To Our Clients, Colleagues and Friends, 

• We think politeness is a good thing, but hasn’t e-mail taken it too far?  You know when someone asks you to send a document, and you go ahead and send it to them?    Does he really have to send you a two word e-mail saying “Thank you”? Is that really necessary?  And let’s not even get into the follow up e-mail that says, simply “You’re welcome.”

• There’s a Southeast mortgage banking company we know who stiffed their Auditors.  Just about everyone in the industry knows about this, and we’ve heard lots of investors and warehouse lenders bring it up.  Okay, so maybe you get away with stiffing someone for $15-20,000, but is it really worth it to develop a reputation like that? It’s too small a world and too small an industry, and besides, it’s just plain wrong.

• Our Client Dinner at the Palace Hotel in San Francisco was a big success.  We had 73 people attend, with people from Virginia , Maryland and Hawaii , along with 4-5 other states.  People made new friends and contacts, along with a lot of sharing of ideas.  Many of us crossed a picket line for the first time, and boy, were those strikers loud!
  

• We have friends in their 40’s and 50’s who’ve now been unemployed for two or more years.  We worry about them.  It just seems that the longer you stay off the merry-go-round, the harder it is to get back on. 
• In that vein, someone told us last week that 90 is the new 250, as in $90,000 is the new $250,000.  The key, in our view, is not to hold for the highest salary or the best job, but to simply get back in the game.
• According to the Bureau of Labor Statistics, women have surpassed men and now make up more than 50% of the nation’s workforce for the first time in our history.  In 1967, by comparison, they accounted for just one-third of all workers.  Four out of every 10 women are now their family’s primary breadwinner, a sharp increase from past decades, and the New Hampshire State Legislature is now made up of a majority of women, a first for a legislative body in the U.S.   Finally, women now account for 30% of math Ph.D.s, up from just 5 percent in the 1969.   Isn’t it just amazing that not so many years ago, we were only using 50% of the intelligence our population has to offer?
• We just came across a copy of Don Quixote from our college days, along with some notes we took listing the phrases Cervantes coined in this novel:  The sky’s the limit; thanks for nothing; a wild-goose chase; mind your own business; think before you speak; forgive and forget; turning over a new leaf; the haves and the have nots; born with a silver spoon in his mouth; the pot calling the kettle black.  None of these phrases were seen in print prior to Quixote.
• We did our own research as high school kids reading Catcher in the Rye in 9th grade.  Salinger coined the phrase tossing your cookies, the first time that phrase had ever been used, at least used in print. It sounds so much better than saying someone barfed, puked or upchucked. There’s almost a literary ring to it.
• With the basketball season upon us, do you know what was the worst record in NBA history? The Philadelphia 76ers in the 1972-73 season had a record of 9-73. That would be the baseball equivalent of going 20-142.
• Okay, it’s time to re-run our contest for your favorite high school, coming-of-age movies. You can send in as many nominations as you like.  But get them in soon as we want to run the results in the next week or three!  We’ll kick-start it by nominating Rock ‘n Roll High School (starring the Ramones) and Ferris Bueller’s Day Off.
• The government tried two Bear, Stearns fund managers for lying to their investors about the quality of the assets in the fund, all based on some e-mails in which they seemed worried about their holdings.   But wait a minute. Is it now fraud to put a positive spin on things?  When does optimism cross over into fraud? Can’t a manager legitimately tell his shareholders that he’s “cautiously optimistic” but still be filled with worries and doubts?  The defendants faced up to 20 years in prison, but the jury found them innocent earlier this week. A real victory for common sense.
• Someone just mentioned Bellamy’s book on utopian society, and it struck us as to why we never liked utopian visions.  Utopianists believe they have figured out what the ideal society should look like, and any deviation from this ideal is, by definition, harmful to this sought after perfection.  Eventually, utopian societies become authoritarian, punishing all who don’t believe in this vision.  And isn’t this why Marxism and so many other –isms fail?  Was Joe Stalin any different than Jim Jones? The beauty of democracy and the rule of law is that there is no single definition of how society must look.  The people get to decide and define that every two or four years.
• If Dennis Kucinich had been elected President last year, it would have been the first time we had a first lady with a pierced tongue. Japan decided to beat us in the Weird Political Wives contest,  and the Prime Minister’s wife has written a book in which she writes that she was abducted by aliens and taken on a UFO to Venus. She says that Venus was very pretty.
• In a major move, regulators will no longer require an automatic write-down of commercial real estate just because the value has dropped.  Some examples of situations where you could avoid this mark down would be where the borrower still has a strong balance sheet, the loan is consistently current, and that the loan does not have any well-defined weaknesses. This could make a huge difference in how the banks can survive the commercial restate crash.
• With 10% unemployment, it’s interesting to note that the government only started collecting unemployment data in 1948.  And by the way, Mr. President, please stop talking about the economic mess you inherited.  You did inherit it. And it did start in the Bush administration.  But we hired you to fix it, and it’s now your mess to clean up.
• We were just reading about the Cal business school professor who got the Nobel Prize in economics last week, their 6^th such prize for that discipline, and the second one within their business school. Despite the University’s reputation for great faculty research, it’s also a regular school with regular students, so it was nice to hear this on TV the other night:  On Sunday, students at the University of California , Berkeley created the world’s largest sushi roll. Tomorrow, they plan to make history again with the world’s largest salmonella outbreak.” – Conan O’Brien

A special thanks to all our clients and friends who came to our dinner.  Things didn’t break up till about 1:30 in the morning, and some of us met bright and early the next day for breakfast. We got to show someone from the East Coast all around San Francisco , and a special treat was when she “met” Bushman, a San Francisco original. We just can’t wait to do this again next year. And don’t forget to send in your movie nominations.

Garrett, Watts & Co.  

Helping mortgage lenders increase revenues, control costs, and better manage risk.

• Mike McAuley      281-250-2536
• Corky Watts        408-497-3135
• Joe Garrett         510-469-8633