Newsroom

If you think today’s bankers take too many risks, you might faint at the exploits of Santa Barbara’s first banker, Mortimer Cook. Of course, there’s a difference between the banker who takes chances with YOUR money and the banker who takes chances with his own. Cook was definitely of the latter type.

Are commercial properties and community banks the next financial dominoes to fall?

Don’t mistake our sense of humor for a lack of seriousness, but we think it says something about the state of the economy when articles in satirical publications such as The Onion (a faux newspaper) seem as prescient and grounded as those appearing in the Wall Street Journal or the New York Times.

Casual observers must be wondering why the debt of a country with a population smaller than Ohio’s and an economy smaller than Massachusetts’ has been dominating the news and roiling American stock markets. We’ve been trying to write something about the Greek financial crisis for weeks, but the situation kept changing dramatically before we could finish a 500-word article.

Every investor eventually faces setbacks caused by disasters, natural or man-made, regardless of whether each disaster could or should have been foreseen.

We have compared disaster recovery plans to earthquake kits, but the metaphor only goes so far, because such a kit contains only items necessary for survival during the likely amount of time one might be isolated and without water or power following a temblor. A comprehensive disaster recovery strategy includes both the survival kit and the tools for rebuilding.

Before we identify investment disaster recovery ideas, perhaps we should consider the different types of disaster that might confront an investor.

With 20-20 hindsight, it’s easy to say that banks, regulators, and investors should have seen the housing bust coming and acted appropriately. (Of course, many did see the bust coming – whether they acted appropriately depends on your point of view).

A friend reports that almost 40% of the retail storefronts in his small town are vacant, and he wonders how long the property owners can withstand that sort of vacancy rate. During this recession, much of the news has centered on residential mortgages and big banks, but the possible effect on commercial real estate and smaller banks may hold bigger economic surprises yet.

The New York Times reports, “The pension plans at General Motors and Chrysler are underfunded by a total of $17 billion and could fail if the automakers do not return to profitability…”

Without a hint of irony, the New York Times recently reported that America’s schools do not teach financial literacy because they cannot find the money.