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  • When The Fed increased rates on June 13 for the second time this year, they left the door open to more rate hikes before the end of the year, and opened the proverbial can of pundit worms. How many more raises will come? How high will they go? Will the economy continue to grow? What is sustainable?

    To get some perspective, let’s look at some historical facts and some recent economic trends:

    ·        Unemployment has fallen every year since 2009, and now currently stands at 4.1%.

    ·        4.1% unemployment is the lowest rate since 3.9% in 2000.

    ·        The lowest recorded unemployment rate was 1.2% in 1944; the highest was 24.9% in 1933.

    ·        The Federal Reserve likes to aim for the “sweet spot” of between 2 – 5% when setting the federal rate. It is currently 2%. They have signaled that rates will be 2.5% by the end of this year, 3% in 2019 and 3.5% in 2020.

    ·        The lowest rate ever was 0.25% in 2008, the 10th such cut in just over a year. Rates did not go back up until 2015. Since then, they have steadily climbed.

    ·        The highest rate ever was 20% in 1979 and 1980 to combat triple-digit inflation. The rate has not been in double digits since 1984, when it hit 11.75% before dropping again to 8.25% by the end of the year.

    ·        The Dow hit 20,000 for the first time in January, 2017. It is well over 24,000 in July of 2018.

    ·        The all-time low since its inception in 1885 happened on July 8, 1932 (41.22).

    ·        In 2009, the Dow bottomed out at 6,443.27; it has nearly quadrupled in value over the subsequent nine years.

    ·        January, 1966 saw the Dow hit 7,781.53, a number it would not reach again until October, 1995.

    ·        Between 1974 and 1980, inflation hit double digits in three separate years. The only other time the country experienced double-digit inflation was in 1946, the highest rate since recording, at 18.1%.

    ·        Inflation has stayed at or under 4.1% every year since 1991; in 2017 it was 2.1%.

    ·        According to Wikipedia, there have been 13 recessions since the great depression ended in 1933, approximately one every 6.5 years.

    ·        The Great Recession of 2007 – 2009 lasted 18 months, the longest recession since the Great Depression.

    Remember all the chatter about the stock market hitting 20,000? People made hats that said “Almost 20,000” it got so close so many times. And then it happened. That was 18 months ago. One and a half baseball seasons later, and the market has risen another 20%.  

    I think we can all agree that this kind of growth is not sustainable. We are currently in a flow pattern, but an ebb surely awaits somewhere. History suggests that we are even overdue at this point (9 years since last recession) for a setback. The question is not will another recession hit; the question is how severe will it be when it does?

    On this, we can only speculate. But for now, the markets are strong, unemployment is low, inflation is reasonable. Most experts agree that we are probably looking at two more rate hikes before 2018 checks out. This seems to keep us on an upward trajectory; so for now, sit back and enjoy the ride.

  • May, 2017. I’m just back from vacation. The water-cooler updates now over, I settle my lumbar into my ergonomic chair, crank some Viking metal on the headphones and show no mercy to the five-day pileup of emails. I plow through them with a fierce, focused fluidity, taking no prisoners. Somewhere along the way, I open an email attachment. Then I see this:

    wannacry protection

    First thought: um, whoops. Immediately followed by this thought: WTF IS A BITCOIN???

    Okay, I lied. That did not happen to me. That was merely a dramatized recreation of real-life events that did happen, though, to many other people in some 150 countries. I embellished with the Viking metal, but you get the general idea. The point is, that reaction was pure. Bitcoin had already been around for a full nine years at that point, and I had never heard of it.

    Google, Wikipedia, research research research. Turns out there’s no reason I should have heard of it, since bitcoin is largely used by cybercriminals, gun runners, drug dealers and other undesirables as a means of buying and selling things that are not supposed to be bought or sold, anonymously. Unless you live on the shady side of Law Street, bitcoin SHOULD be a blissful ignorance.

    That is the perception, sure. Even the real identity of its founder, Satoshi Nakamoto, is unknown. That’s not a good start. But what gives? Is it just a bunch of bitcoin haters hating, or is there any actual truth behind the bad rep?

    Well, yes. Some. It was and is still used for some nefarious acts. And while the blockchain technology that was built to support it provides a transparent audit trail from wallet to wallet for all to see, the real identities of the holders of said wallets can be kept private. Very interesting indeed.

    And it’s probably no coincidence that at the time of the WannaCry attacks, a bitcoin was valued at about $2,000. This then soared by the end of the year to over $19,000. It is currently just south of $8,000. What is your deal, anyway, bitcoin?    

    Bitcoin is a teenager of a currency, if ever there was one. Enigmatic, wildly unpredictable, rebellious, and above all, misunderstood.

    Maybe I should have prefaced this post by stating that I have never personally used bitcoin, nor invested in it. So I have no skin in the bitcoin game; my interest is probably the same as yours--mere curiosity. I want to know where this story is going.

    To understand bitcoin, though, you have to first realize that there are two very distinct sides to the story. One is the investment side, and the other is the user side.

    On the investment side, you have speculators that began pouring money into the cryptocurrency like the next big thing (see prices above). “Pump-and-dump,” “balloon” and even “Ponzi scheme” became readily associated with it. Warren Buffett said recently that investing in cryptos will “almost certainly end badly.” Only time will tell with the investment aspect of bitcoin.

    For users, bitcoin offers fast, direct payments that are traceable. We’ve touched on some of the negative uses, but that is one-sided. People buy guns and drugs with cash as well. In its struggle for legitimacy, bitcoin is turning the tide in its favor, now being accepted by the likes of, Microsoft and Expedia.

    So, verdict time. Does bitcoin deserve the reputation? No. As far as investors, it is an investment like any other—subject to gains and losses. Yes, it is risky, but so is speculating in most areas. You don’t hear many complaints from those who bought as recently as six months ago.

    Yes, bad guys use bitcoin. They also use some of the other nearly 1,500 cryptocurrencies, too. It wasn’t created for them, they are merely taking advantage of some of its properties.

    The one thing most overlooked in the great bitcoin debate is the technology that enabled it. Blockchain is opening up all sorts of possibilities that people are just becoming aware of, in all different industries. From faster, secure financial services to tracing coffee beans from farm to cup, the surface is just barely being scratched. Bitcoin will do its thing, but keep an eye on that blockchain to see the real action.  

  • “Irasshaimase!”

    If you’ve ever crossed the threshold of any store, restaurant or general place of business in Japan, you’ve undoubtedly heard this ubiquitous greeting shouted in your general direction. Translated literally, it is the imperative honorific form of to be/to come/to go.

    Wait, what?

    The short answer is that there is no real meaning in the words; the meaning is in the gesture, the effort. What some have dubbed overly polite or even annoyingly robotic, I posit that this gesture is the very foundation, the hallmark of an excellent customer experience. A bastion of the selfless greeting, it gives and gives and asks nothing in return (linguistically, there is no appropriate response to it). The form is secondary to the function, which is to simply acknowledge. Irasshaimase is an ode, an entreating ballad to the customer that lilts: I see you here, and here you are most welcome.

    The trick that many of us face in the digital age is that our customers don’t ring our welcome bell when they come in. The internet has taken a lot of the ira out of our shaimase. Our thresholds are more likely to be web pages, our guest books web hits. On a platform that, by definition, lacks humanity, how do we see our customers as people? More to the point, how do they feel seen by us? And how can we translate this to a digital language?

    According to a Digital Banking Report survey of 500 financial institutions around the world, the top priority named by far (71%) was improving the digital customer experience. Customers are increasingly making decisions based on the ease of which they can access their financial institution. But it goes much deeper than mere convenience.

    An “experience” is not just clicking on a combination of easy-to-find buttons. That is UX (User Experience). And yes, your website and mobile technologies need to work seamlessly, as a UX fail will certainly send your CX trending in the wrong direction. Reliability matters.

    But while reliability and convenience should not be discounted, remember that a customer’s experience is wholly subjective, and based upon their perception of how they are treated. And that perception should be built upon a foundation of engagement.

    I said that irasshaimase is about acknowledging the customer, being an audible welcome mat. But engaging the customer is taking to the next level. It is the difference between feeling “welcome” and feeling “at home.” Invite your customers into your cozy digital platform home. Don’t be shy. A virtual comfy chair and something cool to drink never hurt anyone’s perception, either. Here are 3 easy ways to engage your customers:

    1.      Courtesy calls. Call it anachronistic, but a good, old-fashioned phone call can really go a long way. People like to know that you are aware of them, even if they may not particularly want to shoot the breeze with you. Remember it’s about perception, and you are making the effort. I switched car insurance and internet providers in the past year. From the former, I got raised rates, monthly emails offering more insurance and nary a live interaction. The former called shortly after installation to make sure my service was okay. Now which one do you think I have the most loyalty toward?

    2.      Short, focused surveys. How many times have you gotten a survey from someone (even someone you wanted to say nice things about) and NOT done it or quit half-way through because it was just too long? People are generally willing to share their opinions…to a certain point. Constant Contact maintains that 5 minutes and/or 10 questions is about the threshold for the average respondent. If you want results, it is wise not to test these limits. 

    3.      Useful email blasts. As mentioned above, my insurance agent sends me monthly emails, but they are usually all about the many other kinds of insurance he offers, and why I need them. Now, I’m certainly not going to suggest that you take out all sales elements of email blasts. However, I am going to say that you need to provide something of value (as opposed to a commercial) to your customers. To go back to insurance, yes, it’s possible I may want to bundle my insurance to save more. But what else might be of interest to me? A focused survey? An article about what I can personally do to lower my rates? Think from your audience’s perspective and you are sure to get not only more traffic and less unsubscribes, but a higher CX as well.

  • How Bank-Owned Property Affects the Real Estate Market


    My parents sold the house I grew up in eight years ago. Now I had always driven by on my occasional visits back home, but never upped the creep factor to the knocking-on-the-door level. I didn’t really care who lived there; just knowing that someone did brought me some small, inexplicable sense of comfort.

    However, the last time I made the pilgrimage back, I discovered that the place of my humble beginnings had become The House. You know the one, because there’s one in every neighborhood. Slightly too kempt to be abandoned, a little too haggard for residence. Source of hush-hush gossip, neighborhood headshakes and squatters' raised eyebrows. Forgotten, but not gone. A denizen of real estate purgatory.

    Whomever had purchased the house from my parents had done so at a very inopportune time, just before the last big market crash. They presumably later defaulted, and the house was taken back by the bank. And there it still sits, a vessel without a captain, adrift and at the utter mercy of the beating sunshine, merciless winters and daring aluminum siding bandits.

    My first instinct was to buy it. This made no sense, admittedly. I live 2500 miles away, and had zero intention of moving back. But I felt that in some karmic kind of way, buying it would somehow provide an impenetrable force field of protection, bubble-wrapping my childhood forevermore. Like I said, it didn’t make much sense. I was fueled by a desperate form of nostalgia, not logic. But this all became immediately moot. You see, The House was not for sale.

    This is how I became familiar with the concept of “shadow inventory.” Shadow inventory refers to bank-owned properties that are not currently on the market. The term became popular in the wake of the financial crisis, when the loans that were being pushed through for mortgages that people simply could not afford were defaulted on.

    According to Bloomberg, the resulting spate of foreclosures left the banks holding up to 4 million homes at its peak. This sudden influx of $382 billion of inventory left banks facing new challenges. AOL reported that as many as 90% of the REOs (Real Estate Owned) properties were being kept off the market. They became The House, four million times over. But why?

    There are 3 good reasons that shadow inventory happens:

    1.     Foreclosures. Though foreclosure numbers have subsided in recent years, a contributing factor to empty homes is simply time. According to Realtytrac, the average foreclosure period in Q2 of 2016 was 629 days. In New Jersey, which leads the nation in lengthy foreclosures, the average turnaround was 1,249 days, or just over three years.

    2.     Market Tolerance. Banks must assess the current market conditions. At the height of the financial crisis, putting the foreclosed houses immediately up for sale would have flooded an already stagnant, bottomed-out market. In fact, AOL estimated that overall home values would have dropped by 20%. Banks must always act prudently on behalf of the market.

    3.     Appreciation. Market tolerance also has its upside. Many of the homes shadowed by the crisis taught a valuable lesson. By taking on the role of de facto caregivers, banks took these fragile properties in, nursed them back to health, and then, when the time was just right, released them back into the wild for a nice profit. Also, in some of the hotter current markets, the smart money is on purposely keeping properties off the market to let them gain value.

    So the next time you are out for a walk in your neighborhood and come upon The House, and start to speculate and theorize (or impulse buy), rest assured that no house is truly abandoned. And someone behind the scenes may just be looking out for your neighborhood’s best interests.

  • “Josh, you have a phone call,” my manager reported.

    My heart immediately sank. I had been receiving threatening phone calls for over a week, both at home and at work, and I knew this was another one. The person on the other end wanted money. Or else. He specified a dollar amount, a drop location and a time, and then threatened to kill me if it wasn’t there. He was my best friend.

    Pause. Let’s back it up just a bit. Add context. This was circa 1992. I was a high school junior, washing dishes at Ponderosa Steak House a few nights a week to pay off my trusty K Car. I didn’t exactly have much game, let alone any money. But I also didn’t have any enemies that I knew of. That’s why somehow I knew it was my old friend “Jake.”

    Jake and I had been best friends a couple years before, spending a couple of inseparable summers together, forming a 2-piece skateboard “gang,” writing really dope gangster raps, and being generally harmless little punks.

    Then his parents got divorced around the time we started high school. Like an after-school special, he promptly ditched school in favor of cruising Main Street and smoking weed with his mustachioed older cousin. Needless to say, the skateboard gang disbanded, and Jake and I walked our separate paths.

    So a couple years later when those calls came, that car parked across the street, the doorbell rang late at night, I somehow knew it was the two of them. Motive? I was an easy target. I was terrified, and fear is a great motivator. I was sure to pay.

    Yes, I am using this story to parallel a ransomware attack. Work with me. There are some obvious physical differences: In this case, I knew my attackers, I had police resources, and, finally, nothing physical had been taken from me. They were not demanding money for me to get my files back, but rather to NOT KILL ME. Different, possibly worse, but nothing tangible had been stripped from me that I had to pay to recover.

    However, the emotional similarities are undeniable. Namely, that awful feeling that you no longer control your own destiny. Someone else has life-hacked you and is now pulling the strings. For months after, the sound of the phone ringing caused my fists to clench. Co-workers walked me out to my car after closing. These things make you feel small, vulnerable and exposed. And they are all exacerbated by the feeling of having no good options, and nowhere to really turn for help. And even if you pay them, you have no guarantees that they will leave you alone or even return your files. It is a helpless feeling. 

    But there is one glaring difference that I would like to draw your attention to. And that is that my situation could not have been prevented. Like any victim, at some point you ask yourself what could I have done differently? You second-guess yourself, and wonder what if I had done this or that. But in my case, there is nothing I could have done differently; no forethought or amount of planning could have stopped it.

    With ransomware, however, there are measures you can take to protect yourself. FOLLOW THIS GUIDE for starters. Do not bury your head in the sand and pretend it can’t happen to you. Better to prepare the castle for a siege, because you’d better believe those bad guys are out there somewhere, looking for a way in. With some good disaster planning and a little luck, hopefully you’ll never meet them.

    Oh, the Jake fiasco? It ended in small-town theatrics. The police set up a sting, it was summarily bumbled, and the bad guys got away. But it had the desired effect; fear is a great motivator. They never bothered me again.

    Read more about MIMICS Disaster Recovery options.

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