Above is a note Mr. Bissell wrote Dr. William Sparks at Queens University after reading his article on Resiliency in the Sunday Observer.

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I read with interest this morning the article in The Charlotte Observer on the two financial raconteurs at Queens last night and the question put to John Mack of Morgan Stanley as to how to avoid the financial crisis was answered in the most obvious manner when he was asked, “How can new graduates prevent another?” Mack told them to, “Speak up when they see things that don’t seem right; often, the employees on the ground level see things the CEO doesn’t”.

Hopefully, this is what we preach every day in terms of exactly what the Name It and Nail It program is designed to do for those items that seem to be unheard and my #1 goal for the year for all of us is:

To maximize value add through constant identification and serving up of problems which are listed with solutions being systematically worked towards.

Also, if we jump to the communication characteristics of a Top 5%er, “one sees; speaks frankly; listens to understand;  2 ears - 1 mouth; is open and honest – does not withhold information and gives and receives opinions in a positive manner,” all of these strive to have us communicate in this fashion.  It is so obvious that these Top 5% characteristics have not been heeded and communication is the crux of the economic problems of today.

John Mack’s sage advice does not apply only to the banking business or our business, but our lives.

Our children should be empowered and encouraged by us to surface those problems they see.  Our home life which is so important should also foster this type of communication before misinterpretations or real problems have a chance to bud.

Another emphatic endorsement of communication we should all heed.

All of us know as members of families the goal generally is to have a tight knit unit that interacts well, teaches the young to become self-sufficient and generally, the unstated greater goal of any family is to have each individual while they are here on earth add value or make the world a better place for them having been here.

Take this scenario of a family with four children. The parents have worked hard, are financially independent and hopefully raising their children to do the same.

By doing odd jobs while they are in school at places such as grocery stores, fast food outlets, the hospitality industry and landscape maintenance; the children have each accumulated their own nest egg. The oldest now has a home and the youngest at age 16 has made a down payment on a car so he can get back and forth to work.

Let’s fast forward a couple of years to a downturn in the economy. Three out of four children have lost their jobs and Dad has a large second mortgage that he has made on the only child who was old enough to be a homeowner in the family, he now owns the car loan of the youngest child, he is working on helping the third child with their credit card bills and is paying the insurance on the vehicle of the fourth child.

These “intrusions” or this aid by Dad were meant to only be temporary. What chance is there of that happening in this economy that we are in now?

The above analogy is very much like the position the government finds itself in today where it has rushed in and done a financial rescue which set off an economic stimulus spending account. According to the New York Times this morning, this accounts for the bigger share of the nation’s economy – 26%. The Times goes on to say that the government is financing nine out of ten new mortgages in the United States. If you buy a car from General Motors, you are buying it from a company that is 60% owned by the government. If you take a car loan or run up your credit card, the chances are good that the government is financing both your debt and that of your bank. If you buy insurance from the American International Group, you will be buying from a company that is almost 80% federally owned.

Just like Dad’s intrusions, these are meant to be temporary.

As hopefully all of us as family members know, we have to let your children learn and intervention like our Dad above, will never work nor will the government’s intrusion.

Last month I did my September musings, but, unfortunately, many of you did not receive it (because only with permission of Ned Curran can you read it).

We left the chicken in the barnyard racing rapidly around. The chicken was a special chicken so we know about him, but this month let’s talk about the rest of the world.

We are a little over a year out from the Lehman failure, the Wachovia Wells/Fargo shot gun marriage and a near failure of the entire financial system.

Since that time, we had some $700 billion in TARP funding, we have had the $4,000 cash for clunkers which totaled $3 billion, we have had the $8,000 rebate for first time home buyers which has been taken advantage of by approximately 1,500,000 participants, we have had a tremendous upsurge in unemployment benefit payments and I am sure we don’t hear enough about lack of government revenues coming in because of tax payments by individuals, investors and corporations. They have to be way down in light of the tremendous losses sustained and they will continue to go lower with government expenditures higher than they have ever been.

The hotel industry is in the worst swoon since the depression, but compared to what I think has to happen – all is quiet.

The regional banks are loaded with commercial real estate loans.

The estimate for the budget deficit is $1.4 trillion compared to a balanced budget at one time during the Clinton administration. Right now we have more and more people hanging on. I know of people who financially were healthy second homers who are now getting by from borrowing on their 401(k) plans. How long does this last and what is the alternative after that?

All we have read about are toxic assets and there are so many commercial real estate loans out there that are being extended because nothing else could be done. The banks don’t want the property and the borrowers are in denial believing that there is a possibility that their investment will come back enough to be viable.

Stay tuned.

(Revised 10/28/2009)

I keep trying to equate today’s markets to a time when the music stopped which was a surprise to all of those on the dance floor, but the analogy won’t go any further because with the music example I view what happens is the people on the dance floor go back to their seats and they are where they were before the music started.

Real estate is key to many individuals - some living off their house, some working for their house and many having real estate investments. Since the music analogy won’t work for me, let me try another that is not very pleasant. Many to whom real estate is key are just like the chicken who has enjoyed himself wandering around the barnyard being fed and all of a sudden just been taken to the chopping block and beheaded by the farmer.

When the chicken is released, it races around the barnyard and then lies down…dead. In the case of many developers or entrepreneurs, the farmer has just done his work, but it is going to be two years before the real estate entrepreneur/developer lies down.

I say this because with the farmer and the movement of the ax it was so quick that there was very little time to fear what was coming; really the same with real estate and the economy.

On December 11 last year, I wrote a piece on the impending storm and at that time I could not find anyone who in their circle of friends had lost their job. Unemployment in Mecklenburg County is now 12.4%.

Most real estate entrepreneurers would be described as I described myself to my Father in 1987. I told him I was a professional borrower.

Since 9/11, times were good and dollars were available at a very low cost, appraisals were high, values were rising and the definition of how high was up was constantly being tested. If you didn’t inventory land, you were behind – entitlements were gold. Most projects were built with a three to five year hold before exit and thus, many financed short term.

Where are we in the run around the barnyard? There is very little money available virtually at any price and if dollars were available, few developers are “qualified or financially able”.

$400 billion in commercial loans are coming due this year and banks are rolling them for two years virtually doubling and tripling the spread over 30 day Libor. Everyone can buy a two year renewal with their bank. Wachovia (not Wells Fargo) does not have a new business unit in real estate commercial loans.

The developer realizes more and more that life is a series of alternatives and theirs are very few, but they must hang on and hope the markets in some way stabilize or return to some form of stability. Everyone is working to make sure today’s appraisal of their property will support the existing loan for renewal purposes. Developers have been in denial.

The balance between entrepreneurial drive and financing responsibility (as in banks) spread to development companies where professional managers were incented to take large risks.

Everything is in contraction. Shoppers are in Wal-Mart or Family Dollar and the barnyard scenario is beginning its two years before the commercial real estate borrowers (developers) are insolvent.

Twenty years since the hiring of Art Fields, Crescent Resources is bankrupt and you will see other large developers cease to exist in their present format in the next twenty four months.

Values as reflected by sales prices of unimproved properties have not really fallen off the cliff as they should have due to loan extensions where the borrower can still pay the interest/ improved income property. Values have dropped and buyers have left large deposits on the table with the rapid rise in cap rates. Contract generation today on improved properties other than a few 1031 exchanges is non-existent.

Never has the ax fallen so fast and for now the chicken has the run of the barnyard.