The Strategy Page

Marc Emmer and the brilliant Kathleen Quinn Votaw joined forces to write The Hybrid Gap: How to Create the Ideal Work Environment.

According to Gallup, there has been a steady decline in employee engagement over the last year, right around the time many companies brought their employees back into the office. How will you retain employees while unemployment remains low, and wage inflation remains high? How are employers to compete?

We answer these questions in The Hybrid Gap white paper, which you can view here.

Don't miss our free webinar where we will share insights on The Hybrid Gap.

Click to register for our free webinar: June 9th at 11 a.m. PST

Bank Failures 2.0

With news that regulators swooped in to take over First Republic Bank only to sell its asset to JP Morgan, comes another sobering thought. A third of small bank loans are for commercial real estate. $270 billion in assets are due for refinancing this year, about 30% are office buildings. The national office vacancy rate is at 17%. Vacancies are already up in most U.S. urban centers, with cities such as Chicago and San Diego that have strong life sciences hubs performing better. 

A depressed commercial real estate market financed by smaller banks is a recipe for disaster. More consolidation is certain.

How bad could it get?

Yet another banking crisis and failure of Fed action to cool inflation fast enough is fueling fears that a soft landing will give way to a deeper recession. But that is chicken feed compared to a U.S. default, which is starting to feel like a real possibility. While still unlikely, the very conversation should give us pause. 

How bad could it get? Really bad. 

To blame one party for this fiasco loses the point. Both parties have held the majority, minority, and the Presidency, and neither in the last 30 years has mustered enough managerial courage to save the country from insolvency.  

The reason no one in Washington can solve this problem is they have, as we say in poker, no "good outs."

No Congressman will touch the third rail of Social Security and Medicare. Steep cuts in military spending while the U.S. is embroiled in a rivalry with China and Russia seems improbable, and doesn’t move the needle. Draconian cuts to other Fed departments is the only way, and still doesn’t stem the tide. Taxes will certainly be higher, but there is only so far a government can go without declining returns. 

So what will they do? Learn from the French, of course. 

Protests in France are a result of French President Macron delaying the retirement age for younger workers, which shifts the entire schedule of payments. This is quite logical given that people are living much longer than they did when these programs were enacted.

The public backlash stems from Macron acting unilaterally without a vote in Parliament--something our government does all the time. 

The French method for kicking the can down the road to future generations by adjusting actuarial tables sounds exactly like the gutless solution the U.S. Congress will embrace.

Ultimately, I think some form of the French solution is exactly what we will do. Let’s hope they don’t cause a meltdown of the capital markets along the way.

I'm sure both parties will come to a short-term solution, but the likelihood they'll solve the long-term problem is bleak.

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Our Strategy Experts:

Marc Emmer is President and Chief Strategist & Facilitator at Optimize Inc. He is an author, speaker and consultant recognized as a thought leader throughout North America as an expert in strategic planning.

John Morris is a Senior Strategist & Facilitator at Optimize. He brings experience in venture capital, executive coaching, angel investing, investment banking and financial management to his strategy consulting role.

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