Tips for a Happy New Year 2009

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Carlos Slim's letter to its employees: internal communication in times of crisis. Carlos Slim is the richest man in the world. He owns a large number of companies and is in the big game of politics and global business. And since last week is circulating on the Internet that would have sent a letter to all its employees with a clear and, according to experts, very accurate description of the global crisis.

Dear colleagues: Like all insurance already heard, we took several weeks for a lot of global financial volatility. Will have heard of banks, insurers and stock exchanges that have gone bankrupt in the world. They see the exchange rate which is over 12 mexican pesos per dollar.

The purpose of this email is not alarm, but try to explain my view the causes of all this. They also explain what they perceive to be doing this at the global level to stop this crisis. Finally giving recommendations and comment on a personal level we are doing at the company. Try to do this it easier to understand but if someone did not understand some of the mail please ask and I can be the explanation.

I ask you to please read the entire document. All sections are very important. For the managers of branches: Please deliver a copy to the people who have no computer.

Background

The crisis in the U.S. beginning with mortgages. For many years the value of the properties was rising steadily. In these years of prosperity are relaxed the criteria for loans. The banks in order to provide more mortgages packaged together or with some financial instruments called for Mortgage Backed Bonds. They were sold in financial markets to other banks, pension funds, insurers and investors.

The problem was when property prices are no longer boarding and in some cases began to decline. As part of the relaxation of lending criteria they mentioned in the preceding paragraph without a hitch some banks lend to buy homes (providing 100% of property value) and in some cases provided to people who had no jobs. Lowering the value of the properties, many people realized that the bank had more money than their property was worth. Therefore stopped paying their mortgages.

The owners of these debts (the owners of the bonds that are mentioned above) went into panic and began to sell their bonds. This caused a stampede to sell these bonds. The famous Bonds are bought and sold like any product (tomatoes, houses, cars). Even when they have guaranteed mortgages, the law of supply and demand govern the value of these bonds. Having a lot more supply that demand values went to the floor. As a benchmark bonds which have a market value of $ 100, were sold to values of $ 35. What's illogical problem is that these bonds are as remember as collateral properties that have not disappeared and that 1) the properties have not had a drop in value of more than 20%, and 2) only 6-7% of the loans have failed to pay. That's why this mortgage crisis has no logic.

However, the owners of these bonds have an obligation to valuate the Bonds in his accounts to the value of what they are worth in the marketplace. By having bought $ 100 and have it valued at prices much lower, the difference is a loss that has to be reflected in the income statement. This has caused many companies such as banks, insurance companies, and so on. they had to report millions in losses and in some cases the banks that have not been able to get more capital have gone bankrupt for this reason.

The problem has grown so that I come to affect banks that did not have these bonds. As background is important to understand that daily between banks lend money to fund its loans and its daily operations (same thing happens in companies like ours). With uncertainty about the outcome of the crisis, banks are raising the cost of borrowing between them.

They are also putting trust between them and no longer provided. This has caused other financial institutions will be bankrupt, infected by the initial problem. But are the rest of the economy as it affect us? The banks by the uncertainty of 'what will happen?', Are leaving companies to give me people. This is happening globally. And if you give it, ask for more guarantees and / or climb up the cost of providing. The companies lower inventory levels, reduce costs and lower profits. This is causing companies to stop selling, have to reduce expenditures and to having to lay off people.

We are experiencing a crisis of confidence globally. As the saying goes' Fear not go on a donkey '. As in many cases when there is any kind of crisis the 'just in case' does emerge from the crisis proportions. This is basically what is happening. The fear of many investors are doing that this crisis will spread like a virus worldwide. Already contagion Europe and Asia. And this affects Mexico (all latin american too), and even if what our leaders refuse this were to beat us (eye deny not incompetent but because the worst thing they can do is to spread panic). How big is the impact?

Much depends on what you do the governments of countries biggest in the world and the speed with which they do and how fast it will impact at companies and individuals.

Governments worldwide are taking action to prevent the economies are slow and give assurance and security to all of us as individuals.

First is the security that we have in the savings banks are safe and that if the bank are gone bankrupt this money. Governments are giving this assurance to people guaranteeing deposits in banks, or in some countries by increasing the amount of deposit insurance. This is to prevent people like us go to the bank to get their money and save it under the mattress. This is a very important measure for the crisis does not spread to ordinary people.

The second thing we are doing is providing governments with financial companies (as between the banks no longer are providing or are too expensive) for these finance companies can turn to companies like ours to provide and the economy can continue in its normal movement. Finally in the U.S. government will allow you to buy the bonds famous for that with more demand for these bonds by the law of supply and demand, may be worth more attached to reality and not based on irrationality. Also for the Banks can sell these bonds to the government and with the money they receive in return be able to lend to companies like ours.

It is important to understand that by the size of the economy of Mexico, unfortunately we can not do much to reverse what is happening globally. As a country we are insignificant for the global problem. But the impact of what happens affects us. For more than a few politicians can blame the current government, is just political propaganda because the government is acting in the best possible way. To give you an idea of the differences in size, in the U.S. went into bankruptcy of the great bourse company Lehman Brothers. The broker-dealer was larger than the entire Mexican financial system together.

Governments are responding to that understand the magnitude of the problem. Its stock took to give results (that is like medicine to the sick, is not immediate reaction).

In the inter we have to prevent them as individuals and as a company. WHAT CAN WE DO?

As Director, I am worried both the continuity of the company as the tranquility of you and advise them and support them as much as possible so we can all do well in these events. It is possible that Mexico's economy will slow. This would impact us as a company and therefore a personal level. That's why some recommendations to embark on a personal level and then informs them that steps are we going to do at the company.

On a personal level

• Caring for your work. Not only implies having the right attitude to go to work every day but try to take care of continuity of the business. Be more efficient, not waste time on the Internet. Do their job in excellence.
• Lower level of personal expenses. It is important to review their personal expenses and seek tighten their belts. Be careful not to spend on things other than necessities.
• Save as much as possible. This becomes even more important because of the uncertainty that currently exists.
• Keep your money in the bank (Disclaimer: what leader or general manager could advise this in Argentina?). For more heed that banks are breaking in the world, it is very unlikely that this happens in Mexico. It is also important to understand that their savings in banks are insured by the federal government. Having their money under the mattress, with a buddy or some cash savings will not necessarily get this guarantee.
• Download as much as possible their debts, especially the debts that have an interest rate that is not fixed. I refer to credit cards and personal loans. Interest rates will rise. Among faster to pay for these loans better. NO pay only the minimum that shows the state of mind.
• Analyze the rate of interest they are paying for their debts. If you need support consult with Human Resources or directly to me.
• Understand the difference between using a credit card and debt with a credit card. The first case is one that uses your card and pays full each month. The second case is one that uses the credit given by the bank or department store. The former has no problem that there is no cost. The second pays interest.
• Credit cards and card shops are a great temptation. Do not take out new and some do it if they can cancel. In the future be able to draw again. By contrast, for mortgage loans (Infonavit, etc.). A fixed rate at this point it's best not to advance payments, but save money. NO time to stop paying their houses. It is their most important assets.
• DO NOT buy bids' Months without Interest. " I am very concerned about this form of marketing that many retailers use to sell more. As the person does not feel at the moment is inclined to make the purchase.
• Be careful with the loans to others. It's very common that someone close to request them borrowed money. If they do come to ask any guarantee (the bill from the car, etc.).. This person may be drowning and may be worn if you do not have much caution.
• Stay healthy. The diseases cost money. Get on a diet, lower weight, exercise, lower cigarettes, lower alcohol.
• Discuss this with your family. It is important that their partners and their children what they understand.

Conclusions

It is uncertain how long this global crisis. People with whom I have talked extensively commented that at least 6 months but can last up to 2 years. The important thing is to first understand that he and learn from the lesson. They also do not get carried away by people alarmist, from journalists to people nearby. That is why we invested time in this release. It is their right to be informed.

Again, the purpose of this email is not alarmed, is informing. Is not the end of the world but if the world is going to affect us. It builds on my long experience and discussion with experts in the field.

On the other hand we have to take action on a personal level and enterprise levels to ensure the continuity of our source of livelihood.
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( Comment form Oscar Granda )

In few words, we must care the money, increasing our income and decreasing ours expenses. Merry Chritmas and Happy New Year 2009 !!!