We must not disillusion ourselves that the current financial crisis is just another 'crash' and all will be well after the 'correction'.

It is true that the capitalist society works on a boom and bust principle but when I talk about 'correction' in the current crisis, I am not talking about simply letting the system 'work itself out', I am talking about the end of the present global financial system as we know it  We have an opportunity to re-build a better and fairer system of wealth distribution - the world has paid a heavy price, especially the millions of wage earners who have lost their homes and savings. 

Before I delve into the 'real story', I want to take you back to the times when owning a home was reserved for the privileged few, when even getting a Bank account was a privilege and more importantly, when lending was subject to strict criteria.  Banking in those days was the 'professionals profession'.

Banking and Stockbroking were the professions of the privileged few and it was a 'club'.

Now let's take a look at the last thirty years - we have seen a drastic change in the sheer amount of lending, to the point where the lending criteria is simply, 'do you have a pulse?'You see, it is not easy for Banks to make money any more - not in the traditional fashion anyway!  Also, think of the amount of 'day trading' that occurs today in the markets.  Now before you all go crazy and tell me that this is the removal of the 'club' system and that it is opening up opportunities for all - think of the motives behind the system that actually created these so called 'wonder' opportunities! 

In the good old days, customers were recommended, mortgages were recommended as of course were all loans and importantly, the people were far more more creditworthy.  My Grandfather said to me one day ( I was nine and raised by my Grandparents and  my Mother), "son,if all of us stopped paying our mortgages, what would the Banks do)?  He was not far from the truth, but of course, because lending was far more restricted, there would have been a far greater chance that they would have got their money back and of course, the stigma of bankruptcy was huge in those days.  But a very good question all of you should ask your Bank today is that if each depositor walked into the Bank at the same time and asked for their money, would the Bank be able to cover it? Think about that question when you next negotiate an interest rate for a loan!

Simply put, we are in an era of hyper competition and the Banking system is far from immune - just look at the deals that have been thrown your way, just to get you to borrow money.  think of the automotive industry, it is no longer about buying cars, but getting the right type of credit.  think of huge global corporations - General Electric for example - where does most of it's revenue come from?  Not from manufacturing, but from the GE Capital arm of it's business - finance.  the same can be said of General Motors and it's GMAC finance arm.

..continued

~Neil

I am again writing about events in the UK and from the news last week, we can see that the election battles have commenced.

A few days ago, a Member of Parliament for the Opposition Party was arrested by the counter terrorism unit of the police for allegedly leaking immigration information that was 'embarrassing' to the Home Office. Information leaked included details of illegal immigrants who had been cleared to work in security! I cannot believe that the Metropolitan Police Force now extends its duties to saving the Government from embarrassment - outside of the fact that the counter terrorist unit was selected for the job! As a staunch supporter of the Conservative Party, I never thought I would see the day when I would agree with one of the UK's most prolific communists, sorry socialists - veteran Labour MP Tony Benn, who said "once the police can interfere with parliament, we are into the police state".  I could not agree more.

~Neil

After my attack on the UK Banking executives who receive payouts for failure and hold expensive parties, I must comment on the 'big three' automotive CEO's that went to Washington to ask for bail out money, a mere 25 billion dollars collectively! 

But did they have to fly to Washington on their private jets???????

Perception is of course reality and whilst as another businessman, I can see that the cost of such an excursion is negligible, in relation to the financial state of their companies… they really should have given it a little more thought as public opinion has sharply turned against them.

It reminds me of an old friend of mine, starting his marketing business with absolutely no cash - something I can identify with, only his problems extended to having no car and no suit for that matter. I called him on the eve of him pitching to his first and extremely high-profile client, just to ask him if he solved his problems.  "The cash, no", came the reply, "but the suit and car, sorted", he said, in his finest London accent.  "go on, please explain", I asked him, "simple, one of my mates is a car dealer and the other is a tailor, I've got hold of a morning suit and a Rolls Royce". I was absolutely stunned and silent and then came the follow up - "you always told me to be the director of first impressions Neil, well I've just become the CEO, still need a chauffeur though - you up for it"? Got to laugh, but he landed the account though!

~Neil 

We are all hearing about the Government cash, or should I say the taxpayers cash, that is being handed out to the failing financial institutions, the latest being Citi Group.

You cannot solve, in the long term, a debt problem by creating more debt.  These institutions have enjoyed huge times of insane money making and through greed and loose credit policies, they are now facing their reality.  More importantly, where is the incentive to succeed, when failure is simply countered with a lifeline?

I wonder what would happen if I wrote to the Prime Minister in the UK, asking him for a loan - I can tell you that I would be referred to a local government office and told about the various 'schemes' that are in place to help business people like me.  After a few months of due diligence and a few meetings, not to mention cutting through the 'red tape' my case would be either approved or not and maybe I could get some cash.  Alternatively, I could be the CEO of a Global financial corporation, that you would expect to know a thing or two about money, especially how I judge others on how they use it and advise them where to invest it and steer myself into a financial tsunami and guess what, the 'red tape' and due diligence doesn't exist anymore and I get my cash and rescue my Company and probably walk away with a few million as well!

Capitalism is founded on the 'boom and bust' cycle and it is the very nature of capitalism and 'corrective' periods have occurred throughout history and they must be allowed to 'correct'.

~ Neil

I was reading Mark Cuban's blog where he is talking about the advisers that President Obama has assembled around him and the fact that he has not one single entrepreneur on his team.  Mark further talks about the need for the Government to get in touch with the people who form companies and literally live from job to job, hoping to get paid on time. He says that entrepreneurs who start and run small companies will be the propellant of the economy. I could not agree more.

These are the people who take the real risks, putting their money on the line each and every time and who have to constantly fight Governmental 'red tape'.  Yet many of these companies develop into hugely wealthy enterprises, creating jobs and paying serious amounts of taxes.  We need to locate and nurture this talent.

It seems the fat cat Bankers are at it again, this time back in the UK, the Royal Bank of Scotland saw fit to hold a SECRET 300:000 pounds party for its executives - fair enough you might say, when times are good, but not after receiving 20 billion pounds of bailout money from UK taxpayers!

Still on the Banking scene, it seems that the UK Banks have told the Chancellor that they will not pass on any interest rate cuts to customers as their profit margins are already too tight and they are not 'charities'.  They are absolutely correct - the charity is the UK taxpayer who has had no option but to bail them out with billions of pounds of their own money - the same money the Banks expect the taxpayers to then put back in their pockets so they can make even more!

~Neil 

So Joe Calzaghe did it! Beating Roy Jones Jr last night was an amazing victory for Joe - coming off the floor in the first round to produce a totally convincing points win, having cut Roy badly during the latter part of the fight.

I was at the famous South Fork Ranch, here in Dallas last night for a Dallas cast reunion.  Seeing the cast was amazing , as I was glued to each episode when living in the UK and still watch the DVD series today. Great entrepreneurial and business education!

Funnily enough, I got talking to some people about the boxing and the usual negative Calzaghe comments come out about how he only fights washed up fighters etc - I asked them if they boxed themselves and was not surprised to hear the answer 'no' and then tried to explain to them that any fighter has the capability to inflict serious damage to another with just one punch.  Roy Jones Jr was and still is, in my opinion and incredible fighter and although he is not going to be as fast as he was in his prime, nobody would want to be on the business end of any of his punches.  You have to respect anybody who steps into the ring and I don't care who it is, there is always a chance for either fighter to win.  Watching Roy last night showed me he was far from 'washed up' and gave a strong performance right to the end, but it was Joe who won through and it was totally deserved. Whether Joe will retire is now the question - certainly, he has nothing more to prove…but…like every fighter, it's in his blood!

So another good night for Wales and all that needs to be done now is to get the Rugby team ready for the Grand Slam and do it all again!!

~Neil

History has been made here in the USA today with the appointment of Barack Obama, the first  ever African-American President and proves that the USA is truly a Country where everyone has equal opportunity to succeed, even becoming President.  Good news for the Franklin family as my son, who was born here on 4 July, is being groomed to be the 52nd American President - he was glued to the television and embraced election fever like a true Presidential entrepreneur.  Look out for Samuel John!

Like in all election campaigns, promises are made and when the battle is won, it's delivery time.  As one of the most influential Countries in the world, the spotlight is always on the USA at election time, and given the global financial crisis that in my opinion, has not even commenced, it is firmly shining on Mr Obama today as it is of course, on all Global leaders.

Turning the attention back to the UK, we have to wait another two years until we can rid ourselves of our current Government, who has managed to fall short on virtually every promise, yet still clings to power.  I think even Mr Blair new when to jump ship!    

The Government nationalized television corporation, known as the British Broadcasting Corporation, the one that manages to successfully show and repeat the same show for twenty years and charge every person who has a television, a fee for owning one, whether they watch the channel or not, may have redeemed it self a little.  They conducted research at the famous Louis Pasteur Institute in France, into a chemical compound found in red wine that can actually trick the body into losing weight!  Fantastic news, but being someone who has total faith in natural products, I am sticking to the natural products found in the Burgundy region of the same Country!  Good news for Mum as well!

~Neil

I have just read an article in a British newspaper about the Chief Executive of failed banking organization Halifax Bank of Scotland (HBOS) being paid a ‘consulting’ fee to help Lloyds TSB, the bank that is taking them over to identify the weaknesses of the company. The fee for this consulting arrangement is a staggering 60:000 pounds per month!

Under his leadership, bad debts have doubled to 5.2 billion over the last five months and although he has forgone a golden goodbye of nearly one million pounds, he has the small consolation of a 2.4 million pension pot and of course the ‘consulting’ relationship, not to mention the potential loss of 20:000 jobs as a result of the Government backed nationalization of high street banks.

There is an argument that it doesn’t really matter if the executive leadership of large, public companies fail, they will probably leave with far more money than most people will see in a lifetime, when of course, the shareholders that back the companies end up losing.

But what about the humble entrepreneurs out there who have huge amounts of desire, ambition and of course, the winning ideas that will ultimately create wealth and jobs? If an entrepreneur fails, he or she will just become another one of many in the statistics of business failures and as most successful entrepreneurs will testify, they are certain to face failure at least once during their journey.

Three good examples of hugely successful entrepreneurs in Britain are Sir Philip Green, Sir Alan Sugar and of course, Sir Richard Branson - did they experience failure? Definitely. What I am saying is that out there is a huge pool of potential and existing entrepreneurial talent and that is the talent that needs nurturing and most of all, Government help.

It is of course election day here in the US and my money is on…

~Neil

I'm back again after the long absence and I'm writing this with two of the most important events in our current economic climate - the USA election and the looming fight with Welsh boxer Joe Calzaghe and Roy Jones JR.

I'll deal with the boxing first as it is the easiest and although I have the greatest respect for Roy, I simply have to root for Welsh superstar Calzaghe, who I tip to win this fight on Saturday and then perhaps Joe can retire as an undefeated legend of the ring.

Now to more concerning events, I believe we are about to embark on one of the worlds most serious financial crisis in history - one that will dwarf the great depression of 1929 and although we have seen the signs over recent weeks, I believe the imminent USA election is placing events on hold, after which we will see an out of control downward spiral, that no President is going to be able to pull out of easily.

The reason for this is the loose money policy of extending huge amounts of credit, hyper competition and the change from a deflationary to an inflationary environment.   A good example is the UK housing market, which following a deep recession in 1991, was rebuilt by the willingness of Banks to lend to almost anyone, who followed the dream of becoming a property millionaire.  Now many did of course and those were the ones with the foresight to anticipate the right time to sell out, in a growing market and with the aim of leaving something for the next person.  When you look at this period, you must realize that the economic conditions were looking good, with a rising stock market and a euphoric view overall.

Wise investors and certainly the people over at Full Circle Asset Management (my own advisers), were predicting the economic conditions that we are witnessing today and they were so far ahead of their time, that nobody listened!  They were actually seeing a Bear Market in the mid to late 1990's and the emergence of a Bull Commodities market and how right they were!  Today, people are queuing up for their advice!

Anyway we all need to prepare and to prepare, we must be aware and that means opening our minds and taking tough action when needed.

~Neil