Business News Gets Personal

July 30th, 2008 Posted by Suzy Ogé

Gone are the days when Business and Financial news existed primarily to inform investors in near real-time how much money they’ve won or lost on their investments. Recently, business and financial news stories have crossed over to the mainstream and are making headlines in a big and bad way.

When I was in the US a few weeks ago, the evening news was dominated by lines of desperate people camped out in front of IndyMac in California to withdraw their money from the failed bank. Those images belong to another era, circa. 1929.

Last week in a suburb south of Boston, 53 year old Carlene Balderrama committed suicide just an hour and a half before her house was scheduled to be foreclosed and sold in auction. Her suicide note instructed her husband and son to use the life insurance money to pay for the house.

Now one of the houses built by the TV show Extreme Makeover- Home Edition faces foreclosure. The show, along with 1,800 volunteers, built the Harper family a new house in 2005 valued at $450K. While some call the Harpers the latest victims of the mortgage crisis, they are actually victims of their own greed and stupidity. The mortgage crisis is bringing to light some of the worst possible financial decisions imaginable. Instead of just saying thank you and making a nice life for their family with the security of owning an amazing home and even an extra $200K in donations for college scholarships and an account to cover maintenance costs, the Harpers couldn’t resist getting their hands on the cash. They mortgaged the entire value of the house and lost everything, including the house, in a failed business venture.

With foreclosures up 121% over last year in the US, the shocking headlines will continue. It is always tragic when a family loses their home, regardless of the circumstances, and many home owners are overwhelmed.

Job cuts won’t help people make their mortgage payments, but more companies are announcing them daily. While visiting St. Louis, the Chrysler plant in Fenton, MO, located just 5 minutes from my family was a daily reminder of the hardship that will inevitably come to the community. A Voyager Van and Dodge truck are proudly displayed in front, but with sales of these models down, Chrysler recently announced closing 1 of the 2 co-located plants, and eliminating 1 shift from the remaining plant. 2,400 people will be layed off at the end of August, with more to follow. In case you are tempted to use logic to convince yourself about your own job security, take note. Chrysler just reopened the plant last Sept. after spending 500 million on a state of the art revamp.

Starbucks is another example that defies logic. Among the 600 stores closing this week, many have just been open for a few months without a track record to identify the losers! Today an additional 1000 non-store job cuts were announced.

Just a few days after returning from the US, I heard that my friend was layed off from Citibank. She married in February and soon after found out that she is expecting twins in September. I was shocked that Citibank would fire her under these circumstances. Sadly, in times like this, companies can do the unthinkable and blame it on the recession and somewhere an investor cheers that the stock has creeped up a few cents.