by Genie Z. Laborde
- USA -
Most people do not see themselves as financial experts. However the strong emotional response we’ve seen lately shows that many people feel the government’s bailout bill reflects the machinations of a Congress that is more focused on propping up big business than securing the financial well-being of U.S. citizens and world markets.
Having experienced a downturn in my business after 9-11, I felt some concern about how the bailout and the predictions of further economic chaos would affect my debt and my income. I was more than a little curious about how others in business around me were dealing with this situation so I began asking questions. First, I asked people who know money and investments, then I asked my friends, and then, their friends.
I asked: “What do you think about the financial fiasco?” Sometimes, I re-phrased it as: “How do you feel about the financial fiasco?” Or “Does the financial crisis affect you?”
Because most of my long-term corporate clients disappeared after 9-11, I have since been diligently searching for a new group of lucrative customers. Part of my search led to me several Angel Venture Capitalists. Frank Gow, a canny, former Scotchman, has been loyal to me in this journey and I respect his acumen and abilities. I really wanted to know what he thought.
“To be honest, the ball is still in the air. At this moment, it’s had no effect on me at all. Ramifications? We don’t know,” he said. “If my pension fund or I were heavily invested (in the stock market) and it had lost 50%, then that, of course, would be a serious loss.”
The following day, he emailed me a more thoughtful answer. “My view is simple, let the chips fall where they may. Use the "rescue" funds to build a new financial system with integrity, selecting only financial institutions which are truly worth saving, and doing so in a cost effective manner so that the taxpayer is compensated for the risks being taken, just as those with money are currently doing to those without money - getting assets (cheap) at fair market value!”
The next person I asked was former entrepreneur Tom McLaughlin. Now VP of Sales, Tom evaded the question: “A friend of mine lost 60% of his capital yesterday. He says he thinks he will have to find a job.” (I was well aware that only a few weeks before, Mr. McLaughlin had closed down his own start-up and taken this new job. He summed up his past entrepreneurial experience by saying, “Good idea, wrong timing.”)
Entrepreneurs are accustomed to change. In fact, they often thrive on it. This economic disaster definitely classifies as “change.” Jerry Brown, who owns part or all of several engineering companies in the Bay Area and Utah says “I think it’s good this happened. Those Wall Street guys are too arrogant and sure of themselves. This brings them down a notch or two.”
While each of these respondents took the time to answer my questions and even looked somewhat relieved to be able to express themselves, they all seemed to be in the middle of very busy days. Talk of the economic crisis doesn’t seem to have slowed down their work.
I went out of my way to find the next person for my survey – my reluctant tenant, Mark Migdal. (I own two commercial buildings in downtown Palo Alto and concern for these mortgages is one reason I am so interested in the answers to these questions.) Though he often complains about the rent, and negotiates hard before the new contract is signed, he pays by the year, and he always has something unexpected to say.
I interrupted Mark in the garden of his office on a lovely September day; the soft, late summer sunlight did not reflect the gloom of Wall Street. Formerly from Russia, Mark is an extremely successful construction company owner.
“Wall Street has made and lost hundreds of billions of dollars, and it looks like they are going to get away with it. You and I are going to pay for the problems that they created. They don’t suffer. We suffer.” Mark was nearly shouting as he finished.
Don Hunter attended one of my seminars last spring after being referred by a professor at Stanford University, and has become a new friend. An expert financial advisor (who holds an MBA from the Sloan School of Management at MIT, as well as an engineering degree from the University of California Berkeley), Don replied after much thought. “There is a lot of confusion. This is because there is a loss of trust. Confusion happens when there is no trust. Without trust, the marketplace cannot function as it should. We must create trust.”
Trust. Of course. The same idea is expressed in a book I just finished reading, The Way of the World by Ron Suskind. But if this idea is so universally clear, why has so little been done to correct for it?
The next person I interviewed worked in auditing years ago on Wall Street when the Milken fiasco surfaced and knew some of the players in that scandal personally. Having worked at both Chase and Citibank, Lynn Douglas is now an entrepreneur, looking to purchase real estate. She has an in-depth understanding of the actions and psychology of Wall Street that few people do. I was somewhat surprised to hear her slant on the crisis.
“I really feel strongly that the media is making too much of this. It is not as serious as the media reports. I personally am distressed. I lost $150,000 of my savings this last week. I do think they should do something to stabilize the market, but I am not a hundred percent sure of this bailout as structured.”
Lynn took a deep breath, then continued, “I preferred the insurance package. It had some merit. The market has always corrected itself. We are changing everything by interfering with the whole capitalism process.”
The last entrepreneur I questioned manages a publishing company in Palo Alto when he’s not playing drums. Our offices are in the same building, so we regularly exchange opinions on many subjects. He usually has something clever and funny to say but on this subject, Steven Apple simply grimaced and said, “If you think you are not affected by the bailout, just wait.”
I also talked with a few young professionals. Their responses were similar to those of the entrepreneurs. If personally affected already, they are coping with the pain. If it has not yet affected them, there is only apprehension and fear: When is my turn coming?
At the end of a recent eye exam, I asked the physician my question. Half way out the door, she turned to face me. She is quite an attractive woman whose emotions play rapidly across her face.
“[It’s] terrible. I lost a lot of money.” For a moment, she looked inclined to elaborate, but then disappeared quickly. She would not give me permission to use her name.
Filipina Amy Wong is a Director of Finance at Moses, an internet and music industry interface company. When I asked her my standard question, she replied, “It will affect me indirectly. I never believed in credit. I don’t use credit cards. I don’t think you should live beyond your means. We all have to face the results of our financial behaviors. I personally am not in trouble, but the community effect will affect me.”
The final person I queried, Lou Yasutome, is the Senior Credit Analyst of Foundry Networks, Inc., a half billion-dollar company in the Bay Area. She answers in no uncertain terms, “On the bailout, I do not think we should do it. These businesses should be able to operate without government intervention. The people should be allowed to fail now. If we allow them to fail now, we will get it out of the way. The market will adjust.”
In my opinion, Steven Apple’s answer is the closest thing to a conclusion I found from all these interviews: “Just wait.”
Whether an entrepreneur or an employee, fear has escalated since the Feds began rescuing banks, insurance companies, and its own Fannie Mae and Freddie Mac. Psychologically, this rampant apprehension and anxiety among investors will freeze investments, start-ups, and financial risks that might have been taken a year ago. At least it will for me. I have a “hunkering down feeling” as if I need to protect myself.
Experts and novices alike are anxious and all of them are waiting for the next bank to fall. The newspapers say the crisis will continue, the experts say “We are not done yet,” and yet none of us know what exactly the fallout of the bailout will be. Because politicians and Wall Street have lost our trust, we suspect something much worse is coming - but what?
About the Author
Author of Influencing with Integrity, Genie Z. Laborde is the founder of I.D.E.A. Inc. whose seminars have been taught to over 50,000 employees of corporations around the world. IBM, Chase Bank, Dell, Intel, HP, Wells Fargo and Dow Jones are among her clients. The interpersonal skills she and her 200 trainers teach have recently been adapted from business to the arena of personal relationships. Her new venture, 2 in Sync, Inc. utilizes e-learning skills for good relationships.
Mother of six (including an adopted child), Genie also has 15 grandchildren. She holds a doctorate in psychology and education initiated by a Ford Foundation Grant for Innovative Education from the University of California at Santa Barbara. Her e-books (Spellbinding, Fine Tune Your Brain, Influencing with Integrity for the Internet, and Selling Financial Services with Integrity, can be found on her websites.