The Green Machine
November 22, 2008
Last week I had lunch with Tom Delay and Robert Kennedy Jr. - separately, of course. Interestingly, although these two men come from completely opposite sides of the political spectrum, my conversations with both men centered around sustainable energy.
Even though Tom Delay and Robert Kennedy Jr. have different opinions about global warming and green technology, they are both interested in green technology and how it plays a role for America in the 21st Century. What does this mean? To me, it means that Green Technology is not (or should not be) political. Whether you believe in global warming or not, that’s not really the point. The point is that as the population grows, we (as a planet) will have a growing need for energy resources. Our current sources of energy (ie. oil, gas, coal, etc.) are finite and will someday run out. And they create pollution (CO2, etc.). The world will have to move to sustainable energy. It is inevitable.
In the 1960’s the United States had a mission to put the first man on the moon. It was a project that all Americans rallied around. It helped make us a great nation with a common cause. In the 1990’s, we had a dot com explosion and the U.S. lead the world in technology.
A sustainable energy project is what is needed in this country. America has to take the lead in the 21st century in Green Tech. As you all know, we are in a recession. Things are tough out there right now. Banks aren’t giving very much. The Big 3 automakers are on the verge of collapse and begging for money (although their Japanese counterparts seem to be doing ok.) In order for our country to get back on track and get our economy out of the dumps, we need to take the lead in green technology. It should be our new “moon landing” and our next “dot com” boom. The time is right.
Axiom has joined a Green Consortium where we are working with Green Tech and Nano Tech companies in order to get funding for Green Projects. The money is there for Green Projects. Its actually one of the few places where money is still available. So I like to say there is green in Green.
If you have a green project or if you are a green company, please contact us to see if we can work together. Send any correspondence to bill@theaxiomteam.com.
By the way, Thomas L. Friedman, the author of The World is Flat, has a new book out called Hot, Flat, and Crowded. I highly suggest reading this book.
Deleveraging America
November 3, 2008
The word of the day is “Deleverage”. This is what is happening in our economy today. Over the past 20 years, both individuals and businesses alike (as well as banks) used leverage (ie credit) to fuel the economy. Leveraging allowed for the boom during the Reagan years. Leveraging allowed for the dot com bubble and the real estate bubble. The problem came about when the banks started making credit available to anyone. The goal was to give everyone in America the opportunity to own their own home. It seemed like a good idea at the time. Add to that the fact that consumer debt now stands at $13.8 trillion (up 20% since ‘05), and stagnant wages, and its a recipe for disaster. Our country, from each individual person up through business up to the banks have all used too much credit assuming that the good times would go on indefinitely.
Last year about this time, we saw cracks beginning to form in the system. Banks started giving less money to small businesses. The criteria for getting credit from banks changed during the first quarter of ‘08. It seems the banks and the Fed underestimated the magnitude of the problem. The credit crunch kept getting tighter and tighter until last month it came to a screeching halt. Banks were not even lending money to other banks. The banks were holding onto their money for dear life. One by one, banks and insurance companies started to wobble. The problem has become global in nature. The rules of the game are changing, and unfortunately, nobody knows what the new rules are.
One thing that we’ve seen recently is that banks and credit card companies are lowering everyone’s credit limit to the amount that you are currently using. So, if you have a $20,000 line of credit and you are only using $5,000, then your limit may be reduced to $5,000. We knew something was going on with AMEX for the past month because they were declining all of our clients credit, regardless of their personal credit score. They were not offering increases. And they were lowering all credit limits. It came as no surprise when they layed of 7000 employees last week.
So unwinding all the credit that is out there is called Deleveraging. Deleveraging is what causes a credit crunch. It happened in Japan in the 1990’s which lead to Japan’s “Lost Decade” where they had little or no growth. Hopefully, we’ll be able to get ourselves back on track within the next two quarters.
Everything is cyclical, so its only a matter of time before the banks figure out what they need to do and start lending again. In the meantime, everyone is going to have to go on a credit diet. We will all have to learn to live a little more within our means and not rely on so much credit. This will be painful for a lot of people and businesses. The solution is to be a little more creative and a little more strategic. There is no need to quit. Hope is not lost. There is still money out there. You just have to know where to look.
If you’re having trouble obtaining money for your business, give us a call. We can help with your strategy.
Behind the Scenes at WAMU
November 3, 2008
“At WaMu it wasn’t about the quality of the loans; it was about the numbers. They didn’t care if we were giving loans to people that didn’t qualify. Instead, it was ‘How many loans did you guys close and fund?’” This according to former WaMu underwriter Keysha Cooper. She could have worked at lots of companies and come to the same conclusion. She shares her story as one of 89 employees whose accounts are contained in a suit against the thrift by an Ontario pension. She says starting about 2006, the company started ramping up the pressure to close loans at all costs. No loan was suspect. “You were like a bad person if you declined a loan,” she said. She was sure that a lot of fraudulent activity was taking place. She ended up being put on leave for refusing to sign off on a loan that was plainly just wrong. Brokers sometimes tried to bribe her to approve loans. This is akin to inviting regulation.
The Corporate Code, Only $995
