Dear Friends:Two postings ago, I spoke of some of the many hardships that the declining global economy will be visiting upon us during the course of the worsening global recession (which I would never call a "depression," as this latter term has become Politically Incorrect). Yet, as doors to conventional employment and credit markets are being decimated by the frightened people in charge, opportunities are coming to light. I would like to discuss these here. Grinning, and head-nodding are not only permitted, but strongly encouraged.
Here are the ways to think, the places to be and the things to do:
- You probably should never trust a man having the last name "Madoff" with your money... and although every U.S. defense lawyer would immediately jump out at me and say, "according to the American System Of Justice (all rise!), he [Bernard Madoff] is 'presumed innocent until proven guilty'," my bet would be with "any person, at any time, is as guilty as the government wants him to be." To wit: former New York judge Sol Wachler (who, himself, was snared by the FBI while dressing up as a cowboy and stalking his one-time mistress) once said, "A good prosecutor could indict a ham sandwich," and the U.S. Government's conviction rate stands in excess of 98% as I write this. Similarly: do not lend money to a fellow whose name is "Skip"...be very cautious before dating someone whose last name is "Loveless"...and never throw a pair of shoes at another person who is protected by the U.S. Secret Service. As a side note, throwing a pair of used gym socks is cheaper, just as offensive across a broad spectrum of cultures, and might make you famous. This ends the humorous portion of this article;
- Understand the difference between Tactics and Strategies -- Strategies are the longer- term plans you make for achieving your ultimate goals and objectives, in accordance with your ambitions, desires and inclinations. A strategic plan maight cover a span of time from several months to an entire lifetime, but its destination is where you want to be. Tactics are short-term initiatives for dealing with the impediments, complications and situations which you encounter along the path to achieving your goals and objectives. They often involve palliative measures, adjustments in timing, a slight detour from the map -- but they are merely immediate accommodations, and should never keep your ultimate focus from your goals and objectives. The simplest analogy is in a situation where you are planning to go to a supermarket, and your ordinary route is blocked off by Police Crime Scene Investigators, a fallen tree, a picket line of anti-government protestors, an oily chemical spill, or an inoperative traffic light; while you will navigate a new route (the tactic), you will still be heading for the supermarket (the strategy to appease your hungry children who are suffering from Taco-Bell Gastritis). Don't lose sight of strategy when engaged in a tactical maneuver;
- Renegotiate your mortage and other personal debts with institutional lenders -- while they are generally as heartless as they are headless, they would rather have a performing loan (or even a loan settled at a discount) than a defaulted or non-performing loan. They are today's 'bad guys' and have certain suble regulatory imperatives which are making them more receptive. Be proactive and scare them a bit. They want to keep your loan in good standing, even if their tactic du jour is to restructure or modify your repayment schedule. They will be more cooperative if you are very explicit with them about 1) the dire economic consequences with which you are faced, 2) with your knowledge that they are doing this for many other borrowers, and with the fact that 3) it is a "win win" proposition for them [trite but effective]. By the way, don't waste time with those aggressively-marketed consumer credit management companies...negotiate with each credit card company yourself;
- If you must pay Inland Revenue, Internal Revenue, or any tax authority, try to pay by postal money order instead of by check. This may help to forestall or even prevent any levy and seizure of your bank account. I would add that if you are a U.S. citizen, or any party subject to U.S. taxes, pay timely and treat the tax authorities as a high-priority creditor. They have virtually unlimited rights and access to anything you own or earn, and they can tack on interest, penalties and other charges at will. You are outgunned - render unto Caesar before he sends his soldiers after you;
- If you are in a technical business or trade, focus your assets, marketing and efforts on repair and maintenance -- While people cannot afford new autos, homes and other large-ticket items, they are increasingly compelled to care for and maintain what they already have. Don't sell a new box -- sell the servicing and upgrading of the old, but salvagable one;
- Businesses which conduct e-commerce via internet are much better choices for investment and promotion than geographically-anchored businesses which people must drive to in order to procure products. This is the era of the online entrepreneur. Consumer purchases will be declining, but an increasing percentage of them will relate to a) repairs and maintenance, and b) online purchases;
- Identity theft, as well as crime, in general, will be increasing. When purchasing online, use a PayPal account instead of a credit card account. Further, if you are an online merchant, you might consider using PayPal as your principal merchant services provider for this reason;
- In business, try to keep your payment obligations in U.S. Dollars, and your billings, borrowings and receivables in Euros to the greatest extent possible;
- If you have an investible portfolio, you might consider keeping some of your holdings in gold, Euros, international Euro-denominated instruments, and very inexpensive multiunit housing properties (non publicly traded) which are producing current income, and which you do not have to borrow money to purchase. In investing, now is not a good time to leverage up and buy on any type of margin. Invest for asset preservation and current return. The notion of the "hot tip for quick gain" is for pathological gamblers and imbeciles;
- Develop your networking and relationship-building resources, as well as your team skills -- partnerships offer diversification of abilities, revenue sources and moral support in difficult economic times;
- If you are in corporate middle management, start thinking like an entrepreneur and building an independent business. You might also start to circulate a winning resume with a captivating cover letter (see the SELF-HELP, PERSONAL GROWTH AND PROFESSIONAL SUCCESS Sections at either HUMANITAS MAXIMUS or IEP in order to get some superb resources) -- your corporate days may be numbered;
- The fields associated with self-help, counseling, religion, astrology will be growing -- Pay serious attention to them, and get into them if you have the inclination, skills and energy. A world of people is desperate for reason, restoration of hope and faith, and information to help them to deal with a difficult time and a very uncertain future. Help these people in earnest, and profit by it.
I wish you, each and all, a wonderful holiday season, a resurgence of self-confidence, a growth in faith, and a renewal in person-to-person communications and socializing.
Faithfully,
Douglas Castle
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