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 Getting
smarter means knowing what you don’t know!!! I have
to admit that my 30 years in business did not give me an ounce
of knowledge on what was going on in our country’s financial
sector. Sub-prime, CDS (credit default swaps), hedge funds . . . it
all did not matter. I thought. When it all started to blow up
in our private world, namely the scary thoughts of losing our
stock market holdings, my interest on how it all worked and how
it could fail grew overnight. It is simply amazing how in just a
week or so my mission in life became that of a student majoring
in economics. I bought nearly 25 books at Barnes and Noble,
every day visiting the same aisles, collecting the ammunition I
would need to fight my private war against the villains of the
finance world. How could this all happen? What was the root
cause? As an engineer, root cause analysis is like a hot fudge
sundae. There is an irresistible draw that occurs when you can
keep asking the question of why, until the last action that ever
contributed to the crime is found. Then the real trouble
started. As my understanding of basic finance grew each day, I
wondered more, not less, on how it could happen. Decisions in
the use of credit, the trade imbalance, and many other policy
actions made no sense to me. Clearly simple good business
practices and careful handling of spending did not take place.
What I was learning was in direct conflict with simply good
business strategies. As a newbie to macro economics my new
understanding was suspect, so I kept my opinions to myself
(almost impossible for me). Then a major break occurred. GM came
to the rescue by giving me a living example of what is going on.
I could understand the big three’s situation. I understood
market demands, competitive products, buyer psychology, and
things that made sales happen. With a 700 billion dollar event
in front of us, clearly a request for help would now arise from
every business sector in trouble. I finally could watch our
nation in action trying to resolve a solution to a problem I
understood. Finally I could grade them. As the Senate hearing
preceded, the true ignorance of business and markets by our
government came clear. I could now understand how so many
foolish mistakes could be made. Those leading us were blind and
losing their way, and we continued to follow them. So I asked
myself the most important question I could as a business owner.
What would happen if GM failed?
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Getting Smarter. . .
The latest of the schemes
already has a name. It is called “vishing.” If that doesn’t sound
descriptive, don’t worry, it will make sense soon. Many of you may
remember hearing of a technique called “phishing”, a play on words that
basically names a social engineering technique used to steal your
identity, or at least parts of it. The phishing technique relied on an
email sent to you, apparently from a trusted source, such as Microsoft,
eBay, or a major bank, asking you to follow a web link to “reactivate”
or “update” your account. The email, link, and everything was cleverly
disguised to look very legitimate. However, the link, of course, led to
a site that happily collected your personal information directly into a
criminal’s database for later sale on the black market. The term
“phishing” then was coined as a nomenclature for the practice of fishing
for credit cards, social security numbers, bank account numbers, and the
like.
Q: This economy is
really starting to affect my business. Business is down. People around
here seem to be staying at home and not shopping. I'm thinking of
cutting prices to bring people in. What do you think?
