Another takedown request.. Geez people, if reality upsets you so much why do you even subscribe to this blog?

I am not about to lie to myself or to my partners about whats going on out there. We work for businesses that are trying to make it, the credit is tight, banks are getting tighter, and we need to elevate our game. If you don’t like my take on this then by all means start a blog or post a comment, I have absolutely no sympathy nor can I assign any value to your pussy communication via email.

-Vlad

Answer E. Invest in direct marketing to Mental Health Care providers.

Hi Vlad, so close to the truth…the smart people woke up about a year ago and got the hell out of the US Economy. I read one of Robert Kiyosaki’s books about a year ago on how he stated the US dollar was over inflated and that the US was heading for a disaster. Unfortunately, the dominos are falling all across the free world.

Just like Vlad said people, it is time to wake up! The glory days are gone for a while, they will come back…and the smart IT Professionals will be smiling on the other end.

Have a great one…time to go out and buy a vacation property…lots to be had in Arizona right now for us Canadians.

I fail to see why this is such a big deal. One bank bought another and the mess is contained. Who is really impacted outside of the greedy bankers and their backers?

“One bank bought another and the mess is contained. Who is really impacted outside of the greedy bankers and their backers?”

This is precisely why we’re in this mess to begin with, you assume something without actually reading the article and go on with your life without realizing how everything is connected and how it ultimately will come down to impact you.

Forget the investors.
Forget the mutual funds.
Forget the Bear Sterns employees.
Forget the economy that survives on top of those 15,000 jobs.
Forget the $2/share purchase price.

What really happened here is that JP Morgan bought Bear Sterns for $250 million dollars because Bear Sterns had over $33 billion dollars that it could not provide solvency for. What that actually means is that Bear Sterns, with over $8 billion in profitable assets, had $33 billion of debt on books that was just fine but could not be liquidated, meaning they could not borrow anymore when people started making withdrawals.

So on paper they were $30 billion in debt. JP Morgan bought the company for $250 million.

Who is going to cover the other $30 billion?

Thats right, Federal Reserve.

But where does that $30 billion come from?

Tax payers.

That would be you.

You just got jacked $30 billion dollars.

Still think this is an isolated case?

-Vlad

I’m sure hoping not.

I read this as Bear Sterns has assets but also had a run on them they could not cover. Chase has (so far) been in decent shape and is playing things smart.

Let me make an example. You have a house ($250000) and loans against the house for its purchase a while back ($100000) and improvements ($25000) – you’re net “in the black” but are screwed if you start missing payments.

If I assume your debt (AND ASSETS!), on paper I’m $125000 richer. And I’d be a fool to do so if I think I won’t be able to make ‘em.

This is business – not usually so transparent to the general public, but if the coming “crash” happens, I expect to get some stuff at fire sale prices too.

Maybe I’m completely wrong on this – I’ve only listened to radio news reports, not deep into the WSJ or Financial Times.

The “Credit Crisis” is just yet another episode in history where people in a position of power don’t really fully understand the complexity and unintended consequences of their actions.

For the most part, most of the lies are due to incompetence and not malice. The problem with attributing malice to these events is that you’re attributing a certain level of intelligence to the perpetrators, where in the majority of cases where the events and issues are very complex, the perpetrators aren’t really that bright. For all our cleverness we’re still pretty stupid.

Getting back to the question you raise – for whatever service or product you peddle, you’re going to have to market it better in terms of value proposition (either real or perceived). Budget cuts will occur throughout an organisation – you’ll need to leverage yours relative to the other potential cuts. As Vlad points out, planning is important. Getting feedback from clients is important, especially as to what they consider to be essential products/services. These are the ones they’ll cut into last. The client’s real (and perceived) essential products/services are where your planning efforts should concentrate, unless you have some voodoo that allows them to perceive your product/service as really and essential one.

Keep the posts coming Vlad! Mental stimulus and challenges should be met head on and not head down. Bring em on!

This is strikingly similar to the S&L meltdown of 1987 which was pretty much a non-issue by 1988 (except for the bankers who jumped out of windows). Or compare where we are (rising inflation and slowing economy) with the late 1970′s (can you say 18% mortgage rate?). Differences today are that we are more interconnected and therefore interdependent on the rest of the world. Will we hit a slow down… yes. Are we done for? Well, if we are, so is China, India and Europe. Do you think that the leaders of the world are going to just idly let the major economies of the planet all implode. For all the screeching against globalization for the last 2 decades, it puts us in a pretty unique position of being required to remain solvent.
The bad news right now for everyone is a signal to the wise to increase your business activities and “Buy When the Blood Is Running in the Streets”.

Quite contrary…

The globalization has lead to the loss of jobs in USA and far more lower paying jobs replacing high paying jobs. The outsourcing that has taken enough white and blue collar jobs to India, Mexico, etc means there will be little to no bounceback from this because the economy is driven by spending on goods and services and as the revenue shrinks so do the profits.

Things change. But its your call as to how aware you want to be of that change.

-Vlad

Evolve or die like the dodo.
Vlad, its nice of you to try inform those around you but if they too stupid to see their own impending doom then maybe its best you leave them to it.

There’ll just be less of us around. Less competition, More profit(hopefully).

Now back to business.

What knucklehead would request that someone’s blog post be removed? Amazing! What possible reason could they have?

Even prior to the financial news this past week, I had an uneasy feeling when reading Karl’s latest economic posts. http://smallbizthoughts.blogspot.com/2008/03/interview-on-economy.html

Sure, we’re doing fine now. But if we do move into a deep recession (or even worse a world wide depression), then people aren’t going to buy widgets or build extensions onto their houses. If they don’t buy widgets, then the widget makers, the suppliers, realty agents, etc. will be in deep doo doo.

I would have to say that IT spending would be some of the first to be cut. “Do we stretch payroll out for a few months, or do we lay off some employees so we can continue with our managed services contract?”.

If we’re lucky, the widget maker will pay our last invoice before telling us that they’re going to get by on automatic updates for a while.

It’s amazing how lame the “productivity/time savings that managed services offers” sounds when there isn’t enough work to keep everyone busy.

Hi Bob!

Long time no chat.

I agree that in the SMB world, tech spending will get cut / eliminated early if there’s a significant downturn.

Hopefully, more educated customers will see the value in continuing with a managed services model – but are the managed services percieved to be as critical as changing the oil in the company truck? And how often does the client skip or push that interval?

I wouldn’t be surprised to see managed services contracts dropped for 6 months to a year then signed up again “if we need it”.

Which means to get your customer to sign up, you have to make being “unmanaged” painful. A great time for smart competition to try snapping them up – if you have any business-savvy competition locally.

I’ve been fortunate to grow and learn because people took time out of their life to teach me. I feel its my responsibility to pass on the same and do my little part.

But your comment has been noted. Someone earlier said: “Why bother training them, McDonalds will do that for you.”

-Vlad

I’m amazed people aren’t seeing what’s on the way. In the UK the bells rung loud and clear when Northern Rock – one of the biggest mortgage lenders in the UK – had to be taken over by the government.

OUR tax money is keeping this bank going now.

The bank was forced into liquidation because of the US subprime mortgage crisis.

It’s a small world.

The reason I contemplated asking you to take the blog post down was because you are seen as a leader in the SMB technology market and many people foloow you. If you say market looks bad our customers will stop spending and cancel services and then we will be unemployed just because some bank made poor loans.

Hi Greg, long time buddy!

Ramberg, do you really think Vlad has that kind of influence?!

Bob,

Watch it buddy, or I’ll send the locust and plagues your way!

Have you got no faith in Vlad?

-Vlad
(no, I have no influence over anyone. If you’re pointing your customers here then you’ve got problems dude)

Found this and thought I would share..
I love the way Wall Street works!
JohnB

Jim Rogers on why Bear Stearns was bailed out:

You know the reason they did it this way was because, if Bear Stearns had to declare bankruptcy, you’d realize that Bear Stearns paid out billions of dollars in bonuses in January – six weeks ago. If he let them go into bankruptcy, they all would have had to send back their bonuses.

This is what they’re doing, they’re doing it so they don’t have to give back their bonuses. That’s why they didn’t put them into bankruptcy. Jamie Dimon has gotten a great deal because the Federal Reserve is paying for it. The Federal Reserve is using taxpayer money to buy a bunch of Bear Stearns traders’ Mazeratis.

http://themessthatgreenspanmade.blogspot.com/2008/03/jim-rogers-on-bear-stearns-bailout.html

Vlad,

Great insight.

We have a president, who much like the CEO of Bear Stearns, is either in denial or lying to the American people. For months he’s been stating the US economy is fine, then Friday for the first time admitted the were in a tough position but overall are doing OK. Below is a link to the White House’s view on the United States economic status, it paints a much prettier picture than reality.

http://www.whitehouse.gov/news/releases/2008/03/20080317-1.html

On April 16 the next inflation report will surface, http://www.bls.gov/cpi, and it will not be pretty, we will see even more turmoil on Wall Street.

With all this said, our business is still doing OK and the only reason we’re having any level of success has been by acting on ideas, advice and products from members of our great SMB community.

Thank you,
Brian Williams

Brian,

I do not think it will be as bad as you may imagine nor will it reflect just how messed up everything is. Our “inflation” is quoted as the core CPI (consumer price index) which excludes the cost of food and energy.

So basically, with the real estate market falling way down and taking out the cost of energy (skyrocketing) and food, things should look normal and we can pretend that everything is OK.

-Vlad

Also, I tend not to want to penalize the president a lot because it’s not his fault he’s in power, it’s ours. The track record of lies and deception from the White House is really commonplace as its lost all integrity.

For example, in the interview this morning he kept on thanking Secretary Henry Paulson over and over for working all weekend with overnighters to pull the deal off in the same breath that he was saying that the economy is fine and that everything is in order.

If the economy was fine and everything was in order, the secretary of treasury wouldn’t be working overnight on the weekend to broker a $30 billion dollar bailout of a debt using taxpayers money!!!

-Vlad

If Asian banks are dumping the dollar because it’s pretty much worthless and oil starts trading in Euros, the American economy will be like Japan’s was in the past but on a huge scale. 15-20 years of economic deflation, record amounts of government debt, record trade imbalances, record high unemployment, record suicide levels, low/negative population growth and maybe a unique American position of high emigration of former immigrants. You’ll have to build a wall to keep all of those Mexicans in! Or Americans moving to Canada! Don’t underestimate how large a problem the American economy is in. America is dripping with debt (government/consumers/businesses). Mostly because the dollar is a global currency and credit has been so cheap to get compared with other currencies. America has been able to conjure up money out of thin air asking mostly Asian governments to hold the can with nothing of their own to back it up – gold. Which is why gold has risen so much and the Asian governments are now dumping dollars trying not to make its value and their ‘assets’ (American bonds) plummet, everybody wants gold not dollars. Of note, is the fact that a lot of the gold in the Federal Reserve Bank is not American gold; it’s the gold of governments from around the world which America has borrowed against VERY cheaply. For all that America has borrowed, it is left with more liabilities than it has assets (the dollar is no longer an asset). Europe has the most to gain if the Euro takes over as the global currency and there are signs it is doing just that. Asian governments are diversifying into gold and the Euro. The Euro is at record highs against the Dollar, and at near record highs against the British Pound and the Japanese Yen. Iran (a very large oil producing country and American enemy) deals oil in Euros and there is talk of other gulf states following suit. Don’t think for one minute Europe/China/India/Japan is going to pull America out of the hole it has created. They all have too much to gain – large American corporations on the cheap. China/India just has to play a waiting game, buy up as many American corporations on the cheap and America will no longer be the sole super power. The changing of the guard has just begun, and the only thing that can save America is Americans saving money in the bank and that goes against the whole American economic model and that could put the country in to a serious recession. Which would you rather have, an economic recession or your ass belonging to another country? Tough question I know, but it needs to be asked…

Vlad,

I was re-reading your comments, as well as some general news articles…it just gets you fuming.

These businesses take big risks, get fat rewards then when it all falls out the government uses our taxes to bail them out. How in the hell is that?

I think there’s a direct correlation to the more information and knowledge we gain as we get older to the feeling of helplessness.

We’re on the West coast so come election time when we march to the polls to vote and hopefully have a say in the change of our country, the tally is already in…the next President decided, the swing of congress to a Democratic majority or a Replublican majority decided…how’s that to make us as US citizens feel even less helpless.

I wish someone had something to say or do that would give me some positive view on the direction of our country and my ability to have any say in this.

For now, I think I just need to become less educated, less knowledgable about our world around us so I can carry an upbeat view about all of us this.

- Brian Williams

A little less hype and a little more facts than the poster above regarding the Euro… A Harvard paper on the topic offers a better & more detailed insight on the topic but by and large the gist of it is generally correct.

The Euro May Over the Next 15 Years Surpass the Dollar as Leading International Currency

http://ksghome.harvard.edu/~jfrankel/EuroVs$-IFdebateFeb2008.pdf

[...] Inflation Report, Bad, Very Bad Posted on April 17, 2008 by Brian Williams Vlad had a great post a month or so ago about how our country is bailing out Bear Stearns, the state of our economy etc… http://www.vladville.com/2008/03/damn-ostriches.html. [...]