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To Our Clients, Colleagues and Friends,\u00a0\u00a0<\/p>\n
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- For the first four months of the 2010 fiscal year, the federal deficit is already $430 billion.\u00a0 Doesn\u2019t it make you sick just thinking about it?<\/li>\n
- This year, interest on the U.S. government\u2019s debt will hit 42% of expenditures. That means that of every $100 the government collects, it can really only spend $58 on things like defense, social security, and various programs, the other $42 going to pay interest on our debt.<\/li>\n
- Alan Greenspan was considered a genius during the boom years, and now people are blaming him for planting the seeds of the Global Economic Crisis. What\u2019s kind of interesting is the mystery behind his Ph.D. thesis.
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\nFrom an April 28, 2008 Barrons article on his thesis: \u201cThere are only two known copies: the Maestro’s own and the one we viewed. As far as we can tell, Barron’s<\/em><\/em> is the only news organization ever to have seen the thesis since a third and now missing copy was removed from the public shelves of NYU’s Bobst library at Greenspan’s request in 1987, the year that Ronald Reagan appointed him chairman of the Federal Reserve Board\u2026..Magazine articles and a new book, Deception and Abuse at the Fed<\/em><\/em> have suggested that his degree was largely honorary and that the thesis was a cut-and-paste job, comprised of previously published, non-academic articles wrapped in a flimsy introduction. Two magazine articles in the late 1990s suggested that the thesis was entirely the work of Greenspan’s staff at the Council of Economic Advisers, which he chaired from 1974-1977.\u201d\u00a0 There\u2019s another side to the story, of course, but it\u2019s apparently quite clear that the thesis involved no original research done specifically for the doctoral degree.<\/li>\n- We flew into San Francisco from Baltimore a few days ago, and as the plane was landing, they played \u201cI Left My Heart in San Francisco \u201d on the intercom.\u00a0\u00a0 Just about everyone sang along.\u00a0 A sweet moment.<\/li>\n
- A bit of musical trivia is that Frank Sinatra recorded \u201cI Left My Heart\u2026.\u201d first, but he hated it so much that he had it yanked.\u00a0 Tony Bennett released his now-famous version, and the rest is history.\u00a0 We\u2019d be curious to hear Sinatra\u2019s version if it exists anywhere.<\/li>\n
- From Doug Mayer at MIAC:\u00a0 \u201cOne area of leakage that we observe consistently is in secondary where folks are using a spreadsheet-based model for hedging…..\u00a0 We find those folks are usually 10 to 20% over hedged all the time, mostly because their hedge models don\u2019t measure (or shock) the servicing component of the pricing that they get from their investors.\u00a0\u00a0 That leakage can turn into a geyser in a significant rally where pull-through drops, their hedges go quickly out of the money, and they have big pair-offs to pay.\u201d\u00a0\u00a0<\/li>\n
- From First Cal\u2019s Emil Fanelli regarding the joke about Bank of New York being so slow moving: \u201cI once had the privilege of dining in The Bank of New York\u2019s executive dining room.\u00a0 The dining room overlooked the East River , and I remember thinking that the slow-moving river currents were going at break neck speed compared to the bank I worked for.\u201d\u00a0<\/li>\n
- And then there was another stodgy bank, National Bank of Detroit . Their stock symbol was NBD, and we all thought we were terribly clever by referring to them as Nice But Dull.<\/li>\n
- Why did President Obama have to appoint a Commission on reducing the federal deficit?\u00a0 Isn\u2019t it pretty obvious?\u00a0\u00a0 Couldn\u2019t a college freshman tell you that all you have to do is reduce spending or raise taxes or both? As Ronald Reagan said, \u201cThere may not be easy answers, but there are<\/em> simple ones.\u201d\u00a0 We had massive surpluses<\/em> during the Clinton years, and the Congressional Budget Office projected a complete elimination of the national debt by 2009 \u2013 all of it –\u00a0 so if we did it once, we can do it again.<\/li>\n
- Here\u2019s another comment on leakage from a client, a mortgage company owned by a commercial bank in the not-so-deep South. \u201cWith regard to leakage, I can send you a copy of the spreadsheet we use to record loans as they fund \u2013 it compares what we expected to receive on each loan to what we actually received and shows the differences recorded into the various income categories\u2026Managers can look at the differences to see if they are significant enough to track down (i.e. not just little differences due to closing a loan at full balance and selling with a payment or so\u2026\u201d\u00a0 The company is Monarch Mortgage of Virginia Beach, owned by Monarch Bank, and it was one of the best run companies we saw last year. Actually, it was extraordinarily<\/em> well run.<\/li>\n
- There\u2019s nothing as good as laughing. Not chuckling or chortling, but out-loud laughing, so we recommend two very funny movies: Don\u2019t Mess With the Zohan<\/em> is about an Israeli commando who decides to <\/em>become a hair stylist.\u00a0 The plot partly revolves some Palestinians who decide to bomb his salon, and as unbelievable as it seems, you could be Jewish or Palestinian and still laugh hysterically. There\u2019s even a happy ending!\u00a0\u00a0 Valentines Day<\/em> is also hilarious. In many ways it\u2019s a throwback to romantic comedies of the 30\u2019s, but with a thoroughly modern twist.<\/li>\n
- A final comment from a client on re-purchases: \u201cIt\u2019s really simple. In our experience, one bad loan will wipe out the profits on 60+ good loans.\u201d<\/li>\n
- Terry Hodel was the President of North American Mortgage, and we remember his once saying that one bad loan wiped out the profit on seven good ones, and boy, things have changed since then?\u00a0 Sixty goods ones wiped out by one bad one sounds a bit high, but whatever the ratio is, it\u2019s way up there. By the way, was there ever a better run company than North American?\u00a0\u00a0<\/li>\n
- We had a hamburger at a TGIF in Towson , Maryland last week, and the waiter seemed pretty cheery.\u00a0 When we asked how he was doing, he answered by saying \u201cI\u2019m living the dream.\u201d Isn\u2019t that wonderful? It\u2019s hard to imagine that working at a fast food joint is anyone\u2018s idea of a dream, but it was a nice reminder that happiness comes from within and that people can be as happy as they allow themselves to be. By the way, it was the first time we\u2019d ever eaten at a TGIF and it wasn\u2019t all that horrible.<\/li>\n
- Speaking of TGIF, a good way to impress your boss is to walk in Monday morning and announce loudly and often TGIM, as in Thank God It\u2019s Monday.\u00a0 Your boss will mark you as a real up-and-comer and it will totally annoy your co-workers.<\/li>\n
- We really liked Baltimore on our recent visit. We drove through block after block after block of abandoned row homes, but the downtown seemed very much alive and vibrant.\u00a0 It also seems a bit like Boston , with lots of colleges and lots of college students, and that always make for a livelier city. We have some ideas on how to revitalize the neighborhoods that have been abandoned there, but no one cares what we think, so we\u2019ll just move on.<\/li>\n
- We have a theory on how to rate companies that has to do with their former employees:\u00a0 It seems to us that the top companies have lots of their people eventually go off and have great careers elsewhere.\u00a0 North American was one of those.\u00a0 A lot of great talent also came out of Countrywide and Headlands and a few others that come to mind.\u00a0 Great companies not only attract talented people, but they also groom them and prepare them for leadership.\u00a0\u00a0\u00a0<\/li>\n
- You\u2019re probably acutely aware of how hard it is getting publicity for your bank, so one of the attachments might be of interest.<\/a>\u00a0\u00a0 (click here)<\/a><\/strong>\u00a0 This is really embarrassing but this writer wanted some publicity for the ultra-tiny bank he ran, and besides hoping no one we knew would wander by on the day covered in this attachment, we mostly remember how bitterly cold it was.\u00a0 We had signs promoting the bank as the true heir to the BofA\u2019s heritage (a red circle around North Carolina with a slash through it) and did it on the anniversary of the 1906 earthquake. Anyway, we opened a few accounts on a plank atop two barrels (think A.P. Gianinni) and the moment the reporter from the San Francisco Chronicle<\/em> showed up and got his story, we closed up, went inside, and changed into normal clothes.\u00a0 It was embarrassing, but we did get some free publicity in the press and on TV.\u00a0 By the way, the little girl in the photo is 8-year old Hannah Garrett who cut school that day.<\/li>\n<\/ul>\n
.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 *\u00a0\u00a0\u00a0\u00a0 *\u00a0\u00a0\u00a0 *<\/p>\n
This week\u2019s cartoon is mildly funny but mostly a comment on yes-men, brief-case carriers, ass-kissers and sycophants.\u00a0 We remember one employee some 20 years ago who was a complete pain in the neck, always managing to disagree, ask tough questions, and bring up issues that no one wanted to deal with.\u00a0 She was a complete pain, but we wished we\u2019d had 5-10 more of her.\u00a0 So the question is whether your company rewards those who tell you when you\u2019re wrong, or whether you reward the team player who always tell you how brilliant you are.\u00a0 It\u2019s a key component of your corporate culture, and it\u2019s worth thinking about.
\nFinally, we\u2019re not above bragging about clients and friends, so if you got a promotion, switched jobs, or did something you want to tell the world about, let us know and we just might run it.\u00a0 Have a good week.\u00a0 And write the President that he really needs to get the deficit under control!<\/p>\nGarrett, Watts & Co.<\/a><\/p>\n
\u201cHelping <\/em>lenders increase revenues, control costs, and better manage risk.<\/em><\/p>\n
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- Corky Watts\u00a0\u00a0\u00a0\u00a0\u00a0 (CWatts@GarrettWatts.com<\/a>)\u00a0<\/li>\n
- Joe Garrett\u00a0\u00a0\u00a0\u00a0\u00a0 (JGarrett@GarrettWatts.com<\/a>)<\/li>\n
- Mike McAuley\u00a0\u00a0 (MMcAuley@GarrettWatts.com<\/a>)\u00a0\u00a0\u00a0<\/li>\n<\/ul>\n
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\u00a0 \u00a0 To Our Clients, Colleagues and Friends,\u00a0\u00a0 For the first four months of the 2010 fiscal year, the federal deficit is already $430 billion.\u00a0 Doesn\u2019t it make you sick just thinking about it? This year, interest on the U.S. government\u2019s debt will hit 42% of expenditures. That means that of every $100 the government […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-344560","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/344560","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=344560"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/344560\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=344560"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=344560"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=344560"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
- Joe Garrett\u00a0\u00a0\u00a0\u00a0\u00a0 (JGarrett@GarrettWatts.com<\/a>)<\/li>\n