Charting Your Course Through Troubled Waters - Part 3

In the NY Times online this evening there was an article on how the world wide financial crisis was morphing into a major recession and how that might lead to serious deflation. Most people are familiar with inflation - the ever upward spiral of prices. But deflation is just as bad or worse, when prices keep dropping. It becomes its own vicious cycle because there is no incentive to invest into new production capability when you can't even sell what you already have - and that leads to fewer jobs and lower incomes.

I'm not that good a prognosticator to know if this is in fact what will happen. However, I think that it is a good bet that the conditions in the US for the next few years will be one where everyone has to do less (see explanation in last installment). So how does one adjust.

I'm not going to give the lecture about cutting your costs/spending less, etc. You can read that anywhere. What I want to talk about is opportunity. Yes, opportunity. Because whenever there is significant change there is opportunity - winners and losers. Take automotive for example. The ability to sell lots of very reliable vehicles with easy financing has made winners of auto dealerships and losers of auto repair businesses over the last 10 years. When you take easy credit out of the system and people don't have the income to afford to buy a car what's going to happen. They are going to run their cars longer and they will need more repairs. I think the opportunity is going to be in the repair business.

Looking at this further, the new car sales business has other disadvantages in the new economy. It is based on lots and lots of borrowed money...borrowings for that big lot, showroom and repair facility, borrowings for all that inventory, and borrowings for the purchasers. Not a very good model for an economy that is de-leveraging and in recession. On the other hand your typical independent auto repair shop is a pretty low overhead operation and uses very little leverage.

Whether you are in business, and independent worker or an employee, I would urge you to look at what you are doing and where you are working and say this to yourself...

• How dependent is this business on borrowed money?
• How dependent is it on having to sell lot's of stuff?
• How high is it's overhead?

If you want to be one who is taking advantage of what is happening rather than be a victim, you have to be in the areas that are going to provide benefit.

So I'd like my 6 or so loyal readers to do me a favor. I want you to think about all the kinds of businesses and economic activities you know, and to the best of your knowledge predict one or two that you think can actually benefit from the new de-leveraging/recessionary environment.

And remember what my new motto is for the coming years - How do we do more, deliver more, achieve more by using less and less.

In my next segment I will be addressing what you can do on a personal level to cope with a crisis such as a lost job or a business going down the tubes.

Glad I Never Chose Construction for a Career

Today was to be the big day when the framers arrived and they started throwing trusses and stuff up on the roof to start the major part of the construction. Unlike our GC who never comes before 8 AM because they don't like to overstress the client (these guys are good - they sent letters to all the neighbors before the construction telling them if there were any problems to call), the framers want to blow and go and were here at 7 AM.

One problem - no trusses - no wood - no nothing. Around 10 AM the truck finally shows up . Even though our project foreman had told them three times that they were going to take the wood in installments as the construction progresses, it arrived with everything - a trailer load 8 feet tall with the trusses on the bottom and no equipment for unloading.

Our foreman said no way - take it back - unloaded and get it back to us the way we requested.

In the meantime there are still all these discussion of how we're going to actually put in support in the middle of the house to hold everything up. I asked the foreman on a scale of 1 to 10 with 1 being "these homeowners should have done this themselves this is so easy" being 1 and "Oh my God, we're going to go bankrupt doing this" being 10, where would he rate the problems we've incurred. He put it a little above 5 so that made me feel better.

I know I'm due for another 'Crisis Management' installment but I have had a ton of writing to do for work so I've not had the energy. I hope to get to it before the week is out.

Hike of the Week

This Saturday's hike was the Pino trail, a lovely trail with a wonderfully smooth path that climbs from 6700 feet to 9200 over a 4.5 mile distance. Hiking buddy of the day was Cabinet Lady.

All of my fellow hiking buddies are of the "let's get out early and get back so we have the rest of the day" classification. We arrived at the trail head at 7:30 AM and were literally the first people there. It was just barely getting to be light and was really pretty cold. Fortunately I had the right gear with me.

This is a shot looking west from the trail head as we set off overlooking the city with Mount Taylor (if you will remember from prior posts) about 60 miles away and shrouded in pink early morning light.

Cabinet Lady Getting on Her Gear

CL is a very interesting person. She's a client of mine and owns a custom cabinetry business that only sells in Santa Fe to ultra high end people. Some of her clients are name celebrities and some of her jobs are more the most of our houses! Crazy Craig (who is par of my team doing consulting for her) joked that the ideal motto for here business would be, "When Expensive Just Isn't Good Enough!"

But CL herself is unbelievably down to earth and great fun. She's also a very avid gardener. When we got to the top of the climb and were eating our snacks, she pulls out her little pad and asks me what I want her to grow the coming season as she's starting to pick out seeds. I knew doing that Tin Chef dinner for her was going to payoff.

Sunrise Breaking on the Mountain

Our Destination only about a Mile Away

Put To The Sabre

As penance for my packing up the Visigoths a year or so too early for their proposed departure from Albuquerque ( I was just trying to help for crying out loud!), I was required to expiate my sins by taking part in a cherished Visigothic ritual - the Sabre Dance.

This involves a bunch of guys skating around on ice in armor versus another group similarly armored both carrying around saber like weapons which they use mostly against each other but occasionally to hit a small black object. Every once in a while this object goes into a net and everyone either cheers or groans depending on which side put the object in.

During this ritual, you are required to shout out talismanic chants like "Go Sabres", clap your hands, groan, curse, etc. depending on how things are progressing. Then there is the animal worship. My local Goths evidently worship the Buffalo while our opponent tribe was worshiping the Bruins.

While this is clearly a sign of the barbarian nature of the Gothic tribes, I must admit there was a certain attraction to the whole thing.

Con - I Mean - Destruction

No actual building is on the horizon but the DE-building continues.

We continue to enhance our front yard landscaping

I'm beginning to think that this plastic dust guard stuff is organic because it keeps reproducing. The builder thinks we may have to reinforce the back of our house from our living room going to the master bed room - hence the exploratory work below in the living room

And this use to be our front closet but is being closed off and will be opened on the other side to give more storage in the second bathroom. Our foreman didn't have much to do today so he decided to start on this which meant I had to empty thing everything out on the quick.

I suppose at some point something is actually going to be built.

When in Doubt - Fall back on Pictures

I had great intentions for writing my post for this weekend. But we had to go to the Goths tonight and mollify them them dinner and wine. Visigoth Queen, Pulisha, was very upset at us. She had written about her and hubs dissatisfaction with the current work and compensation state of affairs here and mentioned in her blog that they probably would be moving out of Albuquerque. Evidently I took it too literally and when they got back from work that day and found me in there house packing their stuff up, they were a bit ticked. Sheesh I was just trying to help.

I think most casual bloggers agree that when you don't have time to write much, pictures are a great fall back.

On Saturday, I went on my longest hike since the operation. I had had my flu shot the day before so this probably was not the greatest idea because I was in mucho pain on the way down and was wiped out that afternoon.

Picture on my way to the destination at around 9,000 feet

Two shots of a mountain across the way on my way down

Construction Stuff

The concrete footer is in

This is where the stairs are going to go from left to right

To keep dust out but to allow us to get in an out of the house we have a zipper enabled barrier. Makes me feel like the scene from ET

Footer for the upper porch in the front

Food Event of the Weekend

Mrs. de-I had harvested some more rhubarb and wanted to do something different so she found a recipe on-line - a kind of jelly roll with the homemade rhubarb filling and a sponge cake made from scratch. The cake was totally awesome. I'm trying to talk Mrs. into doing a version with the rhasberries she's frozen from the garden when everyone is here this Christmas.

Charting Your Course Through Troubled Waters - Part Two

What Happens Next?

As of this writing, the stock markets are gyrating. Also the world's authorities are pumping massive amounts of funds into the banking system to get the flow of interbank lending (the life blood of the financial system) going again so the normal everyday business can be funded again but they are far from stable. While there is a lot of uncertainty, there seems to be just a bit less outright panic and terror.

So what does this mean to those of us who are just little folk buried way down among all the statistics? Well for one while you can stop panicking that does not mean you should not be concerned. Bubble and stock market crashes are preceding indicators of economic recessions. For most of us in the work-a-day world it is not the value of our investments declining that will have the major effect, it will be the influence of real economic decline over all in the economy. That is what causes loss of jobs and loss of income - the part that we little folk fear and dread.

Before I start going into what one might be able to do about one's future in this environment (which will be in Part Three), I want to get you really, really focused on what I believe is the magnitude of what we are dealing with. Because I don't think we are having just a run of the mill major recession - which for those of you too young to have gone through one is not pleasant. We are going to go through a prolonged period of learning to deal with much, much less than we've had before.

Now I'm not a Nobel Laureate economist, but I do have a pretty good track record for calling these things. (It has been gratifying in a perverse way the last few weeks as a number of business clients and associates have reminded me that I called this collapse starting two years ago).

The world economy is now awash in new debt and financial commitments that have been thrown in trying to restart the flow of business funding. Before this the U.S. was already way in debt both as a country and as a mass of individuals. Where is the money going to come from to pay down this debt? It's going to come out of taxes. It's going to come from less monies governments have to give services. It will come from individuals not being able to buy things because they are going to be paying down debt and higher taxes.

When all these things happen, that money paying down debt can't go into building new products and new infrastructure. When that happens the businesses that produce products and do infrastructure can't hire people. All of this causes a decline in economic activity and a reduction in jobs and income. Add to that something I've written about in the past - the fact that there are lots of places in the world that have cash (China, the Middle East) and they want what we've had and are going to be able to pay for it. That's going to mean less of everything for us.

This is a new world and it's going to last for a long time. We are going to be in a situation in the U.S. where we just don't have the capital to make things happen. People are going to find out that a lot of stuff that they think they are entitled to is - guess what - not an entitlement at all. In fact they are going to learn that they have been very, very, very lucky to have been alive during a period when one country dominated the world's economic output and a corresponding lifestyle - and all that is over.

They are going to find that they are not entitled to:

• Multiple cars
• All the electronic gadgets anyone could desire
• Being able to eat all our meals out whenever we want
• Having a system pay hundreds of thousand of dollars per individual just to keep them alive 9 more months
• Own a house
• Use all the energy they want
• Go on vacations anywhere and anytime they want
• And a host of other things
  

We've been on a wonderful ride - but it's over.

But that does not mean one has to despair. Because in every circumstance there are winners and losers. If you want to be winner, you have to understand that the rules are all changing. Accept and embrace that and you are on your way to charting your new course.

Constrution Today 10/13

Here's what happened today remodeling fans.

We were told to shoo out of the house for the day because it was going to be noisy and they brought in a big dumpster. When we came back we found -

The complete wall between the room and hallway gone

From the other direction you can see they've closed off our office so dust collection is less

Inside the room, they've taken out the concrete pad to put in more extensive footings to hold the new construction. This where the stairway upstairs is going.

And they've taken off more of the ceiling as well

Review of the Weekend

A multi-faceted weekend. First let's start with construction photos!

Our hallway from the front entrance way to the bedrooms
Flooring is out and on the left they've taken out the closet.
The stairway to the new upstairs will go up and left from this point

This was our exercise/TV room. That space will now be used partially for the stairs and partially as expanded wine storage.

Looking back out from the room through what was closets back toward the hallway

This is taken looking at the ceiling towards where the stairs are going

And in addition to the addition to the house, we also made a decision to do some new landscaping in our front yard since we've done nothing there since we moved in 8 years ago.

Our friends exiled in Salt Lake City, Gaius Derf and Agent W were here because she had work and their daughter and her in laws were vacationing at the Balloon Fiesta. So we had them over for dinner on Friday night, met up with them and the rest of their crew for Saturday dinner, and Derf and I went hiking Sunday

Tomato Salad (from the garden) and Deviled Eggs filled with crispy proscutto

Things are winding down with the garden and the shortening days so Wife spent all day Friday harvesting things and pulling out the dying plants. Of course that meant a lot of processing of produce by me. I took all day Saturday working on roasting, peeling and seeding New Mexico Chiles and Poblano Chiles. Then I roasted about 20 pounds of tomatos. I peeled those and I drained them separating the water (which I use like a cooking stock) and pulp. Then I took a bunch of butternut squash and I cooked it with the NM green chile to make a soup. Finally, some of our chiles went red (got riper than they should be for fresh chile) so I dried them out and made my own red chile flakes.

Mass 'O' Produce

Squash and Green Chile Soup
Crisped up bacon will finish this off

My homemade red chile flakes
They smell awesome. I'm planning to make some sort of red chile dish for AinA's boy friend at Christmas

Construction (or Destruction) Begins!

After two years of ups and downs, starts and stops, with one contractor dying along the way, we have finally started the home remodel project. They were at it today tearing out closets, removing carpeting and getting ready to jack hammer out concrete starting Monday. Pictures this weekend.

Charting Your Course Through Troubled Waters - Part 1

It is obvious that the economic crisis isn't going away and that we are probably going to be living under less than optimal circumstances for at least the foreseeable near term future. So what do you do to make it through this? I laid out some basic principles last month. But as:

1. I've seen in my own business and with the lives of my children that the need for constant reappraisal and adjustment of action and,
2. I've lived through numerous of these and,
3. I do crisis management for a living

I'm going to keep a flow of information related to how one can deal with the current environment.

This post will deal with "Don't Be A Victim".

So your job is at risk. Your savings are depleting. Everything you've worked for is threatened. What are you going to do? Are you going moan about you're fate? Lose sleep worrying? Go into general depression about FAILURE?

The answer if you are normal is probably - yes I'm going to all those things. And you know what, it's OK. It's OK to be miserable, depressed, angry, scared, frustrated, etc...for a while. Depending on how you're coming into this (a sudden event like losing your job, or a gradual realization that things are deteriorating) this can be a few days or a few weeks.

But then you have to determine - what am I going to do. How am I going to make it through this (which I will talk about in a later post). What you can't do is give up, be a victim. There are all kinds of studies of prisoners of war and concentration camp victims that show that those with the will to survive are those most likely to.

Most of us are not complete Stoics, capable of taking an emotional hit to our chin and not reacting. A good wallow of self-pity is a pretty realistic reaction to a crappy event. But don't let it be the guiding light. Let it be a fling. Then let it go and get on to the process of figuring out just what it is you're going to do.

Gothic Captivity

Don't you just hate it when those darn barbarian tribes do one of those slight of hand, encirclement movements that leave your poor civilized self surrounded and at their mercy.

Visigoth Queen, Pulisha, and Royal Consort, Tim de Buffalo, are off in Phoenix with Tim's father and brother to watch their beloved Buffalo Bills play...WITHOUT THEIR CHILDREN.

No the three pillagers in training are being watched by Wife and I (much more wife). Taking care of these is not the tranquil experience my sister-in-law writes about. It's a little more like the poor folks caught in Jurassic Park.

But not to worry. Memory is long. Our time will come.

On another note, it is very unusual for us to get a rain that lasts all day or all night but we had one last night which left a pile of clouds coming over the mountain.

And some beautiful clouds at sunset.

Metaphysical Musings

Tapasya Revisited

Right after my kidney donation operation, I had a spiritual revelation about old guilt that had been burned out (tapasya) from challenges. My trip east last week visiting my brother, father and sister brought up that evidently other hang ups had been burnt out as well because things that would have in the past driven me up a wall were just non-issues.

The Feel of East and West

Driving from Hartford, CT to Boston, MA (even though I grew up here), I was really taken by the incredible volume and thickness of the trees and greenery. It is so over powering and it seems like it just closes in on you. Then I got home and took my walk this morning, and I am totally taken in by how open everything is, how far you can see and how uplifting it makes me feel.

Changes

After two years of working, having one contractor start, stop and then die - then starting again with another contractor - our home remodel starts construction on Oct. 9. The job is supposed to take 5 to 7 months.

After three weeks of Chinese Fire Drill trying to get reservations made and business organized for an unplanned for business/pleasure trip to Amsterdam and Israel, the whole thing got canceled. This really probably a lot better for me business wise but it means I have to ship a container load of butter spray, light salad dressing and New Mexico Chile and Salsa to my daughter there to assuage her disappointment.

Sister Update

A number of people have asked me how my sister is doing since the receipt of the new kidney. I spent considerable time with her yesterday and I am pleased to say she is doing very well.

She looks much better. She is doing a lot of walking and can maintain a brisk pace though she has a tendency to not give herself credit for what she's accomplished. They have her various medications down to a level that is probably as low as they are going to go. She still has trouble with being tired and she complains that she is sleeping later than she should.

It still seems that it is a little early for her to really be taking stock of what she is going to be capable of and what she wants to do going forward.

All in all I'd say she's doing great.