Founder and Chair – LMFC
Vice Chair – LMFC
President and CEO – The Bank of Northern Michigan
SVP of Shared Services - LMFC
Senior Vice President, Traverse City Market Manager

Hear from the founder of Lake Michigan Financial Corporation, Rich Lievense, and his insight on what this blog encompasses.

A polar explorer, Ernest Shackleton, faced harsh conditions as he attempted to reach the South Pole in 1914.  The story of this expedition is a compelling story of leadership when disaster strikes again and again.  Modern corporate leadership can learn something from this story. 

Read "Leadership Lessons From the Shackleton Expedition" from The New York Times.

The passing of Steve Jobs has caused much reflection in the popular press.  While not perfect or easy to be around, he clearly fundamentally changed many important things.  A couple important lessons are outlined in this short article.

Read "Steve Jobs and Taking the Big Chance" from The New York Times.

Ever wonder why we have such a difficult time developing consensus and compromise?  Perhaps the problem is us and our unwillingness to deal with different ideas and people in our everyday lives.

Read "You Want Compromise?  Sure You Do." from The New York Times.

The market and economic events of the last few days have been dramatic and disturbing. If one spends too much time watching CNBC, the end of the world seems near. We have another view. 

Careful readers of this BLOG know we have been concerned for some time about the lack of political leadership in Washington, the worsening of the situation in Europe, and a multi-year de-leveraging process across the globe (If you are interested in some of these posts, we have provided links at the conclusion of this entry). We believe these factors are the principal reasons behind the recent market adjustments. Let’s take a moment to consider each of these factors separately. 

The political polarization in Washington results from the realization that traditional government revenue and spending programs no longer work in a rapidly changing world. Each political party has moved further right and left and the moderate members of each party are no longer at the table. In an environment such as this, it takes a significant threat or crisis to drive people to consensus. We believe the current situation provides this threat and will eventually cause meaningful policy changes to be implemented. This process will not be pretty, especially in an election year, but we believe the recent budget deal is just the first small step in rationalizing our fiscal house. 

The European debt crisis is another difficult problem. Many countries in the Union are not competitive in a world economy and have spending programs that have been supported by debt as opposed to revenue. This is clearly unsustainable. The political solutions offered to date have been short term in nature and have not fully addressed this lack of competiveness. This too will change as the extent of the problem becomes apparent and the discipline of the equity and bond markets required a more rational long term solution. Ultimately, we believe the basis structure of the Economic Union and the EURO will change to better fit the current world competitive solution. 

The de-leveraging of the world will continue for some time. Large companies have reduced the leverage in their balance sheets and have a record amount of cash. Consumers around the world are in the process of doing the same thing. As mentioned above, governments will be forced to start the same process. Repayment of debt is never easy and fiscal discipline takes time to fully implement but will eventually lead to a more resilient worldwide financial system. 

We expect the next months and years to be challenging as difficult matters are addressed and resolved. Market forces will enforce this discipline and the soft world economy will continue for some time. We will continue to see the emergence of stronger economies in the Far East as wealth and income are more evenly distributed around the world. Ultimately, these are good outcomes but will come at a cost to those institutions, individuals, and countries unwilling to adapt to the new reality. 

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