Coaching Tip: The Leadership Blog

The Social Business of Human Resources

The social networking impact on business is becoming of increasing importance to those who manage the human resources (HR) function in an organization.  That is the reason for this week's new HR bloggers carnival at the Social Advantage. 

Did You See This Economic Depression Coming?

Today's financial and economic tribulations were a long time in the making. Many people ask, "Why didn't someone see it coming?"

But a New York Times bestselling book did see it coming. More than 100,000 people read it in time to protect their wealth and I was one of those people.

We read this about real estate:

What screams 'bubble' – giant, historic bubble – in real estate today is the system-wide extension of massive amounts of credit to finance property purchases.... Many people have been rushing to borrow the last pennies possible on their homes. They have been taking out home equity loans so they can buy stocks and TVs and cars and whatever else their hearts desire at the moment. This widespread practice is brewing a terrible disaster.

And this about stocks:

...the number one precaution to take at the start of a deflationary crash is to make sure that your investment capital is not invested in stocks, stock mutual funds, stock index futures or any other equity-based investment.

About Fannie Mae and Freddie Mac:

Investors in these companies’ stocks and bonds will be just as surprised when [Fannie and Freddie's] stock prices and bond ratings collapse. Most rating services will not see it coming.

About junk bonds:

Don't think you will be safe buying bonds rated BBB or above. If you have invested in municipal bonds, consumer debt, real estate debt, junk bonds or anything other than top-grade paper, sell it at today’s lofty prices.

All these observations are from Robert Prechter's Conquer the Crash, first published in early 2002, when the Dow was above 10,000 and the financial world was partying around-the-clock. Fast forward to today: The average U.S. homeowner has suffered a decline of 30% to 40% in property value. Stocks and commodities had their biggest fall since 1929-1932. Fannie Mae is a zombie corporation under the government’s protection.

The Way We Communicate

Last month, I had an opportunity to talk with Ray Tomlinson, the guy who put the @ sign in your email, about his invention becoming the bedrock of communication.   And since less is more, I told Ray that I forgave him for filling up my email inbox everyday.

Email has had a good run as king of communications.  However, a new generation of social networking services is starting to take hold---services like Twitter and Facebook and countless others are vying for a place in people-to-people communication.  And just as email did more than a decade ago, this shift promises to profoundly rewrite the way we communicate--in ways we can only begin to imagine.

Email continues to grow.  In August 2009, 276.9 million people used email across the U.S., several European countries, Australia and Brazil, according to Nielsen Co., up 21% from 229.2 million in August 2008.  While the number of users of social networking and other community sites jumped 31% to 301.5 million people.

Consider, Twitter.  The service allows users to send a 140-character message to people who have subscribed to see them, called followers.  You can also create links to particular users in messages by entering Ray Tomlinson's @ followed by their user name or send private "direct messages" through the system by typing d and the user name. 

Of course, the obvious downside to the constant stream of messages is: It's a constant stream...and...that can make it harder to determine the importance of various messages.  That's why a number of Twitter software programs filter Tweets by tags, making it easier to follow a topic.

The big question is: Will the new services save time, or eat up even more of it?

Source: The Wall Street Journal, October 12, 2009

Banks Too Small to Save

Bank failures are placing enormous strain on the F.D.I.C. and its fund, which keeps depositors whole.  Flush with more than $50 billion only two years ago, the fund recently fell into the red.

Deemed too small to save, small banks are approaching a grim milestone: the 100th bank failure in 2009.  There were 25 bank failures in 2008 and just 10 in the five previous years.  This month, three were taken over including Warren Bank, a small lender here in Michigan. "People expect companies to go out of business, not banks," said James R. Fouts, the mayor of Warren, MI just outside Detroit.  "That is something that you expect to hear about in the Great Depression, and it further exacerbates the feeling that financially, the country is not yet in stable shape."  While the parade of failures still represent a mere fraction of America's small banks, it underscores a growing divide between them and large institutions considered too big to fail that are growing stronger as the economy improves.

Burdened by worsening commercial real estate loans, many small banks' troubles are just beginning.  Many analysts say that the non-toxic loans could sink hundreds of small lenders over the next few years and place a significant drag on the economy. 

Together, the 8,176 smallest banks control just 15 percent of the industry's $13.3 trillion in assets.  Yet, "people are angry with all the shenanigans on Wall Street," said Frederick Cannon, the chief equity analyst at Keefe, Bruyette & Woods in New York.  "They believe their money stays local when they put it in a community bank, rather than sent off to Never-Never land."

How safe is your bank today?

In every disaster, only a very few people prepare themselves beforehand. Think about investor enthusiasm in 2005-2007, and you'll realize it's true.

Financial analyst Robert Prechter warns that the doors to financial safety are closing all over the world. He believes prudent people need to act while they still can.

To coincide with the release of the second edition of Prechter's New York Times best-selling book, Conquer the Crash, these 8 free lessons share some of the most valuable, still-prescient knowledge from the original text.

I encourage you to learn more about Prechter's Conquer the Crash. EWI's free "Conquer the Crash Collection" is the perfect place to start.

Learn more, and get immediate access to the 8-lesson "Conquer the Crash Collection" here.

 Robert R. Prechter Jr: Conquer the Crash: You Can Survive and Prosper in a Deflationary Depression (Hardcover w/ Updates for 2009) includes Bonus CD-ROM

Source: The New York Times, October 11, 2009