To Our Clients, Colleagues and Friends:

· With the National MBA Conference coming soon to our beloved San Francisco , a warning to those newcomers that San Francisco weather is generally cool, foggy, and unpredictable. The mornings typically start out gray and foggy, with the fog disappearing around 11:00 and turning to warm sunshine by noon.  But almost always, the fog and the wind will return about 6:00.  Just be prepared and bring some warm clothes.

· And don’t forget that we’re a hilly city, so skip the high heel shoes.  As someone said of San Francisco , “I love this hilly city of yours.  When you’re tired of walking around, you can lean against it.”

· How many of you have a formal succession plan?  Seriously, think about your top 3-4 people.  What if one of them dies in a car accident?  What will you do?  How long will it take to replace this person?  A good succession plan is updated regularly and actually lists one or more names – from inside as well as outside your company – as possible candidates.

· Have you noticed that commodity prices have been plummeting?  We were speaking to someone a few months ago who was very concerned about prices, shortages, and food riots.  Our response was “Look, the growth in the middle-class in India and China is not going up 40% a year like some of these food prices. And no, the population of the world isn’t going up 40% a year either.  This run-up is just not demand driven.  It looks like a classic bubble, and besides, trees don’t grow to the moon.”  Well sure enough, it was a bubble, and like all of them, it has burst.  Corn, oil, gold, wheat – you name it, almost all commodity priced have been plummeting the past few weeks.

· If we look back to 1985, it’s amazing how much smaller certain banks were.  The problem is, of course, is defining the bank.  We know that Wells Fargo has $585 billion in assets today but where do you look 23 years ago?  Do you look at Wells – or Norwest, which acquired them but took their name?  Same with the BofA – do we look at their 1985 numbers, or do we look at Nations Bank?

· What’s the latest a baseball players has been hitting .400 without achieving that goal?  George Brett was still at .400 as late as September 19 in 1980 and ended up at .390.  What a bummer to come that close and not make it.

· Tired of all those credit card solicitations jamming up your mail box?  Industry mail volume totaled 499 million pieces in June, and industry estimates for 2008 mail volume are 6.4 billion pieces.  What a waste of paper.  Doesn’t everyone already have enough credit cards?

· We just read that Congress passed the fewest bills so far this session of any time in the last 20 years. We think that’s a positive!  In fact, we think that every time Congress passes a new bill, they should repeal two old ones.  They didn’t address gas prices or energy, but they did vote to proclaim M ay 5-9 as National Substitute Teacher Recognition Week.

· In 2002, Bartolo Colon went 20-8, but the interesting thing is that he was on two teams that season. He was 10-4 with the Indians before being traded in mid-season to the Expos where he also went 10-4.  Only nine other pitchers have done that in baseball history, winning 20 games with two teams in one season. In 1984, the same Cleveland Indians traded Rick Sutcliffe in mid-season because he was a mediocre 4-5.  They traded him to the Chicago Cubs where he went 16-1 the rest of the season, ending up at 20-6.  A great trade for the Cubs.

· If Fannie Mae and Freddie Mac get into more serious troubles and are taken over by the government, there could be several days of disruption.  We’re not saying this will happen, but you should at least think about it and how it might affect your operations. See the next item.

· FNMA’s market cap is now $4.7 billion (down from $9 billion last Friday) while Freddie’s sits at $2.1 billion (down from $4 billion four days ago). Scary times.

·  Rudyard Kipling wrote “I feel sorry for the children born in San Francisco .  How sad for them to grow up and discover that all cities are not like theirs.”     

The great Satchel Paige once said that “Age is a question of mind over matter.  If you don’t mind, it doesn’t matter.”  That’s as good a note to end on as anything.  See you next week, and maybe even at the M BA conference. We can show you some of our favorite parts of San Francisco .

Joe Garrett and Corky Watts  -  Garrett, Watts & Co.