In a departure from what I usually write, I’d like to say, “My dearest American friend, how are you?” I understand your markets are dying, your customers have vanished, and you are in need of work. Your housing indices have fallen by over 35% in three years, your consumer is dealing with triple digit percentage increases in commodities, and your foreclosures and delinquencies are the largest in well over a generation. Many of your leaders are under investigation, facing litigation, or have simply vanished. This great “awakening” has yielded extensive casualties.
You must remember that while there is strength in numbers, the individual can still make a difference. As your domestic baby boomer human capital is aging and retiring, we reflect on new workforces and their ability to reinvent markets and revitalize lost sentiments.
However, I must ask. Is the fact that domestic high school education rates have been falling for over 40 years contributed to the financial demise you are now witnessing? Has the increase in offshore worker euphoria and technological advancements provided a drain or conduit for extracted information to flow from one continent to another creating a plight among domestic operations? Or is it a political crisis brought forth by conditions outside of the control of financial services and mortgage industries?
There are a great many pretenders trying to leverage their position as yours diminishes. Can you find the innovations needed to restore confidence in your pervasive, granite foundations? Will the adoption of green and electronic process solutions be your catalyst for change? Can you find the fortitude and investment to create new products so desperately demanded? Will the gatekeepers of the past become increasing the inhibitors to turnaround and sustainable success?
As we are now witnessing, there is a great challenge yet facing you, your workers, and your industries. The second half of this year holds material risks and challenges for your economy and financial markets. You may experience an industry double bottom. You will lose contact and relationships that have been forged over decades. Moving forward, your environment will be permanently different. It cannot remain the same.
But alas, there is hope glimmers of light emerging and beacons of prosperity to embrace. The ensuing chaos and cataclysmic events have ushered in extensive fear, while creating new mandates. “Irrational exuberance” is giving ground to common sense, loan and organizational restructurings, consolidation, and evolving 21st Century credit markets. The financial and economic unwinding continues to be painful but necessary to force adoption of electronic standards, data quality, understanding of bidirectional supply chains, and much needed recapitalization of cancerous FSI and mortgage practices. The treatment has finally arrived the pain however still lingers.
Amidst the ashes and lost careers, new and positive initiatives have been ushered in green technologies, social responsibility, corporate accountability, and dare I say, some overdue regulatory oversight. Excess has now been replaced by necessity and old processing methods by automation. Everywhere you turn, change is being discussed and the old line manager and advisor has faded from view by their own hand or by those of others. Just as some old forests need fire to unleash the seeds of a new generation; it appears that the financial and mortgage world will be bathed in an inferno if it is to unleash its potential.
So as the vulture and “scratch and dent” investors arrive on the scene of decaying corporate hierarchies and spent business models, take cautionary solace that your markets may have finally reached the physiological necessity of capitulation. Then again, capitulation does not represent the end of the $450 billion of announced write downs or the fire sale pricing of CDO and MBS warehoused debt facing mark-to-market valuation it signifies, just maybe, the beginning of the end.
For you my American friend, there is no option but success. No greater option than rebirth by leveraging and redeploying, via reeducation and revitalization, your skilled finance and mortgage workforces. May you find the relevant innovations to once again make you strong and a beacon for free-market growth devoid of draconian oversight. May you think and act innovatively different bringing ethical leadership to industries and homeowners lost among the flames for your sake and the rest of the world.
You and your workers have my greatest respect but can you maintain your intensity and passion in the face of a withering crisis? Can you overcome the misguided actions of a few, who failed to comprehend the end-to-end supply chain risks that were spread by many, and not just a single individual, functional group or corporation?
In closing, some say your strength has left you. Others advocate your failures are a result of corporate greed and risky behaviors. As I said, some say you are dying more and more say you are dead. Yet I wonder if their rash generalizations hold merit as many forget their history in favor of the latest headlines and news stories. It has been stated by many before us that America and its industries are dying. Somehow, I think they will be proven to be in error once again.
Regardless of what has been said and the tens of billions rushing in to “get-rich-quick” off the charred remnants, you will survive you must survive. As always my American friend, you know I will continue to work with you for many years to come.
