A lot of people have been shocked by a variety of aspects of the current credit/banking crisis and the recessionary conditions that it seems to have created or exhasterbated. I have been warning about the collapse of the US housing and mortgage markets and the potential for a banking collapse since i first heard, a few years back, that over 20% of all US mortgages were Interest only VAR loans. I never imagined that a) it would affect the rest of the world as much as it had and b) that financial firms in Europe were part of this AAA rated crapfest, or c) that people in Iceland, Hungary and other countries in Europe were taking out mortgages in foreign currency that could destroy them financially. I never imagined that Europeans would attempt or even be allowed to make such risky financial descisions, maybe more than in the US, but i was wrong.

Strangely enough, many things that have helped build the productivity of the last 25 years have combined to increase the speed at which economic changes occur and how extreme they are. In the 1970s it took weeks or even months for the automakers to notice that sales were dropping and to cut back production. Today the number are integrated so that if sales drop today, you can cancel a shift of production tomorrow. Ideas of maximizing your business by aggressively using your cash flow to expand your business, lead to businesses with no capital reserves. printers, car dealers, small manufacturers came to rely on credit to ensure they can pay their bills from day to day, so they could maximize their pay. That strategy and it’s associated tactics worked great in strong market. Today it appears that all markets are even more rapidly pulling back as the world sees slacking demand.

The combination of technology, management innovation and rapid communications have combined to allow the various players in the economy to react instantly. This rapid reaction has allowed the economy to turn around from boom to bust in a few short months as word of crisis cause business and consumers to start hoarding cash instead of spending it. We should get used to the speed at which the Economic “bi-polarism” occurs.

I was happy to have been contacted by Washington Post reporter David Fahrenthold for my opinion about how the financial crisis was effecting the offset market.

his article was published today: http://www.washingtonpost.com/wp-dyn/content/article/2008/10/05/AR2008100502518_2.html

While I am happy to quoted, unfortunately he didn’t mention my company 4Offsets.com or link to out site.

Here are my words wisdom

“People still come to the site, but where you used to get people signing up [for offsets] every day, now you’d be lucky to get a few people a week,” said Fred Weiss, a small-time offset seller based in Ann Arbor, Mich., who sends customers stickers that say, “Carbon Neutral Vehicle.” Apparently that isn’t as important now.

“Who cares about the environment? Am I going to have a house next week?” he imagined would-be customers saying.

Well maybe I’m on my way to fame and fortune, but I think it will take a bit more before i join the talking heads of the US media.

Can’t Get Enough of Me? ;>) BUY MY BOOK!

Well i hope someone will do something about slowing this crisis down. I heard/read yesterday that 30% of Prime rated borrowers are being turned down for car loans, vs 10% last year. The number for Sub Prime rated borrowers was a 90% rejection rate, vs just 30% last year, basically the sub prime market is gone. With all the automakers reporting sales down 35% and show room traffic down 45%, we can see these new financial realities hitting the society in many different ways and few if any are ‘good’.

I say let’s call these toxic securities(and i use the term securities loosely) as worth 35 cents on the dollar, for the purpose of “Mark to Market” accounting rule for a 6 to 12 month periods. This will bring borrowers into compliance with loan covenants thus slowing the crisis. In fact had this been the case last january, most of the crisis might not have happened.