Greece, Debt and the Road to Your House

So, 10 doctors walk into a bar….Okay not the beginning of the best joke ever, but I did have a dinner meeting with several of my customers this week and the conversation quickly turned to politics. I would like to continue our thinking from last week’s discussion of how to best engage government and explore just how deeply our Grassroots should run. From banking, to schools, to medicine, to the local restaurant around the corner, it is important to understand how we came to be in well…so much debt.
It begins here at home. I call it trickle up debt. It becomes a pervasive mindset that in order to have something you have to pay for it later. The conversation with my customers over dinner began with a bit of finger pointing. “Look at Greece! Geez what a mess!” said one. Like many countries, the Greek government, like the U. S., relies on borrowed money to balance its books. The recession has made this harder to achieve, because tax revenues are falling with people spending less, just as entitlement and welfare payments start to rise. To be fair, using public spending to even out the bumps in an economy is what most large developed economies do right now. This is all well and good as long as the investor money keeps coming in to the system. We aren’t even close to a balanced budget here in our own country. In fact, Economist warn that to get there we would pretty much need to eliminate all spending on defense and social security. Yikes. The lesson here is that debit is not all bad. Debt that you cannot repay is very, very bad.
Unfortunately, investors have lost confidence in the Greek government's ability to walk this tightrope – so they have been demanding ever higher rates of interest to compensate for the risk that they might not get their money back. The higher it’s borrowing costs, the harder it is for the Greek economy to grow itself out of trouble. Money really doesn’t grow on trees, and while countries like the US can print more, it just works to devalue the currency.
When Greek debt downgraded to "junk" status, the cost of borrowing money became too high. Fearing bankruptcy, Greece had to turn instead to the European Union and the International Monetary Fund for money to float there debt. But, just as money doesn’t grow on trees, it ain’t cheap either. Germany and other European Union members took issue with just giving more money without constraints to a struggling Greek economy as did Washington. This time there had to be some strings attached and a tough series of public sector cuts known as austerity measures were designed to reassure international investors that the government can become credit worthy again.
Dial back a few years to the mid 2000’s when Greece was strong and solvent. During this time and prior, the Greek government took advantage of this by running in a deficit. With an economy dependent on shipping and tourism, it headed south quickly when the economy worldwide started to cool. Austerity measures have been the source of massive protests as the Greek government seeks to shake the couch cushions of its economy for loose change. Public sector pay cuts, pension reductions, new taxes on corporate profits, luxury and sin taxes, and value added tax (which is for an entirely different article) are the tools of a Government seeking to sustain itself and it has the people crying Uncle.
But, let’s get back to my doctors and our dinner conversation. Greece is a long way away, so what does that mean here in little old Jefferson County? Well, the story for Greece sounds pretty similar to Jefferson County if you get right down to it. Weak leadership, poor accountability, and simply spending and promising to spend money that you don’t have can be found across the world or even around the corner.
And what about some of the towns right here in North Jefferson County? Time will tell how the balance sheet fares out, but spending just because you have it, especially when it is on salaries and not infrastructure or improvements is just not a good idea. A recent Birmingham News article reviewed the balance sheets of two of our big towns here in North Jefferson. Both passed budget increases for 2012 with bigger coffer requirements needed to support employee raises and debt obligations. And don’t forget the add-on of “just a penny more” to your tax burden at the store.
Suddenly Greece doesn’t sound so far away.

Creating Value and Trust

You do not have to look far here in the North Jefferson Area to find plenty of post Tornado recovery work. Now would be a good time to assess where the recovery falls with respect to the formal Comprehensive Development plans that exist. A bit troubling may be the realization that those plans are several years, and in many cases decades old, and have never been revisited or revamped. Now is a perfect time to take an assessment of those Comprehensive Development Plans and view them in light of the community mission and vision. Indeed, if you don’t know what you are aiming for, then you may hit just about anything. All of this plays into the ideas of your brand, your image, and ultimately how you are perceived by your customers. Or in the case of a city, or the entire North Jefferson area, how the growth, recovery and stability are viewed by local citizens and outside supporters. Is our leadership trusted? Do we have a credible and believable reputation?
Not long ago, trust and reputation was the domain of the public relations department. Marketing concerned itself with spending huge sums to maintain "share of voice" which is marketing speak for outspending rivals to drive brand awareness and endlessly reminding consumers of the "unique selling proposition".
Now, marketers are waking up to an awareness that in the world of branding, trust is the most perishable of assets. Polling in recent months shows that increasing numbers of consumers distrust not just the obvious suspects—the banks, politicians, insurance—but business and corporations as a whole. The shift in sentiment is forcing companies from Ford Motor to American Express to tweak marketing and focus on rebuilding credibility. Trust is what drives profit margin and share price and it is what consumers are looking for and what they share with one another. In the arena of local government, reaching out to the community to inform them about not only meetings, but meeting content, results and plans is key as well.
The recovery plan, just as is the Comprehensive Development Plan, is pulled from a systematic planning process. It should be based on sound technical studies, it should facilitate community involvement, it should be open to continuous monitoring, and it should be periodically updated.
It is key that recovery look at not only zoning, but future land use. Please keep in mind that an expert in real estate or real estate law may not be the best expert in land use law, as the two are different skills and area of expertise.
Think about what this means for your city and community. Perhaps you find that old approaches don’t work as well as they used to for you. Don’t just blame it on the recession, job insecurity and hammered home values as to why business and political dynamics are changing.
Techniques and share of voice strategy are easily copied by your competition, but they can’t copy your reputation or recreate the trust that you own with your customers or constituents. Mercifully, you control that. It is yours to grow or loose.
As you move into your week, take a minute to think about what your community and customers expect from you or your product. If you miss the mark on expectations, no matter how well you do, you fail. This sets a poor outcome for trust, and really makes your job of creating a loyal customer more difficult. The old saying about under promising and over delivering really rings true here.

Governor Elect Dr. Bentley, BBA, and the North Jefferson Area

Governor-Elect Robert Bentley is already working for the North Jefferson area.  If you lodged your vote for a pro-business agenda, you would have been encouraged if you attended the Birmingham Business Alliance Annual luncheon this week at the Sheraton to hear Dr. Bentley, I mean Governor-Elect Dr. Robert Bentley, discuss his commitment to our area.  An intricately woven quote by Lynard Skynard that “Birmingham Loves the Governor,” was an bright attempt to win hearts and minds.  Bentley’s follow up that “You may not always love me, but we will have a good four years full of opportunity,” set the stage for anticipation of good ideas to come.  Even this conservative skeptic is willing to give him a chance. 

 “I commit to you to make Birmingham a better place,” said Bentley.  Well, so goes the North, so goes Birmingham.  Bentley expressed support for the Northern Beltline and promised to make its construction a priority.    In allegiance with our Senators Shelby and Sessions, he remains committed to work quickly and diligently to make our road access a reality.  A quick turn down I65 South and you can see the fruits of all of our labors, that of our Legislators and that of our hard earned tax dollars.  Sharing the luncheon table with me were Mayors McCondichie and Phillips from Brookside and Gardendale respectively, and we were all ears.

Not fading from the issues, Bentley stated that “the role of government is to create a fertile field for jobs to grow, not to create the actual jobs.”  I like the sound of that.  Bentley was humble to recognize that the strength of a leader will be measured by history by the minds that he surrounds himself with in the leadership challenge.  To that end, University of Alabama at Birmingham President, Dr. Carol Garrison, was selected to introduce Bentley.  Per Dr. Garrison, UAB has a lot to gain by a pro business minded leader at the helm.  UAB alone has a half million dollar economic impact on Alabama, and lest you be stymied by that number, please realize that this occurred just in the time that the one hour luncheon was served at this event.  That is a half million dollar impact EVERY HOUR.  Garrison shared that for every $1 invested in UAB, a full $16 impact is realized for the Alabama.  UAB is the Economic Engine for Alabama.  Yes, we need efforts in Huntsville, Mobile and beyond, but UAB is alive and well and doing the job needed to keep Alabama competitive.

Bentley stands out front as one of the first to ask the question, “Did you create a job?”  This is simple, poignant, and clearly significant thinking here.  In an environment with 20% underemployed, and 9% real unemployment, we look to strong leadership on several fronts to include right to work legislation, improvements in our 2 year and 4 year colleges, decisions on tax requirements for business, and please oh please let us not overlook infrastructure improvements to attract business and industry to our area.  Bentley will be well supported if he is a leader that makes strategic decisions, and does not “study the problem to death.” 

Well, how do you do that, and can he?  Echoing his training as a physician, his message was true in its simplicity.  Dr. Tinsley Harrison was his professor in medical school, and a storied and respected physician indeed was Dr. Harrison.  Dr. Harrison, ever the servant leader, would encourage his student to “listen to the patient.”  The patient will tell you what is wrong if you are keen to listening.  Your job then will be to not just examine, but to diagnose and MAKE A DECISION.  When you make your decision, then your treatment will lead the way to strength and improvement. 

It has been my experience that everyone has an opinion after someone makes a decision.  I assess that we are mercifully entering into a time of great decisions and change here in our fair state.  Now is the time to educate yourself, leverage your opinions and become involved in the diagnosis and ultimate treatment choice for healthy growth.