Can We Survive the Next Crisis?

Ten years ago this week, Lehman Brothers Holdings Inc. collapsed, triggering the biggest bankruptcy filing in U.S. history and a major catalyst for the financial crisis, a seismic event that still reverberates today.

Let’s look back at where we've been, what we've learned, and where we go from here.

Small business optimism surges to highest level ever, topping previous records

U.S. small business optimism surged to a record in August as the tax cuts and deregulation efforts of President and the Republican-led Congress led to more sales, hiring, and investment, according to a survey by the National Federation of Independent Business.

The NFIB Small Business Optimism Index jumped to 108.8 last month, the highest level ever recorded in the survey's 45-year history and above the previous record of 108 in 1983, set during the second year of Ronald Reagan's presidency.

Is your management ready? Does your leadership and management teams have a plan of action to take advantage of this optimism?

Job openings

They rallied to a fresh record, too, as the number of available job postings outpaced the number of unemployed people by 659,000 in July.

At the same time, the largest share of workers since 2001 quit their jobs. The optimism is building in the Labor market as:

a) more Americans are confident enough to leave their jobs in search of fatter paychecks, and

b) labor market strength could push hourly wages higher. Remember, wages rose in August at the fastest pace since 2009.

Corporate Leverage has continued to grow

The 2008 crisis was the result of U.S. households feasting on cheap credit to buy homes.

These Ponzi-like conditions created a giant subprime-lending industry. This has continued after the financial crises. We have not learned from our mistakes. Just look at the Corporate Bond market:

• The federal deficit is now projected to top $1 trillion in 2018
• The government took in about $105 billion more in individual and payroll taxes but $71 billion less in corporate taxes. Spending on interest on the public debt increased by $55 billion, or 19 percent.

Crisis and deepening dysfunction in US politics

Every day last week brought new demonstrations of an unprecedented crisis within the Trump White House and US state apparatus. The Trump administration is torn by internal divisions and conspiracies.

Erratic Real Estate Market

Refinancing activity plunges to the lowest level since 2000.

Supply of Homes Surges 20% to 90% in Many Markets Just as Pending Home Sales Drop

Spending and Individual debt on the rise

Student debt and Auto loans have increased steadily.

The priciest iPhone now costs more than a MacBook

Rising Inequality

The top 1 percent's share of global wealth has increased by 10 percentage points.

After the banking, currency, or debt crisis...the share of centrists or moderates in the country went down, while the share of left- or right-wing radicals went up in most cases.

Among bachelor’s degree recipients, roughly 3.6 million or 4.8% were living in poverty in 2017, according to the Census Bureau.

As stocks surged, wages and salaries stagnated, rising more slowly than they typically do in post-recession rebounds, exacerbating income inequality.

Here is a perfect example:

Nirmal Mulye, the CEO of Nostrum Laboratories, used the following logic to defend his company's decision to hike the price of an antibiotic by 400%:

"I think it is a moral requirement to make money when you can...to sell the product for the highest price."

• He also told the FT: "I agree with Martin Shkreli that when he raised the price of his drug he was within his rights because he had to reward his shareholders... this is a capitalist economy, and if you can't make money, you can't stay in business."

So, my Question to you: Is the over optimism bubbling?

The next financial crisis ‘will be more severe’ socially and politically, says billionaire investor Ray Dalio.

A decade later, amid signs of new asset bubbles, a big question is whether the steps taken after the crisis have made that system strong enough to withstand the next shock.

Nobody can answer for sure, but are you going to wait for things to happen or make things happen?

We need a game plan to hedge against such cyclical events. History tells us that they are inevitable. Have you taken any steps?

Think outside the box. Make use your Emotional Intelligence. We need a Wholestic approach.

Learning is a 4-step process:

1)   You don’t know what you don’t know

2)   You know what you don’t know

3)   You know what you know

4)   You don’t know what you know – It becomes your sixth sense

What Have We Learned Since 9/11?

That comes back to my original question: Can We Survive the Next Crisis?

What do you think?

Trushar Mody

EncoreCorporateTraining.com