Though the housing bubble deflated about two years ago, its true effects are only now beginning to emerge. In late 2006, when the economy first began to show signs of weakness in the housing market, most economists predicted that a recession was very unlikely, and that any downturn in real estate prices would be localized and mild. In reality, a global downturn is now a real threat, with the final price of the credit crunch projected to exceed $1 trillion dollars.

Not only have falling house prices in the US spread to other markets abroad, they have contributed to massive losses in other areas of lending such as credit cards, and the financial industry, which is now reeling from the US government bailout of Bear Stearns. What does this mean for emerging economies like China and India? In the short term, volatility seems to be the order of the day, with India’s fledgling exchanges rocked by jittery investors. Until financial centers and investors can regain confidence, market conditions will be exaggerated. Early trading also plays a psychological role for investors, as news developments impact Asia before Wall Street opens.

The US and the UK both face difficult home pricing corrections which will continue to hamper growth. Most homeowners expect, if not to make a profit, not to sell their houses at a loss, which is a difficult pill to swallow. And if they can’t sell their homes for what they think they’re worth, then waiting it out contributes to prices falling, thus exacerbating the problem.

While government intervention has been exceptionally forthcoming in efforts to preserve confidence in financial markets, less attention has been given to homeowners who are being foreclosed on over the next year, which is only so low because of robust growth in Asia.

Another prospect which looms over every government is the specter of inflation, which threatens to overtake the slumping economy as the number one priority for the Federal Reserve and other central banks, who have had to take extreme action to prevent further liquidity losses. The Fed has sold off over $100 billion in auctions and lowered interest rates five times in an attempt to lower mortgage interest rates, but confidence will remain shaky until the full extent of investment bank’s sub-prime exposure is realized. Stuck between a rock and a hard place, central banks are taking decisive action in hopes that the economy will level out without pushing inflation to dangerous levels.

Posted by The Transition Companies

No matter how rich a person or a country is, there will always be tough times. In these tough times when the economy is in bad shape surviving a bad economy is a must for everybody. This will not only help themselves to adjust to the current situation but this is also one way of contributing to the overall survival. The following strategies no matter how simple they might be can somehow help a person to survive the downscaling economy.

On transportation:

- It is best to carpool more often. Make it a habit between you and a coworker to take turns in carpooling to the office. This is a good way of minimizing both your expenses in gasoline. If there are more than two of you living in your neighborhood much better, the more the merrier.

- Instead of buying new cars, old used ones. In these tough times, new cars are not a necessity. But still, you need a means of transportation. What best way to save up but to buy old cars and save up some money? When you buy used cars, it would costs you a lot cheaper.

- Put together different errands in one trip. Try to get all of the things you need to do in one trip or on your trip home. This lessens the number of trip you need to make and you can avoid from driving back and forth.

- Take up a hobby and ride a bike. If you live close to stores malls or places you usually go to, ride a bike instead of driving you car. It’s god exercise and it’s good for your health.

- Wash your car yourself. This one is a no-brainer, why spend on something you can do yourself. That’s right, you can do this yourself. Imagine the cost savings that you’ll be making. It’s not much on its own but it’s a lot altogether.

On eating:

- Eat like you’re on a diet. Try and eat off your kids plate sometimes, this will make you eat in smaller portions and you would even notice. This one works if you don’t go for seconds.

- Bottled water alternative. Tap water is the ultimate cheap fix. Try comparing an ounce of bottled water and an ounce of tap I’m sure you’ll see the difference.

- Less meat more savings. Imagine not having meat during the working week and having it on weekends instead. It will definitely cost you less than your usual tab.

On personal shopping:

- Generic is good. Brand loyalty is a thing of the past especially if it cost you a lot. More than anything else the generic substitutes allows you to have options.

- Be a bargain hunter. Despite the downscale, people would still always buy personal items for themselves. Getting good items while surviving a bad economy can be done by buying bargain stuff. Don’t just be contented with the low price the stores have, try and look around if there’s anything better.

The Transition Companies is hereby providing information on valuing a business or business valuations for the purposes of a business sale. The Transition Companies can also provide the management consulting to increase earnings and optimize a company to increase its business enterprise value.

The Transition Companies Valuation Methodologies

There are various methods of valuation. Within each method, different standards, characteristics, and premises of value apply depending on the valuation purpose and its context. In general, the three valuation approaches are: Discounted Cash Flow Method, Market Approach, and Asset Approach.

The Transition Companies Discounted Cash Flow

Discounted Cash Flow is the most widely accepted professional valuation approach in the M&A arena and the approach used most by buyers. Under this approach, value is the sum of the future projected cash flows of the business, discounted back to the present value at the appropriate discount rate.
The difficulty here is determining the appropriate discount rate. The discount rate should reflect the risk of the business (and its likelihood of meeting cash flow projections) as well as estimates of return on investment (ROI) and cost of capital, current interest rates, and current and projected inflation rates.

In addition, premiums or discounts are applied for control and marketability of the business. Other qualitative factors taken into account include the company’s reliance on key individuals, limited product diversity, heavy reliance on one account or supplier, and a multitude of other factors, many of which are industry-specific or specific to the particular company. The Discounted Cash Flow method shows how much a buyer can pay based on their ROI expectations. The market approach (detailed below) indicates what a buyer will have to pay for the business in a competitive sale.

The Transition Companies Market Approach

Under the market, or sales comparison approach, data is gathered on transactions of similar businesses for review of capitalization rates and multiples. If valid comparables are available, they need to be adjusted to reflect the difference in marketability. Two issues need to be considered:

1. Data on the sales of privately- held companies is limited. Often the owners of privately-held companies do not disclose the details of their private transactions.
2. No comparison can be made between the value of a privately-held company and a publicly traded one. Due to the “mass market” and liquidity options available, publicly traded companies “trade” at higher values than privately-held companies.

The Transition Companies Asset Approach

Adjusted Net Book Value (adjusted for obvious overstatements and understatements), Replacement Cost (the cost of duplicating from scratch the company’s assets on an “as-if-new” basis), and Liquidation Value (the value of the company’s assets when converted to cash in short order) are all asset-based valuations. These valuations all result in very conservative estimates of the value of a business, based upon only its tangible assets. These methods do not consider the value of a company’s intangible assets, such as the company’s name and image, customer lists, internal systems and procedures, future opportunities, etc. The Asset Approach is not considered applicable to M&A unless the business is distressed.

A Note about Formulas and Rules of Thumb

Formulas and rules-of-thumb are usually based on a multiple of sales or earnings. These are informal valuations that pay little if any attention to the vast differences among individual companies. They generally have little or no basis in reality unless substantiated by one of the recognized methods of valuation.

Valuing a Business for Sale

Determining or predicting a fair market value is often more accurate if the evaluator has actual M&A market experience.

Valuing a business for sale requires a critical analysis of the history and future of the business. From a historical perspective, the company’s financials should be adjusted — or normalized — to show the true profit potential of the business.

Market research should cover the topics of: industry size, industry growth, competition and barriers to entry, alternative and substitute products, external trends affecting the industry and geographic influences. In addition, an assessment of the company including market share, customer acceptance, product superiority, and technological position should be made to determine revenue and profit potential. The level of M&A activity and condition of the capital markets at the time also impacts the value.

Some value enhancers that increase value are:

• Second tier management team in place
• Diverse customer base with no specific customer dependence
• Proprietary or patented technology; if not defensible market positions
• Historical track record of consistent earnings
• Growth in the economic sector or vertical market
• High barrier to entry into the market
• Some unique operational platform
• Critical mass of the business
• Velocity in the company’s industry.

Some risk factors that mitigate value are:

• Owner dependence
• Key person dependence
• Lack of Non-Competition Agreements for key people
• Customer concentration with a few key customers
• Commodity products or industries
• Supplier dependence
• Changing technologies.

Valuing a company or business is ultimately the rendering of an opinion by an individual(s). The opinion, like all opinions, is subjective and is as credible and accurate as the experience, background, credentials, and perspective of the party presenting the opinion. Several opinions of value can be issued by several sources each having the same set of information but each providing differing opinions of value. Who’s right and who’s wrong?

While overviews of several theories of valuing a company have been reviewed, the best method of identifying value is through the open market. Proper analysis and presentation of a company to the open market should result in a competitive situation whereby the value is ultimately determined by the open market. The open market is in fact the court of final opinion on the value of the business.

 The Transition Companies

© 2009 The Transition Companies . All rights reserved.

This could be the perfect time to start the process of transition out of your company say’s The Transition Companies. Selling a company properly is a “process” and not an “event.”

Are you thinking about the possible “transition” out of your company ask’s The Transition Companies? Now might be a good time to start as it often takes a year or more to find just the right buyer. Selling a business is thought by many to be an “event” that happens similar to the sale of a house and then we move on. However the best way to sell is to think of selling as process or a gradual transition from one step to another until the deal is done. Consider the following offered by the Executive Team at The Transition Companies:

Capital Gains Taxes Rates

Among the many reasons why you would be wise to start the exit process sooner than later is the Capital Gains Tax story. Many think that capital gains taxes are likely to increase soon. Federal capital gains taxes were reduced from 28% then to 20% and at last to 15%. Given the current climate in the White House, it is quite possible, some say quite likely, that the capital gains tax will increase. That means you will need to sell for a lot more to net the same amount.

Interest Rates Will Rise

Buyers tend to pay more when the cost of money is low. Lower interest rates make growth by acquisition a more attractive option than organic growth. A higher sale price and modest capital gains taxes add up to more dollars in the sellers pocket.

Buyers Are Still Plentiful

We know at The Transition Companies that Private Equity groups are major players in the M&A market. They have lots of cash and are searching for businesses to buy. Many are paying top dollar and are leveraging their purchases to the hilt.

Consider the Baby Boomers

Baby boomer business owners are just now beginning to think about exiting. It has been said that possibly 80% of business owners are thinking about selling, about 70% in the next three years. Competition will be keen for attractive buyers. You will need to offer a more attractive opportunity in the future to even be on the radar screen of the most desirable buyers once Baby Boomers start the transition of their companies to new ownership.

Are you prepared?

Many business owners think they are well-prepared, but an outside independent third party or a buyer might disagree. Start working on your comprehensive exit plan. It could take as much as three to five years to get your personal and business house in order. To maximize the net after tax dollars you walk away with, prepare now so you can exit for top dollar while market conditions are optimum. If you do not prepare properly, you might find that you missed the opportunity of your lifetime.

A neat and orderly transition always includes three phases:

1. A certified and accredited valuation, an executive summary of the company and an offering memorandum to put in front of buyers. There needs to also be an analysis of the strengths, weaknesses, opportunities and threats that face the company. This is called a SWOT analysis by some.

2. An aggressive and pro active marketing campaign ending with multiple buyers bidding for the company. One buyer is no buyer. You should have your company in front of 100 to 300 potential buyers.

3. A carefully planned due diligence process. The buyer must do it, but you must be in control of the way it is conducted. The Letter of Intent that starts the due diligence process must be done just right.

If you start early, plan wisely and get professional help if at all possible, you will transition out of your company with more money in your pocket.

Richard D Parker

Executive Director

The Transition Companies

Web: http://www.TransitionCompanies.com

Consulting Value Enhancement Profit Improvement Management Consulting

The Transition Companies

The current economic downturn is due to three factors: 1) Too much cheap money for too long and a Federal Reserve that created the housing bubble, 2) The use of unstable financing provided to people who didn’t understand what they were getting, and 3) The rating agencies allowed poor quality high debt to pass into the system.  The businesses relying on the housing market are in a slump that will not bottom out until the end of this year.

What can be done to counter this trend and to protect your current business and even make advances during this period?

There are four strategies that you can apply now to take advantage of the slow periods.

1. Build on your core values.  When your bottom line looks dismal the tendency is to reduce or cut spending and personnel.  Yes, you want to cut the fat but Do Not go after the brand building or innovation projects as these are your future.

      The lean times are when the focus should be on the new products, service and innovations, that will propel you ahead.  Invest this time in intensive self investigation asking employees for suggestions, ideas and ways to make you faster, leaner to become more creative.  If wages need to be cut then include top management, so that everyone can suffer together.  This builds loyalty.  Use this time to look for the highly skilled unhappy employee that you have always wanted to get.  He is most likely unhappy or fearful for his job at your competitor.

1. Constantly communicate.  You must constantly communicate your message and explain why it’s changing and why it will be better.  Get information from both your customers, your people and your competition, and get it fast.  Have weekly strategy meetings so as the information is updated you can adjust your strategies.  Constantly update, verify and re-verify the information and then communicate it to the rest of your team.  You must communicate your needs the needs of the company to your team and between teams. You are the cheerleader so you must facilitate the flow of information.

1. Judge your customers. Identify your weak, high risk, slow paying customers.  Business is business and so if you aren’t getting paid or paid on time cut off those who want to use you as a lender.  These types can drag you down very quickly.

1. Clean out the attic.  Resist the notion to make wide sweeping general cuts.  Identify the slow moving, less profitable products and cut those that drag your resources down.  Invest and focus on the products or areas that provide the most return for the dollar.  Increase these performers capacity to the top as they will always pay the way.

Eight marketing ideas to help your small business during a bad economy.

Even if your company is doing well during a down economy, you need to make plans for customers who may start cutting back. They key is to shift your marketing from image-oriented marketing to direct response, measurable advertising.

If your business is already feeling the effects of a weakening economy here are some strategies you can use to market in a bad economy.

1. Place your focus on more direct forms of revenues versus “image advertising.” It’s time to show good, measurable results. Coupon redemption programs and the use of promo codes can be very effective. When the economy is down everyone is looking for bargains. With coupons and promo codes you also get to track what’s working and what isn’t.

2. Learn more about your customers needs. Surveys don’t have to cost anything. If you have an email list, you can build a quick survey to send out using Survey Monkey. It’s free and easy. You can also put the survey on your web site and offer something free for people to take the survey. Since you may not be able to advertise everything during a bad economy, it’s smart to know where to put your money.

3. Call in favors from your vendors. You need to get the biggest bang for your buck. I’m not suggesting hitting up your vendors for such large discounts that it places an undue strain on them. However, get what you can while keeping your relationship good and making sure they stay in business to serve you throughout the downturn.

4. Not all customers are created equal. See who has purchased the most from you and make sure you stay close to them. As your best customers, they should be entitled to any perks you can afford.

5. Stress ROI. All of your campaigns need to convey how your customer will profit from your product. And you need to be as certain as possible that your advertising campaign will pay for itself. When you start a business you obviously need to watch your pennies. However, don’t abandon this practice as you grow your business.

6. Test. Test. Test. Segment your list and try different subject lines, headlines and sub heads. Try different offers. The key is to find the one combination that hits the sweet spot and use that one. This point brings us back to the importance of measuring your results. With limited funds when starting a business you need to know which message gets you the best results.

7. Try to “convert” everyone that comes to your web site. By convert I mean capture their name, company, email, and phone number. Get this valuable marketing information by offering your visitors valuable content. Reports and videos are great things to use. Think about any content and information that would help your customer or prospect succeed – especially in a bad economy.

8. It’s time for family values. When hard times hit, people tend to go back to the nest. Try to position your product in warm, fun, family-oriented scenes. Even if your product doesn’t quite fit that image or is more business oriented, every product will affect someone. The image could even be a coming together of office workers around your product. “Paint the picture” how your product makes a warm, positive impact on someone or something.

“Think Different – Intellectual Property and the Value of a Fresh Perspective”

When Apple Computer coined the phrase “Think Different”, the message was that when you view the world from a new perspective, new possibilities emerge, new innovations are developed and we benefit in ways we might not have imagined possible had we stuck to our old ways of thinking.  So what does that have to do with intellectual property?  Paradoxically, although intellectual property (IP) is by definition about new innovations, the way people think about intellectual property is remarkably stagnant.  My goal here is to share some thoughts on how a fresh perspective about IP can unlock tremendous value that is currently not being realized.

When I tell people I work with intellectual property, four out of five will ask if I’m a lawyer.  While I’m not a lawyer, the question is interesting because it reveals the mind-set that most people bring to discussions of intellectual property.  To a large extent, IP is viewed as something the lawyers analyze and review then file away in dusty folders.  Since IP rights are, after all, legal rights, expert legal counsel is obviously a critical component of your overall strategy.  If the goal is to maximize the value of your IP, however, a legalistic perspective is not sufficient.

Other, more forward thinking companies will take it to the next level – what I call a “tactical” perspective.  That is, they’re more proactive about intellectual property and might assert their rights against competitors and infringers or they might seek to generate revenue by licensing non-core innovations to third parties.  That’s better, but still not enough.  In my view, companies need to take a “strategic” view of intellectual property.  By that, I mean that innovation and the economic exploitation of that innovation need to be woven into the firm’s DNA.  Marketing should deeply understand the value represented by the company’s IP and clearly articulate that value to customers in the sales process.  Finance should understand how the company’s IP translates into a more valuable company and make sure that value is leveraged.  You get the picture. 

Still not convinced you need to care about intellectual property? Consider this: Intangible Edge has studied over 400 middle market companies, looking for signs that IP matters.  We looked at companies in industries ranging from Paper & Allied Products to Industrial/Commercial Machinery & Computer Equipment to Business Services.  Roughly half of these companies have revenue of less than $300 million.  What we found is that having IP correlates to higher gross margins in a range of industries – some that you might expect, like computer equipment and programming, and others that you might not expect, like Rubber and Plastic Products.  The point is that intellectual property does matter – even if your company isn’t located in Silicon Valley.

Clearly, intellectual property helps create value, but what else can it do for you?  I would argue that viewing the world through the lens of IP can provide valuable strategic and competitive insights.  For example, patent filings are publicly available through the US Patent and Trademark (PTO) office web site and can be mined for clues to what technologies or products your competitors are focusing on and where you stand relative to them in the quest for sustainable advantage.  

Intangible Edge recently did an analysis for a major private equity firm in which we benchmarked the level of innovation at one of their portfolio companies against its competitors.  The company in question, which was focused on filtration, had made little effort to innovate while its competitors had been actively developing and patenting new technologies at an increasing pace in recent years.  Their competitors’ innovation, moreover, was focused in areas where the portfolio company’s own aging IP was centered, which suggested a weakening competitive position.   This company, in its inward focus, had failed to appreciate that its position was eroding, but an IP-based perspective was able to identify problems and suggest action items.

Besides using intellectual property to identify threats, IP can also be used to identify potential buyers of your company or division, as well as companies that might be potential acquisitions or JV partners for you.  Clearly, CEO’s of companies know the players in their industries, and I’m not suggesting that IP analysis would ever supersede that real world perspective.  What I am saying, though, is that it’s another arrow in your quiver, which can be useful in identifying companies that may not compete directly in your industry but that may be pursuing complementary innovation and development.  This sort of landscape analysis can be done with the US PTO’s web site, or using services such as Delphion’s, which start with the government data but add a more user-friendly interface and helpful analytics.

Conclusions

To paraphrase an old orange juice commercial, “Intellectual property isn’t just for lawyers anymore.”  Everyone in your company should be focused on IP – from the CEO to the most junior analyst, and from the business development department to the finance department.  Why?  Because IP drives value in a wide range of industries from computers to business services…Because IP can give you a fresh perspective on what your competitors are doing, and where you stand relative to them…Because IP can help you identify potential buyers for your company or potential acquisitions and JV partners…Because your competitors are increasingly focused on IP…Because private equity firms and other potential financial buyers of your company are focused on it.

Biography

Marc Lucier is Founder and President of Intangible Edge, LLC, a Greenwich, Connecticut based firm that helps companies maximize the value of their intellectual property.  That help takes four main forms – research & analytics, valuation, raising capital and arranging licenses.  Prior to forming Intangible Edge, Marc was a Vice President at JP Morgan where he focused on financings of intangible assets.  Earlier in his career, Marc was an engineer at GE Aircraft Engines.

The Transition Companies and Recapitalizations

TTC maximizes the proceeds from the sale of a privately held company by providing strategies, resources and execution that lead to results.

Alternatively, if an owner wants to increase the value and sale proceeds of their company, TTC will put a

Headquartered in Dallas, Texas with offices in California, New Jersey and Florida, The Transition Companies offers… Wall Street experience and resources specifically for middle-market companies and…

·         the personal attention of a specialized firm

·         international resources of a large organization

·         the expertise of a middle-market specialist

·         the experience of seasoned professionals

Our team of experienced M&A professionals will confidentially open the market for privately-held companies offering the owner multiple options to fully reap the rewards of their hard work.

Almost all news you hear or see today is about the downward economy. People are losing jobs, the price of gasoline is skyrocketing; and then there is the dreaded “R” word, Recession. As a leader, you are supposed to be upbeat and optimistic about the current economy. No matter where you go someone will ask you how business is because it can be one of the barometers for the economy. You try to explain that you have no crystal ball and you have no idea how the market is relative to your community, and you do this all with a happy face. After all, they may be a potential buyer. You then casually ask how their business is and they may say, reluctantly, they wanted to buy a widget today but the economy feels sluggish and, they’re just not sure about anything. Perhaps they will just save their money. They have a look on their face like they did you a favor by not purchasing a widget today! As they walk away they say thanks for your insight into the economy, you may have saved them from investing in a widget, of all things. No sale today, maybe after the elections, inauguration or the New Year.

In that very moment you wish that conversation had never come up and long for the good old days when the news was lighter – when people felt confident enough to want and purchase a new widget. How can you not talk about the economy? How can you keep a positive attitude when the economy stinks?

Sound familiar and painful? You know you need a positive spin to rev up your sales team who are wondering how to meet their goals in such a dismal economy. After all, they have had the same conversations with each other on your showroom floor. You may even have a little doubt in your own mind. If only you could just avoid the whole situation, maybe it will all be different tomorrow.

STOP IT NOW! Stop talking about the economy! Stop telling people that business is slow. Stop all the negative whining about the economy. JUST STOP IT! The more you dwell on your perceived observation of the economy the more you look for proof you are right. STOP IT NOW!

Below are four keys to creating a positive and prospering market around you.

1. Focus on what you want. If you focus on the potholes while you are driving, you’re going to hit the potholes. Instead, focus on a way around the potholes. When you’re talking to your staff or customers, indicate business is great and now is the perfect time to buy. Never talk about how tight money is for you (or anyone else, for that matter). Words trigger pictures that create emotions. How do you think people will feel if they hear the boss talking about how bad things are? You, as the leader or a team player, should talk about success and how great it is to work in a winning business.

2. Create a perception of value. Would you trade me a one-dollar bill for my twenty-dollar bill? It may be a good deal for you, but is it a good deal for me? It is if I perceive the value of a one-dollar bill is worth more than the twenty. Let’s say I’m dying of thirst and the bottle of water requires a one-dollar bill. Then yes, it is a great trade. Your job is to create value now that helps customers feel good about their purchase.

3. Create a positive environment. The only place you talk about the slow economy is with your competition. Let them believe that the market is bad if they so choose. However, you want people to feel good when they are in your house. So, take charge and a build strong belief in your people and yourself that you can prosper in any economy because you have the best team, the best product, and the best location.

4. Plant encouraging and positive ideas, discard negative ideas. Read positive material or listen to inspirational CD’s – in other words, work on putting positive thoughts in your head. And, if you must watch the news, the second it is over say to yourself (out loud is even better), I am thankful that business is great at my place.

You might argue that I don’t know how tough it is for you or what its like where you live. You’re right. But, I have traveled all over these great United States and I have seen hundreds of people just like you, and they are winning. Every day I see people who know that no matter what is going on in the marketplace, there are many ways to win in this economy. You have a choice each day as to how you will face that day. Your choice is either one of adversity or prosperity. People who start the day with a prosperity mindset automatically think of creative ways to outsmart the market. People with a prosperity mindset look for ways to inspire people to go where they did not think they could go. Leaders with a prosperity mindset see the obstacles as an opportunity to win when others might see only doom and gloom.

Posted by The Transition Companies

Is the worst still to come? That is the $789 billion dollar question. Or in the case of Treasury Secretary Timothy Geithner, the 2.5 trillion dollar question. Despite Congress getting ready to vote on the stimulus bill compromise, the Treasury Department getting back to work on the banking system and President Obama’s declarations that swift action will avert disaster, Americans seem short on hope and long on financial worries. Are bad economies like bad marriages–throwing money at them doesn’t necessarily solve the problem?

It is now largely believed that the recession began in the fall of 2007, although Central Texans didn’t begin to feel the financial squeeze until much later in 2009. In fact, Texas has even experienced job growth in the last year. But this doesn’t mean Austin is immune to the difficulties of a bad economy. The ripple effect felt across the country is making waves here with job cuts and budget tightening.

RealtyTrac announced this week that nationwide the number of foreclosures were down in January, falling 10 percent from December. However, the good news is often tempered with a dose of reality, as in this case the January foreclosure rate was actually 18 percent higher than a year ago. California, Florida, Arizona and Nevada are still leading the nation in foreclosure numbers, but states with previously stable housing markets like Oregon are racking up foreclosures, as well.

Will a stimulus package and a better bank bailout change things soon? The drop in foreclosures is an indication that government and big bank intervention can have a positive effect. According to the Associated Press, “Contributing to the monthly drop was a decision by government-controlled mortgage finance companies Fannie Mae and Freddie Mac to suspend foreclosure sales during the winter holidays. Plus, Florida Gov. Charlie Crist brokered a deal in which lenders in that state agreed to a 45-day halt to new foreclosure petitions.”

The issue at hand is how much government intervention will help and how long will it take to turn the economy around. The current economic climate is often compared to the Great Depression, which started in America in 1929, but was felt worldwide into the 1940s. It wasn’t until after World War II that the economy began to change drastically. Obviously, no one wants another World War to turn the economy around.

Is the worst over? Most analysts seem to think things may not get better until sometime in 2010. As Sheila Bair, the chairwoman of the FDIC, wrote in Fortune, “We need to return to the culture of thrift that my mother and her generation learned the hard way through years of hardship and deprivation.” Hopefully it won’t be too many more years of hardship. That is certainly what the Obama administration is hoping with the implementation of the stimulus package.

Posted by The Transition Companies

The Transition Companies Economy Turnaround