Expert Professional Advice

The need for reform and clarity is evident and urgent. (Paul A. Volcker, Foreword)

Who saw the banking crisis in advance? It was obvious to the authors that it was on the horizon:
Too big too fail is real, costly, and becoming more severe. The second part of the book provides policy makers with options to address it. TBTF is not unsolveable, and this is the right time to address the problem – waiting for the next bank crisis can hardly improve our lot. (pg xii, Preface)

Penalize policy makers: (pg 142) <President Obama are you listening?>
For example, policy makers who do not close banks while still solvent must forfeit their jobs.

Warning signs that a banking problem might have been underway: (pg 181)
CDOs went from roughly $8 billion at end of 1998 to $500 billion at the end of 2001.

Issuance of loans in the so-called asset backed securities market – securely backed by consumer loans or smaller business loans – had risen fourfold, from roughly $300 billion to $1.2 trillion between 1995 and 2001.
Now that TBTF has been proven false, government officials who didn’t act prudently must lose their jobs (in some cultures a lot worse would befall them), and where warranted, if their influence was bought, mandatory prison terms should be handed-out in order to restore public confidence. If executives and companies continue to improperly benefit from the “crisis” why should I believe in the system? It’s amazing that when the first proposal was issued for the bailout in September the government officials spoke of the urgency to act by claiming that within a week the economy would completely crumble, confidently pushing a crummy bailout package for the privileged, not the people, but where were those government officials when it came time to confidently act before the banking crisis? They didn’t see it coming and yet they were so quick to offer the solution! So, how could their “expertise” be relied on?

While these are helpful methods to employ in management, copying the Japanese may aid in building great companies, but logically there is no long-term best approach… where are all the five hundred year-old companies? Where are the one thousand year-old businesses? I will credit the Japanese with building great products, and although the Japanese economy continues to suffer for over twenty-five years I think Japanese companies will continue to survive in a sustained economic downturn. They do too many things right. So, the alchemy of a leader itself arises, not from management, but from huge markets… but the author of this book, published in 1994, was nearly oblivious to the rise of China as a superpower with leading economic development. And it happened with nothing but millions of people forging ahead to serve underserved markets, not practice educated MBA activities or follow Japanese management techniques. Now that the fog has cleared from 1994, there is a huge mountain of advancement and economic activity… and even skilled outsiders didn’t get the golden keys to the Middle Kingdom.

It should be common sense that finding wealthy people to work with is how you access private capital. I’m not sure why people worth between one and ten million in US dollars would choose to go into funding ventures at an early stage and tie up their capital without a clear plan of an IPO cash-out but the book claims those are the people who are angel investors. For those folks that think the downturn in the economy is new, I’ve felt it hasn’t been good for a longtime, since the tech bubble burst and here’s commentary from the book that discusses the economy (the book was released in 2005).

Page Xxiii: Such companies also possess the potential for jobs in our recessionary and recovering economy, both nationally and, particularly regionally. Large funds must make large investments in order to put their money to work.

Although the authors are experienced in the field and have created International Capital Resources (a funding exchange/matching platform), the book doesn’t seem to offer a lot to hold a reader’s attention. The enlightening part can be summed up in the introduction: It is a part of probability that many improbable things will happen. (Aristotle, poetics)
Companies never go broke if they always have enough cash. Since the only time companies go broke is when they run out of cash, really work on your cash projections, your cash flows. That’s the overwhelming concern to raising angel capital or accessing any investor capital.

Tax liens and deeds
Below-market real estate
Income trusts and master limited partnerships
High-yield stocks (Dividend capture)
Drips
Bonds
Options
Foreign exchange
Selling or brokering cash flow
Passive income strategies:
Vending machines, ATM, timeshares, payday loans store, Internet advertising

The book is nearly useless. None of the strategies are secret as the book references other books and websites for each topic. What you’ll get out of this book is a chance to waste time, there are detailed sources of information available online, all this book does is provide an introduction to the topic with none of the essential experience or detailed guided plans to executing a strategy, nor are any real-world investment returns presented.

The other flaw with the material is that the projected returns aren’t enough to fit the claim about becoming rich. The foreign exchange and options intro is extremely limited and not conducive to real-world application. Anyone at any time could make a fortune with enough leverage by gambling. Should I also consider the casino a model for quick riches if I bet US $1,000 to $5,000 on one number in roulette and win $36,000 to $175,000? This tactic alone would produce faster, higher-returns than the book delivers – except I’m dealing directly with the risk of total loss of capital per event.

The best idea of the book is missed by the author – he discusses a guy who created seatguru.com which was purchased by Tripadvisors for a significant sum of money. Building anything that anyone wants, especially drawing the kind of web traffic that seatguru did is the fundamental way to building wealth in the current marketplace. As long as there is business there is advertising and marketing. Some of the biggest payouts are advertising endorsements. A person now has an immediate distribution channel for a good idea and the marketing of that idea along with a quick way to assess if the market values that particular approach.

The book had well-placed marketing crossover on AOL with Shrink a size, presented by Slim-Fast, featuring Prevention magazine.

Maggijolley 04:13:58 PM Jan 19 2009
First of all read the label of everything you want to buy. If in the first 5 ingredients you see any kind of “enriched” (flour, wheat, etc), High fructose corn syrup (yes what you have heard is true ITS BAD STUFF), Sugar, ANY partially hydrogenated oils or hydrogenated oils DONT buy it! I watched a show on Discovery called “You on a Diet” and it opened my eyes! Don’t waste your money paying for a gym membership, as they said on the show you can use your own body weight for resistence training. If you haven’t seen the show or bought the book “You on a Diet” you should at least go browse through it at a book store. I have lost 140 lbs over the last year and plan on getting rid of the last 60 lbs this year to hit my ideal weight. I still drink way to much soda, but I’m cutting back on that too (I use to drink a case of soda per day by myself, now I make a case last me a week; which is a HUGE improvement). DONT do these dumb fad diets they dont work and so many are unhealthy! Atkins is one

SKoolbeans 03:30:08 PM Jan 19 2009
Love 83.Count calories. if intake is 5,000. Go down to 4975 a week then minus 25 each week. Get yourself support person. One that will keep you in line. Walk block a day, then add on each week. Great base for more ridgit exersise.Keep adding a new exersise each week. Rest is important too. After week , every other day. DON’T GIVE UP….. GOD BLESS.

LoftisX4 02:30:45 PM Jan 19 2009
I weighed 367 at my worst. I started a new lifestyle (read diet) on December 31. I have cut my portions, read labels on EVERYTHING I buy at the store. We eat a LOT more turkey now, as opposed to beef. Nothing is fried. Skinny Cow makes an EXCELLENT fudge-cicle for chocolate fixes. I even tried tofu (it was okay.) I picked up some resistance bands at Target and have started a VERY light exercise regime while I build up endurance. AND I’VE LOST 17 POUNDS. I am so excited. I’ve been overweight my whole life. I have two young boys now, and I want to live for them. I can’t wait (weight? lol) til summer!!!

EXODUS 77 01:54:00 PM Jan 19 2009
Tfladylove83 the first thing you should do is cut out the soda and the sugar that would get you started on the right road, I once weight 225lb and my excuse was I ‘m a mother of 5 kids but I was very unhealthy. The hardest thing was cutting out the sugar but now I no longer use it. Quick walks regardless of how short also helps. When you go to the mall or grocery store park as far away as you can and walk. After a year of strong will, I now weight 135lb and my goal is to train for my first marathon. Believe me it’s not an easy thing to do but it takes strong will and determination. You can and will do it, your son should be your motivation.

Reduce the use of canned foods for babies

Use baby bottles without BPA

Use glass, porcelain, or stainless-steel containers, particularly for hot foods and liquids

1. Cutting their salary to $1 per year

2. Giving back the last five years of salary and bonuses to the company in the spirit of helping the company survive.

When their money is at stake they’ll be properly motivated to spend it better, perhaps without the jets, to help the company.

Taxpayers must demand that if our money is at stake then executive compensation must be revoked, and any potential stock options would have to be off limits for fifteen to thirty years before executives could cash in. The goal is not to reward executives for poor decision-making. When Rick Waggoner, CEO of General Motors was asked if he would be willing to reduce his salary to $1 like the CEO of Chrysler he refused, yet during the congressional panel he claimed that the bailout package is needed to “save the U.S. economy from catastrophic collapse.” It seems like he’s threatening that if you don’t help him the economy falls into a deep decline but he doesn’t want to sacrifice anything further because he has already pledged that he will reduce his salary fifty percent. That leaves him with around 3.5 million dollars… still rich, but way out of touch and not the guy I would want left in charge. What’s the point in giving money to the failures? Shouldn’t we expect more promising executives to take over from within in exchange for any bailout money? If they don’t want to step aside… maybe those companies shouldn’t get a handout. After all, when the consumer can’t pay for his car, does the consumer get rescued? And Ford’s CEO, Alan Mulally, when asked if he would reduce his salary to $1 a year, responded with a comment like “I think I’m OK where I am.” Is that so… no personal sacrifice, no government funds – the outrage is that these guys want the money and yet they refuse to contribute from their own pockets. That doesn’t inspire confidence in an industry recovery. The auto executives don’t want to give up the corporate jets – they’re not going to change – they’re way out of touch with the public… if they were in touch with the public they would be making better cars that people want to buy.

So, the simplest solution is to make banks aid autos which I haven’t heard in the media, except in the editorial of the November 24, 2008 issue of Financial Week titled “Make Banks Aid Autos” and the article states that it is obvious what is wrong with the auto industry:

1. Legacy costs

2. Lousy designs

3. Decades of general mismanagement

But an obvious short term solution, at least in the short term, which isn’t being considered is to make bailed-out banks help the car makers restructure themselves. The article further states: While it is not the government’s job to directly rescue every industry that’s ailing as a result of it’s own behavior or general economic circumstances, the U.S. is in a unique position to apply some pressure on lenders. When looking to attach strings to the remaining $350 of the bank bailout, Congress should consider requiring that the recipients of capital aid in providing debtor-in- possession financing and funding to support warranty services to the automakers. That’s not a direct bailout, but it would allow the automakers a smoother transition into a massive restructuring. After all, if much of the bank bailout feels like good money chasing after bad, why not make the banks throw some of it back to solve a problem they helped create?

In the December 1, ^{2008 issue of Business Week on page 70 there is a listing of upcoming cars, the Honda Insight (40-45 mpg est.) and Volkswagen Jetta TDI (30-41 mpg est.) appear to get about the same mileage as the Chevy Volt (50-100 mpg est.) which will cost ten thousand to twenty thousand dollars more… unless one of the big three automakers can really make a car that gets 100 miles per gallon. The Chrysler Jeep EV (50 mpg est.) uses technology similar to the Volt but didn’t have a price listed. And on page 22 of that issue is an article with an interview with Carlos Ghosn, the CEO of both Renault of France and Nissan of Japan and in response to a question regarding what automakers must do to survive and prosper he mentions “You want to have innovative products, strong fundamentals, a team that believes in the brand and believes the company will be ready to fight again. I don’t think everybody is going to make it through this period of time, but those who survive will have a boulevard in front of them because people will still need to buy cars.” If U.S. automakers aren’t making cars that people want, what’s the point of bailing them out? If the market doesn’t want to buy their product it seems like any government aid simply delays the inevitable failure… the government can prop up automakers but can’t force consumers to buy. And on the last page of the magazine Jack Welch makes a case for why the best thing to do is let the auto companies declare bankruptcy and get a fresh start because survival is not a business plan and not to be funded with public monies. His suggestion was to merge Chrysler and GM within bankruptcy and if any government aid was to be offered to provide it to Ford, which is in the best financial condition of the three – prop up the stronger and let go of the weaker. I’m not comfortable with the government operating in the automobile business as a player in the recovery – government does a bad job of innovation and business management (the U.S. postal service is an example). In the December 20, 2008 issue of the Economist, page 56: On December 11th, for example, Senate Republicans blocked a bail-out for Detroit’s carmakers. This thwarted the clearly expressed will of majorities in both the House and the Senate. But it was the right thing to do. A bail-out would either delay inevitable restructuring or (worse) put Congress in charge of it.}

Another interesting point in the book is a quote from Archbishop Desmond Tutu in Chapter 6 – Remember the power of hope: There is no situation that is not transformable. There is no set of circumstances that cannot be turned about by ordinary human beings and their natural capacity for love of the deepest sort.

What the book fails to do is take into account that present day conditions have changed and thoughts of prosperity have vanished, the middle class has been disregarded, and economic pressures are unfolding in a way that may not improve for many years. A positive attitude doesn’t change the circumstances. When the problems are real, systemic, and large, none of the author’s suggestions or discussion seems to help. What the author fails to address is that if there is a cure to the ailment of the unpleasantness of life, it is the power of love and brotherly love as a meaningful form of salvation and self-directed approach to existence. While this book, like any other of its kind are filled with anecdotes, mental tricks, reminders, or suggestions which are trivial and fail to address human nature in a psychological and biological concern, and may deepen our misunderstanding of existence. Prosperity and peace of mind has never been guaranteed, and the idea of “easier than you think” can easily be achieved by not wasting time with improvement, gurus, or thinking, but by simply removing all distractions and attachments, which isn’t so simple since it can take an entire lifetime and doesn’t seem to be a permanent state.