The Domino Effect

I am sure by now that you have heard about the recent chapter 11 filings. You cannot turn on the news without hearing about the Lehman Brothers. Whenever there is something big, I notice the media repeats themselves over and over. I am sure much of this is because they expect viewers to come in at different times. The problem is that we hear about it and rarely get some of the details. Today I thought I would just discuss how this will impact your business and what you can do about it.

As you have already heard, Lehman Brothers bankruptcy is the largest in history. Others have created problems and now the US Treasury is in big trouble. I discussed this with someone the other day and I was shocked to hear that they felt they would not be impacted at all. Mostly they believed that the people who were working for Lehman would lose their jobs.

You need to understand that when they say the biggest in history, they mean the biggest! The total amount was somewhere near $629,000,000,000.000!! That is enough money to pay everyone in New York City about $62,000. I’m including poor and rich alike in that number. So this is a big deal.

Other banks like IndyMac closed this year creating a fear of lending with some institutions. When you are looking to get a loan, banks are looking to see if you can pay them back or not. Honestly, they should have done this from the beginning. Now they have no choice but to be selective on whom they lend money to.

It’s easy to get caught up in all this mess but one has to ask, How did we get here? What happened to us that landed us here? The simple answer is greed. Good old fashioned greed. Banking institutions know that they make most of their money from those who cannot afford to pay them back. Many of these banks have built their empire off of the backs of the poor.

Really, all the poor need is just some financial education. Without that education, its only going to get worse. Since the beginning of time there has always been the hunter and the hunted. Our financial crisis is no different. Honest working people seek out loans because something changes and they are facing their own crisis. Banks know that they will keep working and building up debt.

What happens when the bank cannot lend money? The ones in need of loans will find themselves in foreclosure or repossession. It will be a very bad downward cycle.

The good news is that you can do something about it. You need to look in your business, take into consideration that these things will force you to see a paradigm shift. You see the domino’s falling from what happened with the big firms but are you quick enough to make changes in your business? Will you avoid a domino falling on you?

Where do you get the money? How will you grow? There are all easy answers to those questions and I would love to hear from you as to how you plan on adjusting to the financial climate ahead. Are you prepared or are you going to wing it? I understand many out there are gamblers. Unfortunately for you, the odds are not in favor.