downturn has permeated the marketing departments of credit card companies, with direct mail credit card solicitations down 30% in 2008 to 3.9 billion. This is the lowest level since 2003.

Is Trillion the New Billion?

As politicians, economists and financial analysts throw around numbers like $9.4 trillion in sub-prime loans, $700 billion in wall street bailout funds  and an $800 billion-plus stimulus package, let’s provide some perspective on just how big a trillion dollars is… think about it like this:

“To put a trillion dollars in context, if you spend a million dollars every day since Jesus was born, you still wouldn’t have spent a trillion,” Senate Republican leader Mitch McConnell said.

That is pretty humbling.

Bud Selig paid more than $18 million in 2007

Amongst all this chatter about executive compensation limits for corporations, I was absolutely furious when I saw the following: Only 3 players made more than Selig.

Bud Selig is he the highest paid commish in all of sports, by a landslide. I think this explains why the owner of one of the poorest teams in MLB continues to dismiss a much needed salary cap.

I often think of sports as a microcosm of life. This is a clear example of how the game will continue to suffer until the system is fixed. Like the auto industry in Detroit or the banking sector in New York, serious reform is needed to maintain a healthy and functioning system. Unfortunately it seems that we don’t like to institute restructuring until realizing collapse, when it’s already too late. This notion of ‘if it’s not broke, don’t fix it’ must be amended if we wish to continue to prosper as a society. What about fairness… when will this be a national mantra?

Hyundai Assurance Program

Did anyone see the Hyundai super bowl ad? I obviously missed it since I live in Canada and am devoid of any creative advertisements whatsoever. Instead we are forced to watch promo spot after promo spot for the network’s ridiculously weak spring line-up because they couldn’t even sell the inventory. This includes hits like Corner Gas and Gary Unmarried. By the way, when did Jay Mohr become the male version of Leah Remini? He used to be a crack up. Oh yeah and how many times did they promote BNN (The Business News Network)? What could they possibly talk about all day – the price of oil is down another 2%. Even CNBC is pretty much unwatchable after 15 minutes and they have ample business in the U.S.

Anyway, back to the Hyundai Assurance program… if you lose your job within a year of purchasing a new automobile (assuming it is financed or leased) they will let you return it. What an amazing message. Something innovative in the midst of the automobile industry turmoil. How long before Detroit tries something like this? In super bowl fashion, I say the over/under is 2 years.

You can watch the commercial here: