Financial Crisis! This is why it happened.

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The economical crisis: is it really a crisis? What caused it? How can we extract ourselves from it? Let us be a little calm, cool, and collective about the multi-billion dollar questions. It seems like every little blip or incident sends the economy into a tail spin. How could a hurricane in the Gulf of Mexico cause long lines at the pump all over the South? How can less than 5% of the home mortgages going into foreclosure cause a financial collapse of world markets?  They cannot. Not by themselves anyway.

One of the problems is that the world hates America but loves to trade with us. We are the only country that can innovate, develop, and inspire progress. Our economy is over 13.8 trillion dollars, making it the largest in the world by far. America’s economy is larger than those of the next four largest economies (Japan, Germany, China and United Kingdom) combined. Sure, they are growing, but the world is far behind us.

With all of their oil revenue, Saudi Arabia has only the 24th largest economy in the world, and Venezuela comes in 34th, at $228 billion per year. That is still a lot of surplus for these nations, and they certainly do not want to invest it within their own corrupt countries. Mexico receives $20 billion per year from illegals sending cash back to relatives. Yet when they go home to Mexico, they only have poverty to deal with.

Nevertheless, because we are an open society, most foreign nations and individuals can trade with and invest in America. So, wealthy business owners and foreign banks are heavily invested in our economy. We buy their oil, toys, cars, and clothing, and they take our money to buy crops, military hardware, and invest in our markets. It is the latter that is causing so many sleepless nights.

As India and China demanded more oil for their expanding economies and America refused to produced more domestically, investors began to “speculate” that prices would go up with the demand. So they invested heavily in the American market. At the same time, America’s lending institutions and banks, being encouraged by Congress, began to change their lending criteria and sold risky loans to the Fannie Mae and Freddie Mac companies who lobbied Congress for more risky loans. The more money they gave to Congress, the more support Congress gave them to make risky loans.

During this time something strange began happening in the western states. Many foreigners using fake ids (often from their own Consulates) began to buy homes with weak, unsupported loans. It was a boom business for all. As the dollar weakened, more overseas investments came into the market, creating more capital for the banks to lend. The explosive mixture was ready – all that was needed was the right spark.

First came the crack down on illegal immigration and the well publicized raids on businesses. Communities began to report the exodus of illegals back to their own countries and a decrease in the local work force. At the same time there emerged a noticeable increase in the foreclosure rate on homes. Those foreigners with fake identification had no reason to stick around; they were abandoning homes. It started in California and moved into Texas.

Gasoline hit around $4 a gallon in the U.S., and there was a revolt from citizens demanding more domestic production of oil. This had an immediate reduction in the price of oil and the speculators panicked. They moved their money out of oil, the price per barrel plummeted, and the foreign investors took their money out of the country. The dollar got stronger and banks started experiencing a “silent run” on bank accounts when large depositors began to take money out. The first cracks in the financial institution began to appear. Those “silent runs” were often foreign investors looking for better places for their money. Then the “panic” took hold and the U.S. Treasury asked Congress to inject 770 billion dollars of cash to be available to banks to lend out. Without the cash infusion banks could not lend and businesses could not pay monthly expenses.

Now that Congress has shown its willingness to support bad ideas and mistakes, State governments are standing in line for bailout money. The floodgates have been opened. The stock market will survive, but only after sanity returns.


What inspires a Leader to lead?

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What Inspires a Leader to lead? My wife and I have been blessed to be acquainted with many world leaders and influential people. We have known benevolent foreign presidents that leads their people with a kind heart. We have know industry giants that have build great wealth by inspiring others to greatness. We have seen spiritual leaders that have a vision and can direct and define and entire culture. Then there is the uncommon leader that draws people to themselves and motivates them out of service to them.

I remember the very first time I met one of my many mentors I will call “Jack”, he was serving me. I was giving a speech near Palm Springs California and he came to hear me. It was not connected with his business and he only knew me as an author but he came anyway. After my speech we had questions and answer and this man stood up to let a room full of strangers know how much my book “The Rope” had done for him and his business. He was selling my books to this audience for me. He did not have to do that, he was going to get nothing out of doing it but he did it because he had the heart of a servant. That is the key of real success, developing the heart of a servant.

A few months later I was asked to speak at a function of “Jack’s” organization and meet his business partner “David” and their other leaders. It was at this meeting that I began to speculate on the characteristics of leadership. What made these guys go? What compiled them to continue long after they have reached every economical goal, every level of social prestige and the most satisfying lifestyle imaginable?

The answer clarified the evening before the main event began. “Jack” and “David” gathered with all their leaders behind the stage. They did not gather to agree on a strategy to increase their profits. They did not gather to determine how many people showed up to support them. They gathered to have prayer and to ask comfort over those seeking answers to the personal problems weighing them down.

As we stood there in a circle with both male and female leaders, I began to think about the characteristics’ of a successful person.You must have these characteristics long before you become successful because they must lead you like a beacon in the night. Backstage that evening I felt each one of those leaders would have rejoiced if someone from the audience had exploded their business to greater heights than anyone back stage. They would rejoice at the success of others.

I then had a moment to set down with “David” before I went on stage. Here is a man successful before coming to into this business. His motivation was not to provide more beautiful things for his wife, he understood there was nothing he could give her more beautiful than she already was. He was not trying to make more friends his level, of respect had guaranteed many friends. He was not trying to sell a few more products so he could be the biggest badness man in the business. Any conversation you had with “David” would leave you with an understanding of success. Success comes from serving others.

It does not matter if you are a surgeon ”David” or a migrant worker like “Jack”, the heart of a servant brought them successes of extraordinary levels.