Greek Debt 101
May 8, 2010
I don’t usually comment on national and international news but this week I ran into an explanation of the whole Greek debt mess that helped me understand what’s going on.
In case you haven’t been following the news I’ll add some background. The world’s financial markets have been in an uproar over the last month because of fears that the Greek government will not be able to pay back money they owe to bankers and investors. The European Union has now pledged $140 billion to help them out.
The bailout has the Greek citizens up in arms because it will mean, tax increases, cuts in public spending (pensions, salaries) and a general belt-cinching they feel is unfair.
That’s the setup as they say, in the TV biz. But the reasons turn out to be pretty simple to understand.
The owner of a local business, who I know pretty well, is a Greek-American but he still has family back in the old country and visits often. So as I started to walk out of his shop with my purchase I asked, “What’s going on back home?”
“It’s simple” he says. “You see that piece of paper?” he asks, pointing to my receipt. “In all the years I’ve been going back, and all the things I’ve bought, I never got a piece of paper. They don’t write anything down, so the government has no idea who paid for what, or how much tax they should be getting. Now, they’re paying the price and they don’t like it.”
Sometimes, even the most complex international problems have a simple explanation. I’m sure the citizens of Greece have other opinions but this one makes sense to me.
Decisions, Decisions
May 6, 2010
“How We Decide”, a fascinating book by Jonah Lehrer, is another is the long line of texts trying to explain to the general public how our brains work.
Lehrer uses real life examples to illustrate science, helping us understand the split-second decisions made by NFL quarterbacks, airline pilots, and even soldiers in combat situations.
A good portion of the book retraces many of the points made by the now-popular science of behavioral economics – books such as “Freakonomics,’ ‘Predictably Irrational’ and ‘Nudge.’ In fact all these books seem to use the same set of experiments to prove their points.
As their most basic level they all help us understand why marketing works as well as it does.
But Lehrer’s biggest contribution may be his last few chapters as he explains the process that scientists think goes on in our brains as we make a decision. Using fMRI which measures brain activity, they can look at which sections of the brain are most active as we make various kinds of decisions. Everything from simple “either-or” choices to more complex moral decisions based on values that are ingrained at a very early age.
His conclusion,- that decisions are basically a three way battle – suggests that the best tactic is to let brain’s thought centers battle things out, while you take a break.
Unconsciously, your brain will make a decision and your conscious mind will announce it. It may seem like an unconscious act but you really have no idea what was going on in your brain.
One section I found particularly helpful is the explanation of what’s really going on when we’re positive we have the right answer to almost anything. From politics to predicting human behavior, Lehrer notes, if we’re that sure, we’re probably wrong because we tend to ignore facts that don’t support the decision we already made.
So if you’re looking for something that’s easy to read on the beach but has a little more substance than that romance novel or murder mystery, try ‘How We Decide,’ and see what’s really going on between your ears.
Small Town Living
April 23, 2010
I live in a small town. It’s the kind of place where clocks don’t really matter. We have a small shopping area with a pharmacy, which includes the post office, two restaurants, a grocery store, real estate office , a bank and a hardware store – not to mention the gas station across the street.
Most of the businesses have signs in the windows suggesting they open at 9:00 a.m. It’s a very loose interpretation of time. If, for some unknown reason, you need something that early you’ll probably find yourself waiting at the door for the owner. No one seems to mind if it’s 9:00 or even 9:15 when the store opens.
That’s the price you pay for knowing the comforts of small-town living where everyone knows your name and the police chief doubles as town manager. The fact that we have a monthly newspaper may tell you a bit about the pace of life around here.
Biggest news recently was last weekend when an errant, and apparently drunk, ‘out of town’ driver drove into the telephone switching box on the main drag. Suddenly 900 homes had no landlines at 5:00 a.m. on a Saturday morning.
At 9:15, when a neighbor came by to ask about my service, I used my internet-based line to call the phone company. I began the slow climb up the AT&T phone tree finally reaching a live person to explain that I have no service. After a pause I was told that the earliest they could have someone out here was the following Tuesday.
“No,” I replied, “You don;t understand, someone ran into the main switch box and there are probably many folks without service so I’m sure you’ll want to work on it sooner.”
Suddenly I was on the phone with Lilly Tomlin’s “Ernestine” character from the 70’s. “Gee,” he said, “We don’t have many calls about it.”
Sorry, I lost it, and screamed into the phone, “That’s because they don’t have phone service…” and hung up.
I called the police and they said they had already called their emergency number and the situation would be addressed. Crews were out later that day.
These are the joys of small-town living.
Ending Overeating
April 9, 2010
I finally finished one of those books sitting next to my bed. “The End of Overeating” by David Kessler, MD.
Dr. Kessler,was the former head of the FDA before returning to the Bay Area for a short stint as head of the Medical Center at U.C. San Francisco. The fact that he’s currently the center of a long running legal battle over his firing, has nothing to do with the book, but it’s an interesting local note.
In his book, Dr. Kessler lays out his case that overeating has become an epidemic in the US, aided by food manufacturers who have figured out how to get Americans to buy more of their product.
Dr. Kessler maintains that by focusing on the addition of sugar, fat and salt, food producers have found a sure-fire way to tap the psychological impulses that create overeating. American consumers don’t have a chance unless they figure out a way to avoid prepared food at the grocery store and fast food everywhere else.
He lays out the physical, psychological and emotional basis for overeating as a disease and like others, notably Michael Pollan, he suggests that eating less processed food is the answer to beating the health issues which have already surfaced in this country and are starting to show up around the world.
The book is well written with logical arguments and consistent conclusions. Dr. Kessler, in his position at the FDA clearly had access to sources that might not talk to you and I so he’s able to lay out the industry’s side of the story, in disturbing detail.
My only criticism is that he puts most of the responsibility for solving the problem on individual Americans, asking them to develop strategies for avoiding the traps spread by the food industry.
Maybe Dr. Kessler knows first hand that the politicians are unwilling to face the issue, but it seems to me the fight against overeating has to start in Washington. Despite that, Dr. Kessler’s 250 pages add another voice pleading to fix the American food supply and it’s worth reading.
Real Estate Roulette
March 18, 2010
A huge percentage of Hawaii real estate owners were investors just flipping property. Like other vacation destinations such as Florida, Arizona or Las Vegas, Hawaii property values got clobbered over the last three years.
What sold for well over $1million in 2007 is now priced at $600,000 thanks to the large number of foreclosures and short sales. According to my friend in the business, the problem is that current buyers – and there are many people on the Big Island shopping for property – are trying to time the market.
Countless books on economic psychology explain why everyone hates to pay too much, but it’s starting to get a bit irrational. According to one agent people are coming with their minds made up. ‘They think that if they wait longer they can get a better deal, or that they can purchase via a short sale and really make a killing, but they don’t realize what it’s going to cost them.
As federal reserve programs holding down interest rates expire in a few months the cost of borrowing will increase, she pointed out. Plus a short sale often takes 9 months to complete and right up until the end the bank can change its mind. It may cost more to buy from an owner but loans are available and you’re getting a normal closing for a property at half price.
There is still a large number of foreclosed units, especially in the condo market she says, but the pressure to sell isn’t the same as a single family home, so many of the banks just hold on to the property and will wait for prices to increase.
Plus the homeowner trying to arrange a short sale does not have an easy time proving to the bank that the sale should be allowed and often the difference has to be made up by the seller. That doesn’t even include the tax folks who tend to count your ‘loss’ as a tax gain – especially since most of the properties are vacation homes, not primary residences.
So the good news is that there seems to be lots of potential buyers, the bad news is that they may be waiting for conditions that will never come. If I had any money, I’d invest and plan to sell in about three years when the bust cycle returns to boom.
The Joint is Jumpin’
March 15, 2010
For a variety of reasons many people see Hawaii as the ‘canary in the coal mine’ – a predictor of what’s to come for the nation’s economy.
So, I thought I’d check in with some friends there and see what the future may hold for the mainland. Hawaii has been hit hard by the bursting real estate bubble and the general retrenching of the US consumer.
Happily my friends, who deal with reality and not economic theory, are actually optimistic for the first time in many months.
First of all, this is whale season, the according to everyone the joint is jumpin’ – literally – so the tourists and residents are seeing a great show out in the water.
A friend who works at the airport in Kona told me, that tourist traffic is up. “The tourism bureau has been saying traffic was down 10% last year, but it was really closer to 30-40%,’ he says, “but now, there has been an increase, probably because the airlines have dropped the fares.” He admits it’s not back to what it was 3 years ago, but at least it’s headed in the right direction.
Further evidence of an increase can been seen in the food business, where many businesses either went broke of cut back hours. Several stopped serving lunch, but one manager friend said they have decided to open up again for lunch starting April 1.
According toa property manager, the condo rental market seems to be picking up too. “We’re going to have our first full quarter in the black in over two years,” she said noting that occupancy percentages were almost 80% for the first three months of the year.
People are still waiting until the last minute to book vacations, but as the weather has gotten colder in the western US and Canada, booking have increased from, Colorado, Utah and Canada where snow-storm after snow-storm has left people looking for an escape.
Another rental agent pointed out that many visitors used to head for Mexico, but between the kidnappings and drug violence they figure “why chance it.” Plus as one agent noted, “they can keep their money in the US.”
In my next post I’ll tell you what my real estate friends are saying out in the middle of the Pacific. But until then, the next time you read a story about an economists making a prediction based on numbers and charts, suggest “On the other hand, here’s what the people on the ground have to say.”
End of an Era
March 6, 2010
In my heart I am a journalist, so it pains me to give up on a newspaper. But after more years then I can remember, I’ve decided that I can no longer tolerate the ‘new direction’ Rupert Murdoch has taken the Wall Street Journal.
I used to revel in the autonomy of the news pages-reporting news objectively while the editorial pages remained decidedly conservative. Unfortunately I fear their editorial bias has crept into the news pages and while they are just about the only print publication expanding their staff, I no longer have confidence in their editorial decisions.
It wasn’t any one article, just a long held view and the fact that my subscription renewal came and I’ve decided not to take them up on their special offer.
That the paper has changed direction from the business-focused publication that I wanted, to a more general-focus newspaper, was also a factor but I could have handled that, as long as the financial news I wanted was still there.
I’m sure Rupert will not be shedding any tears at my departure and he’ll point to the fact that his creation now has the largest national circulation in the US but he’ll have to suffer along without me. (that’s if you include web subscriptions)
I’ll make due with the Financial Times, New York Times, The San Francisco Chronicle and my online visits to the Boston Globe, my Twitter feeds and various blogs.
Now if I can just make it until the 3G version of the iPad is available and I can carry everything with me, I’ll be in great shape.
What Me Stressed?
March 5, 2010
A good friend of mine, who also happens to be my nutritionist -helping me with my diet – had a very interesting post this week linking stress with weight gain.
So far I’ve lost 10 pounds in about six weeks with Chris Becker’s help. There are a lot of other medical problems caused by long-term stress. My wife, who specializing in stress management could give you the whole list.
But after reading the article on Chris’s blog, I have just one question -Does my weight loss mean I am now stress free too?
Just curious.
Business Strategy
March 1, 2010
One of the largest hotels on the Big Island of Hawaii announced last spring that they would be closing for September and October for major renovations but that they would reopen November 1.
The announcement was a major blow to the many workers who depend on the hotel, but since the facility was among the oldest on the island, a closure during the year’s slowest season did not seem unreasonable.
The employees took the news in stride, more or less, but everyone watched anxiously to see what changes might be in store. As the two months progressed, what many assumed would be a burst of activity and employment for construction workers became mostly a bust.
No huge delivery of material or even new furniture was seen and as September turned to October the locals began to suspect the ‘renovation’ was nothing more than an excuse to cut costs during a slow period and get ready for the December-March season.
As no news was announced the employees grew increasingly nervous wondering if the hotel would indeed open. After all, with tourism down dramatically it wasn’t too much of a stretch to image the owners just throwing in the towel.
But in early winter, as the employees were allowed to return to work they breathed a sigh of relief as they cleaned, polished and readied to hotel for guests. The ‘soft opening’ saw 100 rooms occupied and the employees declared their personal recession over.
But it raises the question: Could your business just close up and hope for better times. Would your brand be strong enough to survive?
Money, Money, Money
February 27, 2010
Spent a day recently at the Money Coaching Institute in Petaluma California. Deborah Price and Steve Shagrin have developed a unique program to analyze how people relate to money.
Deborah and Steve have developed a series of archetypes which can help anyone deal with their tendencies. From a holistic coaching standpoint I was interested to see how money issues can impact virtually every aspect of your life.
I urge you to visit Deborah’s website and take the Money-Type Quiz. Just keep in mind that all the ‘types’ they outline are often present in all of us, although one type usually predominates.
The test is a good place to start and particularly with couples, can help resolve some difficulties that may surface in other areas.
If you need some help, drop me a note.