Election election

What to do on Tuesday... that seems to be a perplexing thought for many of us. And while the obvious thing for me to do is blog about what seems to be a never-ending campaign of change, mavericks and mudslinging (I live in THE swing state, PA) I think that I'd rather try to uncover nuggets of truths that can help you improve your business.

In order to do this, however, we need to take the opposite approach of each candidate - who seem to be promising immediate change on everything without really planning for long-term issues.

As business people, we need to step away from our personal feelings for a few minutes in order to plan. Set our emotions aside, our personal ideologies aside and really plan for "what if" scenarios. What if Senator Obama is elected? What happens if McCain is elected? What if... you get my point.

With that said, the best advice I can give you is to begin proper planning NOW based upon either scenario. In fact, this should have been done as soon as it became evident who each party's nominee would be. It's not too late, though.

Set up a network consisting of a financial planner, accountant, attorney, local politician, marketing guru, real estate expert, college administrator, teacher, advertising person and restauranteer. Add more if you would like, but this is my mix and it seems to give me ten different angles on any certain issue.

Then ask your experts to give you "what if" scenarios based upon both candidates. You will now have 20 different insights to the same problem.

NOW you can begin to plan accordingly for the next four years based upon something other than our your own personal subjectivity. In fact, you may gain insight into multiple political views, economic arguments, educational debates and taxing issues as they relate to YOUR business.

Does it sound like you have just improved your bottom line? You betcha.

Ask each of your sources to do a SWOT analysis on your business based upon their what-if scenarios. A SWOT analysis, in case you don't know, stands for Strengths, Weaknesses, Opportunities, Threats as they relate to any item; most notably your business. Again, with ten or more experts at your disposal, you will get many answers to your questions and their personal analysis of your business. That's powerful stuff.

The other indirect benefit of doing this is that you've just included yourself in a very exclusive club compromised of various professionals in multiple industries rather than surround yourself with folks just like you. And while it might be uncomfortable for a short-time, the long-term benefits of obtaining differing views will yield results you cannot even imagine. In fact, these views will likely lead you to new markets, products and business ventures you might not have ever imagined.

Get out and vote with your conscience, but use your brain when it comes to business planning.

Drop me a comment below and let me know what you think.

$700 Billion bomb

I told you that a vacation would do me a world of good. The result is two blogs in three days. But all of the credit cannot be given to rest - let's thank Treasury Secretary Paulson and Fed Chairman Bernake too. After all, it's not everyday the two get together on CNBC and talk to members of congress asking for quick passage of $700 Billion.

And at the risk of being labeled conservative in my common-sense approach to this whole thing, I would ask each of you to consider the following before giving Paulson carte blanche authority to buy these mortgages at "a deep discount."

If the assets can be purchased at such a deep discount, why isn't anyone else rushing into the market to scoop these up? Additionally, consider the fact that Bernake and Paulson are suggesting that they will pay a fair market value for these assets. Huh? If they pay fair value for these assets, or in some instances, above fair value, isn't that the same as creating profits for Wall Street?

The next point to consider is that Paulson used to work for Goldman Sachs. Before the White House tapped him to be Treasury Secretary, Paulson ran Goldman Sachs and made about $50 million per year. I can only speculate that he still has shares in GS today. By the way, Sachs is no longer an investment bank and will likely survive this implosion. The cynic in me is guessing that they will be the first in line when it comes time to dump these valuable mortgage assets, too.

Here is the point that drives it home, however. I know that we all hate history, but I'm going to ask you to go back to your eighth grade civics class and revisit the New Deal in 1933.

That year, the New Deal disallowed investment banks from also acting like commercial banks. Five years later, the New Deal created Fannie Mae to increase liquidity in the mortgage market. This allowed lower down payments and easier terms to obtain home loan financing. Freddie Maca was created in 1970.

Skip ahead to 1989 and the Savings & Loan debacle. The government stepped in when the S&L's were writing bad loans before it was en vogue and had a TON of bad loans on the books. This action changed everything - setting precedent to banks and other investment firms that if you make bad loans, the government had yoru back and would bail you out.

In 1995, Congress re-established the CRA (Community Reinvestment Act) that emphasized lending to low-moderate income borrowers in less affluent communities. If a bank was going to buy another bank or merge with another entity, it had better adhere to CRA standards in order to get its plan approved. Homeownership skyrockets to over 65% of all Americans that could be homeowners becoming homeowners.

Flash forward to 9/11. Rather than allowing the market to shoulder the burden for bad loans that occurred as a result of the business slowdown due to the terrorist acts of that day, the Feds decide to continually lower interest rates; from 6.5% to 1%. This allowed an artificial "inflation" in the market for loans and created a new demand.

Now, we find ourselves in the same predicament and we are following the same exact path! It has to stop.

Worse yet, we are allowing Paulson the ability to do whatever he wants, whenever he wants, with our money. No checks or balances here, sir.

There is an alternative and it's a simple thing to enact. Sadly for congress, it doesn't come with pomp and circumstance or a $700 Billion price tag. It's changing an accounting rule that currently requires banks to list loans as assets and value them at their current price. In case you haven't followed the mortgage market, you probably would have more luck selling sand in the desert right now than selling a mortgage on Wall Street. This is why the market liquidity crunch has hit. Not because of foreclosures, which are bad, and not because of subprime lending, which is also part of the problem.

Think about it this way. If you absolutely HAD to sell your house today. Not tomorrow, not next week, but today, would you get top dollar for it? NO WAY JOSE (my five year old daughter's favorite quote.) THAT'S what is going on in the mortgage/banking market right now.

These investment banks don't have to sell their mortgage loans today, but they have to value them on their books based upon today's demand... go figure.

The real culprit is a little accounting requirement. Sorry it's not sexier, but that's too hard to explain I guess.

Please, I am asking you as someone that really doesn't want his children to pay for this horrible plan to spend two minutes and contact Congressman Altmire and Senators Casey and Specter and ask them to please NOT sign this horrible piece of legislation.

Send me your comments and don't worry, there will be another post Monday.