Readyforpoliticalrevolt

CherylHallsurveyedmorethan50DallasFortWorthbusinessownersand executiveslastweekinthemidstofthemarketturmoilignitedbyStandard &PoorsdowngradeofU.S.Treasuredebt. Theywereasked: 1.DoyouthinkStandard&Poorsdowngradewaswarranted? 2.Whatdoyouseeasthelongertermimpactofthedowngrade? 3.Isthereabrightsidetoit? 4.Doyoufeelconcernsofadoublediprecessionarejustifiedorbased primarilyonfear? 5.Howlikelydoyoubelieveadoublediprecessionisnationallyand locally? 6.Whatistheonethingthatworriesyoumost? Herearetheircompleteresponses. ElizabethFalconer,president,StruhsCommercialConstructionCo. 1.Notreally,maybealittlepremature.(downgradenotdefault) 2.Comparedtoothercountriesdowngrades(Canada,1994,Japan2001), theimpactwasminimal.Hopefullytheimpactherewillalsohavelittlelong termeffect. 3.Maybevoterswillwakeupandfigureoutthatthechangewegotin Washingtonisnotnecessarilyforthebetter. 4.Fearbased,whichcanbecomeaselffulfillingprophesy. 5.Nationally50/50;locallymaybea10percentchance. 6.Congressanditsuncannyinabilitytounderstandeconomics.Theyneed tobringDr.ArtLaffer[memberofRonaldReagan'sEconomicPolicy AdvisoryBoard]outofretirement! BobBachman,partner,USGTInvestorsLP 1.Yes. 2.Mostlynegative. 3.Ihopethatthedowngradeandthesubsequentstockturmoilmightforce ourpoliticiansinWashingtontoseetheworldthewayitisandpropose actions(likeratifyingfreetradeagreements)thatmightactuallyhavea positiveeffectontheeconomy. 4.Fearplaysabigrole,buttheconcernsarerealandjustified. 5.Myguess(andIemphasizethewordguess)isthatthereisa50percent chanceofadoubledipnationallyanda25percentchancelocally.But nobodyspredictionsarereliable.Wereallyareinunchartedterritory.

6.ThatourpoliticiansinWashingtoncontinuetheirdysfunctionalbehavior andthusmakethechancesforaseriousdoubledipmuchhigher. JohnP.Boone,chairman,BelmontGlobalAdvisorsInc. 1.Wasthedowngradewarranted:Absolutelyyes. 2.Longertermimpact:ThisdependstosomedegreehowtheCongressand theadministrationreactassumingnosignificantmovesbythem,one wayoranother,Ifeeltheeffectwillnotbethatsignificantprobably interestratesabithigher. 3.Brightside:Ifthiswouldbeenoughofawakeupcallforallofus,which unfortunatelyIdoubt,andeachofusrealizesthatweallneedtoworkat ourprofessionandrunourpersonalfinancesinamorediligentmanner. 4.Doublediprecession:Morefearthanjustified,butgrowthwillremain verymodest. 5.Doublediprecessionlikely:Nationally,25percentorsochance;locally, verylittlechance. 6.Worries:Toomanyofusthoseingovernmentaswellasordinary citizenswillcontinuetolooktothegovernmentortotheFederal Reservetotakeactionsthatwillsolveallourproblems.Asnotedabove, eachofusneedstohandleourownaffairsinamannerwhichcontributes toamorevibranteconomy. JanCollmer,retiredtechexecutive,pastchairmanofDallas/FortWorth InternationalAirport Thedowngradewaslongoverdue.Themarketshavetakenitsomewhatin stride. Themarketsarealsobeinginfluencedbymanyotherproblemsinthe MiddleEastandEurope,particularlytheplightoftheeuro.AsintheUnited States,thereisnotenoughmoneyavailabletosolvetheEuropeancommon marketproblems.GermanyandFrancecannotbeartheloadalone. Americawillbelittlehelp.Throwinamultiplicityofwars,allofwhichseem unwinnableinthetraditionalsense,andyoubleedallthedeveloped countriesdry. IranhasrecentlythreatenedtotakedowntheAmericanelectricalgridin retaliationforStuxnet[acomputerwormusedagainstIransindustrial systems].AmericaissodependentontheInternetthatitseemscompletely plausiblethatatakedownofutilitiescouldbeaccomplished. ThedebtproblemsthatwearedealingwithintheUnitedStatesshould havebeendealtwith20to30yearsago.Therehasbeenahugeover promiseonbenefitsofallkinds.Somesmalltownsarehavingtodeclare bankruptcybecauseofpensionpromisesmadetofireandpolice.Almost twothirdsoftheU.S.budgetistransferpaymentsofonekindoranother. Weclearlyhavecreatedawelfarestatethatwecannotsustain.TheNew Dealgotitstarted,theGreatSocietyacceleratedit,andtheCarterand Clintonpoliciesputitonsteroids(thinkCommunityReinvestmentAct).

ThepromisesmadebySocialSecurity,Medicare,Medicaid,drugsandnow universalhealthcarecannotbedelivered.Ithasbeenacknowledgedby manythatourpathisunsustainable. ThrowintheincrediblemanufacturingcompetitionfromChinaandthe otherAsiancountries(andnowsubstantialresearchanddevelopmentin theThirdWorld),andyouhaveaperfectstorm. Inaddition,theculturaldeclineofAmericaandthegrowingabandonment oftheeducationandworkethicdonotleadtoaquickrecoveryregardless ofwhatthepresidentorcongresscando.Moretaxesseeminevitable,but theywillprobablybecounterproductive.Clearly,moretaxeswillnotsolve theproblem. SteveSwanson,president,DACPatientRecruitmentServices 1.Yes,thedowngradeiswarrantedand,bysomeaccounts,shouldhave occurredearliergivenrecenteconomichistory. 2.Asmallcorrespondinguptickininterestratesastheeconomyimproves. 3.Thepotentialforreneweddiligenceonthepartoflegislatorstotackle theveryrealissueofdebt.Lawmakersneedtorebuildcredibility,andI believeU.S.businessiswatchingclosely. 4.JustifiedastheEuropeanUnionhasnotundertakentherecapitalization offinancialinstitutionsthattheU.S.has. 5.Dallasisfaringbetterthanmanypartsofthecountry.Increasingly,world economieshavebecomemorelinkedandthethreatofcontagionfromthe EUisreal.Fortunately,U.S.businessisinbettershaperelativetotheir balancesheetsandcashonhand,allowingustobetterweatherthe impendingmarketadjustments. 6.Alackofpoliticalwillonthepartoflawmakers.Thetypeofbrinkmanship occurringdiscreditsusintheinternationalcommunity.Giventhelevelof fiscalausterityrequiredovertimetoimprovethedebtpicturesuchefforts willneedtoyieldmuchmoremeaningfulresultstobeviewedbymost Americansascredible. GlenAgritelley,owner,TBarMRacquetClub,MercyWineBarand Sebastian'sCloset 1.Inaway,no.Rightnowthiscountryisnotacreditrisk.However,yes forthedirectionweareheadedinandthelackofourCongressand presidenttoworktogethertomakeanythinghappen.Thisrecentfiascoof anagreementisapebbleintheoceanofwhatneedstobereallydone. Thereisverylittle,ifany,realseriouscostcuttingintheentitlement programstheelephantintheroomthatnooneseemstoberecognizing. 2.Itweakensanalreadyfragileeconomy.Althoughtheeconomyhasmade somestridestomoveforward,keyindicatorslikethejobnumbersand housingremainwellbelowwheretheyneedtobe.Theuncertaintyofwhat thefutureholdsisthebiggestthreattothiseconomy.Businesspeoplelike mearenotwillingtotakeonnewrisksorinvestmentsnotknowingwhat directionthiscountryisgoingin.AndthedirectionIseedoesnotlook promising.

3.Ihaventfoundityetifthereis. 4.Abitofbothactually.Therecoverypriortothedowngradewasfragileat best,anduntilpeoplegetbacktoworkandconfidenceinourcountrys directionbecomesclearer,thethreatofdoublediprecessionisreal. 5.Ithinktheoddsare5050rightnow.Thenextsixmonthswilltellthe tale.WeinTexasstandabetterchanceofnotseeingitaswehavefared betterthanmostthroughthefirstrecession. 6.Whatistheonethingthatworriesyoumost?ThatPresidentObamagets reelectedandwecontinuedownthisroadofredistributionofthewealth andsocializationofoureconomy. MikeHernandez,chiefexecutive,D&MLeasing,MortgagesUSA 1.Yes. 2.Ithinkitwillraiseoverallratesapproximatelyapoint. 3.HopefullyitwillfinallybringfiscalresponsibilityinWashington,butI'm notholdingmybreath. 4.Idon'treallyknow,butobviouslyhopeit'sbasedonfear.Iknowthat regardlessoftheeffect,Texaswillcontinuetofarebetterthatotherparts ofthecountry. 5.Seeabove 6.ThecompletelackofbusinessknowledgebythoseinWashingtonwho aremakingtherules. DavidBiegler,chiefexecutive,SouthcrossEnergyLLC 1.Ratingsaremeanttoreflectanentitysabilitytofinanceitsdebt,which shouldnotbeinquestion. 2.Thedowngradewasverymuchanexpressionoffrustrationoverthe politicalsystemsinabilitytoproduceaplanfordeficitreductionandnotof abilitytopay.Therealquestionisnotthelongtermeffectofthe downgradeitselfbutratherwhetherithasthederivativeimpactoftipping thebalanceinfavoroftrulyaddressingthisproblem. 3.Thebrightsideisthatthedowngrade,alongwithallthathashappened, seemstobeproducingimpetusforongoingactions.Maybethistimewe willtrulybegintodealwiththecountrysdeficitproblemandnotagain immediatelyreverttoputtingourheadsinthesand. 4.Thereisnodifferencebetweenarecessioncausedbyfactsandone causedbyfear.Itisstillarecession.Fearisnothingbutthenormalreaction ofriskaversionandourleadershavecausedagreatdealoffearwithout anymitigatingactions.Theriskofadoublediprecessionwillnotsubside untilactionsdissipatethefear. 5.Itisatleasta5050chance. 6.Mybiggestworryisaboutthefearandmalaisethathaveinvadedthe Americanconsciousness.Withoutleadershipfocusedonrestoringthe publicsconfidence,prolongedlongennuiwillhavelongterm,detrimental consequences.

 BobbyHaas,principal,NewMainStreamCapital 1.DoyouthinkStandard&Poorsdowngradewaswarranted?Yes 2.Whatdoyouseeasthelongertermimpactofthedowngrade?Itwill prolongtheeconomicmalaisewearein. 3.Isthereabrightsidetoit?No,unlessitdeliversanelectricshocktothe dysfunctionalpoliticalsystem. 4.Doyoufeelconcernsofadoublediprecessionarejustifiedorbased primarilyonfear?Justified. 5.Howlikelydoyoubelieveadoublediprecessionisnationallyandlocally? Likelynationallywithsomeimpactlocally. 6.Whatistheonethingthatworriesyoumost?Governmentdysfunction. BobPearson,chiefexecutive,PearsonPartnersInternationalInc. 1.Yesthedowngradewaswarranted,andiftheineptpeoplewehavein WashingtonwouldhavelistenedtoS&Pswarning($4trillionora downgrade),wewouldntbeinthissituation. 2.Longertermitwillmeanhigherinterestratesandanembarrassing furtherdeteriorationofthedollar. 3.TheonlybrightspotisthatIhopepeoplehavelongmemoriesandvote alltheincumbentsoutnextNovember. 4.and5.Yes,Ithinkwecanlikelyhaveanewrecessionbecauseconsumers readthepaperandwontspend.Sotheregoes70percentoftheeconomy. 6.ThethingIworrymostaboutisthattheidiotsinWashingtondont understandhowtolead,areallonvacationandevidentlydontcare,yet theywillgettheirfullsalariesfortherestoftheirlives. JimFite,president,Century21JudgeFiteCo. 1.Notwarranted,butsurelyshouldgetpeoplesattentiononCapitolHill. Waitinguntilthelastminutedoesnotworkformanyreasons. 2.Fortherealestatebusinessandconsumersingeneral,higherinterest rates.Thiswillbefromthegeneraleconomicpoliciesofnotlivingwithin yourincomelimitsandprintingmoney. 3.TheonlybrightsidewillbeifCongressgetsthemessageenoughis enough! 4.Asforrealestate,wearestillinthefirstrecession.Lendingrestrictions mustloosenonsinglefamilyhomessothatbuyerscanenterthemarket withconfidence.Thependulumneededtogoawayfromthesubprime lending,butthecurrentrestrictionsareridiculous. 5.5050.Jobsandconsumerconfidencewillkeepusoutofadoubledip. 6.TheuncertaintyofthenationalpolicieswithoutunderstandingofMain StreetAmerica.Asmyfather,JudgeB.Fite,said,Whatwehaveistoo

manyDemocraticandRepublicancongressmen!WhatweneedisUnited Statescongressmen! ChipBabcock,partner,JacksonWalkerLLP 1.StandardandPoor'sisaclient,soIcan'tcommentonthe appropriatenessofthedowngrade. 2.It'slikeyourbankaccountitgoesdownaloteasierthanitcomesback up.Iamafraidthatotherswillusethisasabasisforraisinginterestrates onallmannerofcredit. 3.Somemightsaythatthiswillputpressureonthegovernmenttoaddress ourdebtproblems.Butifthat'sthebrightside,we'reinanawfullydark place.Idon'tseeanythinggoodaboutthis. 4.Weallknowthatconfidencedriveseconomies,andwhetherthethreat ofadoublediprecessionisdrivenbyfearornotisbesidethepoint.If peopleloseconfidenceinoureconomy,adoublediprecessionismuch morelikely.ButaswehaveshowninTexas,onedoesn'thavetoacceptthis andcaninsteadfocusonthefundamentalswithanoptimismandcando attitudenecessarytoclimboutoftheholewe'vedug.Itcanbedone.Ifwe cangetgovernmentspendingundercontrol,itwillmaketaxincreases muchmorepalatabletotaxpayerswhowillseethattheirmoneyisnot beingwasted.We'llneedtodobothtosuturethedeficitwound. 5.NotlikelyinTexas. 6.Iworrymostaboutalossofconfidence.Thiscountryisstillthestrongest intheworld,andweneedtobelievethatandactlikeit. ErinBotsford,chiefexecutive,BotsfordGroup 1.DoyouthinkStandard&Poorsdowngradewaswarranted?No,butI thinkitmayhavebeenagoodwakeupcallforCongress. 2.Whatdoyouseeasthelongertermimpactofthedowngrade?Toosoon totell. 3.Isthereabrightsidetoit?Yes,wewillbeforcedtogetourfiscalhouse inorder.Theycertainlydontwantanotherdowngrade. 4.Doyoufeelconcernsofadoublediprecessionarejustifiedorbased primarilyonfear?Hardtotell.Corporateearningshavebeengreatwith plentyofcashoncorporatebalancesheets.TheEuropeanfiscalissueswill bethedrivingforceastowhetherornotwehaveadoubledip.Werelya lotonEuropeanbuyersforourgoodsandservices. 5.Howlikelydoyoubelieveadoublediprecessionisnationallyandlocally? Nationally5050.Locally,DFWisingreatshape.Peopleareflockinghere fromotherstates.Twocouplesrecentlymovedintomyneighborhoodfrom Californiajustthissummer. 6.Whatistheonethingthatworriesyoumost?Investorpanic. SandyBrown,Dallasmanagingpartner,Bracewell&GiulianiLLP 1.TheS&Pdowngradewaswarranted.

2.Iamhopefulthatthelongtermimpactofthedowngradewillbethat wellgetourfinancialhouseinorderanddowhatsneededtogetit upgraded. 3.Ifthereisabrightside,itisthattheembarrassmentofthedowngrade willcausethepolicymakersinWashingtontomakehardchoiceson spending. 4.and5.Theconcernsofadoubledipareabitoverblown.However,so muchoftheeconomyisdrivenbyhowconsumersandsmallbusinesses feel.Soiftheyarescaredandstopspendingandproducing,itcoulddrive usintoanotherrecession.Adoublediprecessionissomewhatunlikely locally,becausewekeepaddingjobs.ButIwouldntbesurprisedifsome partsofthecountrysufferwhatsomeeconomistswillcalladoubledip recession(althoughthingsreallycantgetmuchworseinArizonaand Florida). 6.Theonethingthatworriesmethemostisthatwenowhavemore peopleinthiscountrywhoarenotpayingtaxesthanthosewhoare.That hasthepotentialtoturnintoclasswarfare. ChuckDannis,president,CrossonDannisInc. 1.Yes,butIdonotbelieveanyonereallythinksthattheU.S.wouldever default. 2.Longterminvestorsnowhavetofactorintotheirinvestmentdecisions thatsuchadowngradeisindeedpossible.Idontthinktheybelievedthat before. 3.Someonenotquitesurewhoyetwillmakeaboatloadofmoneyoff thispoliticallydriven,shorttermcrisis. 4.Therehastobeconcern,simplybecauseofthecombinedeffectof (potentially)higherinterestratesandnojobcreation. 5.Wewilleventuallyfollowthecourseofthenationaleconomy,butIam suregladtobehereinDallasthananywhereelseifwedodoubledip. 6.Whatistheonething(aboutthiseconomy)thatworriesyoumost?A joblessrecoveryreallyaddsnothingtothehealthoftherealestatemarket: joblesspeopleshopless,dontbuyhouses,doubleupinrentalhousingand dontleaseofficespace.Nonewjobsequalsadownrightpitifulrealestate market. PaulSpiegelman,chiefexecutive,BerylCos. Ihonestlydontfeelqualifiedtoanswer15. 6.Whatworriesmemostisthatwehaveapoliticalsystemthatisputting ourpeopleandourcountryateconomicriskbyturningbusinessinto politics.Leavethebusinesstous. CarolReed,principal,ReedsPublicRelationsCorp.

LikeanyonecareshowIfeelaboutthemarkets.Politicallythisis devastatingforObamaandhisreelectioncampaign.Icanjustseethe oppositionadvertisingnow. GailDavis,president,GailDavis&AssociatesInc. 1.,2.and5.I'llleavethesetotheexperts. 3.Isthereabrightsidetoit?We'reAmericans,entrepreneurs,leaders. There'salwaysabrightside!I'mfortunatetobeinthebusinessof inspiration,soI'llsharewhatoneofmyfavoritespeakers,MichaelTreacy, sharedwithourteam:OnlyafoolwouldbetagainstAmerica. 4.Doyoufeelconcernsofadoublediprecessionarejustifiedorbased primarilyonfear?Ifthere'sonethingwe'veseenduringthedownturn,the businessesdoingthebestdon'toperateonfear.We'vegrownyearover yearbecausewehaven'tstuckourheadsinthesand,ratherwe'vepushed aheadanddeepenedourclientrelationships,sowhentheydohavemoney tospendonspeakers,theyhaveasourcetheytrust. 6.Whatistheonethingthatworriesyoumost?Thatalltheseissuesare detractingfromwhatweneedtodoasacountry:Grow,grow,growthe economy.Ihavebeenprivilegedtoworkwithgreatclientswhobelievean importantpartoftheequationisinspiringtheiremployees,solet'sgettoit. JoStaffelbachHeinz,principal,Staffelbach 1.DoyouthinkStandard&Poorsdowngradewaswarranted?No!Itwas moreaboutsendingamessagetoourgovernmentaboutitsinabilityto resolveitsbudgetproblems.Thedowngradetoldusnothingnewaboutthe qualityofourdebtorthelikelihoodofdefault. 2.Whatdoyouseeasthelongertermimpactofthedowngrade? Questioning,andrightlyso,oftheworldseconomicconditionanda continuederosionofconfidence. 3.Isthereabrightsidetoit?Possibly,iftheworldthinksamarket correctionwaswarranted.Butthatsstretchingit.Europeancountriesthat havespentthemselvesintoacornerwillmakeanefforttocorrecttheir mistakes,whichwillbegoodforlongtermgrowth.Thepopulaceisawake, payingattentionandwantingresults.Thisispositive. 4.Doyoufeelconcernsofadoublediprecessionarejustifiedorbased primarilyonfear?Fearoffurtherrecessionhasbeenfueledbytheseevents andultimatelystokesthefirethattheglobaleconomyisfalteringinall aspects.Thisfearisevokednotonlybypoliticiansbutalsobythe24/7 nationaltelevisedpress. 5.Howlikelydoyoubelieveadoublediprecessionisnationallyandlocally? Wehaveeveryreasontobelievethathere,regionally,wewillbebetteroff thanotherareas.Butjobgrowthisessentialforathrivingeconomy.Ifwe havejobgrowth,wehavealargerbasefortaxationandincreasedrevenue. 6.Whatistheonethingthatworriesyoumost?Lackofleadershipin Washington.Thisisnotatimeforpolitics.Thisisatimeforleadershipand solutions.

CraigHall,realestatedeveloper,HallFinancialGroup 1.No. 2.Thedowngrademaybeseenasthesparkfortheselloffinthestock marketonMonday,thoughIthinklongerrunwewouldhaveseenaday likethatwithorwithoutthedowngrade.Albeitnotinastraightline,Ifeel themarketstillhasquiteawaystogotothedownside. 3.S&Phadthesubdebtmarketcrisiswrong,andIthinktheyhavetheU.S. abilitytorepayitsdebtwrong.Idontseeabrightsidetoanyofthat. 4.Iremainfearfulofadoublediprecessionandwouldarguethat,formany people,wehavebeeninonecontinuousrecessionfromtheendof2007.A politicalfocusoncuttingspendingisawrongquestion.Weshouldbe concernedwithcreatinggrowthandjobs. 5.Nationally,wearemorelikelythannottohaveGDPgointothenegative territory,oradoublediprecession,asitiscalled.Locally,wecouldbe draggedintoitaswell,althoughwearedoingbetterthanmostpartsofthe country. 6.Whatworriesmemostisfiguringouthowtogettractiononcreatingjobs andreallycomingoutofthegreatrecessionstartedinlate2007.While arguablytherecessiontechnicallyendedinmid2009,Iwouldntsay2010 or2011todatehavebeennormalbyanystretchoftheimagination.We needsomenewthing!Somethingneedstobedonetocreatequalityjobs. Somethingneedstobedonetoreversethetrendoftheeconomywhere therichgetricherandthepoorgetpoorer,andwelosethemiddleclass. Thisissociallypoliticallyandhumanrightswiseunsustainable. DennisMcCuistion,TVhost,McCuistion 1.Yes,andverylateinmyopinion. 2.Thedowngradeisnottheproblem.Thefiscalsituationistheproblem. S&Phasnocredibility.Theyarejustsayingtheemperorhasnoclothes whentheemperorhasbeennakedfor10years. 3.Onlyifitgetstheattentionofthe535plus2,andIdoubttheywillgetit. Andiftheydo,theywillusuallydothewrongthing. 4.Justified. 5.Somewhatlikely. 6.ThattheAmericanpeoplecannotandwillnotweanthemselvesaway fromseeingtheentitlementmentalityasaright,andthatbigcorporations andWallStreetwillcontinuetogamethesystem. TomHansen,chiefexecutive,HeelysInc. 1.No.TheratingissimpleastatementofoddsontheabilityoftheU.S. governmenttorepaytheirdebts.Thathasnotandwillnotchange.Thisis moreofapoliticalstatementandquiteironicconsideringitwasthegross miscalculationsoftheratingsagenciesonthesafetyofmortgagebacked securitiesthathelpedgetusintothismessinthefirstplace.

2.Longtermimplicationscouldbeariseininterestrates,butthatwould benegligible.Thebiggerimpactwillbeonthepoliticalprocessandthehue andcryforreducedspendinganddebtreduction.Thatsagoodthing,but itssuretobemessyandreportedbythedenizensofthe24hournews cycleliketabloidstalkerupdates.ItllbegreatTVifyoulikethehorror genre. 3.Thebrightsidecouldbethepoliticalwilltofinallyaddressspending thatsbeenoutofcontrolfordecades.Doubtfulthatwillcomefromthe currentcropofWashingtonresidentsmorelikelyfromthoseinstalled whenthecomingkillalltheincumbentsmovementcomestofruition. ThisisaHowardBealemoment(PaddyChayefskyhaditright.) 4.Doublediprecessionconcernsarepurelyfearbased.Balancesheets haveneverlookedbetter.Companiesarehangingontocashinsteadof investingorhiringduetototaluncertaintyastowherethegovernmentis goingonanything.Noclarity,noleadershipfromWashingtonandno oneinthebusinessworldwillbemovingforwardatallsofearsustains thebadeconomy.Doublediprecessionisnotlikely.Werestillridingthe firstdip. 6.WhatworriesmemostisthelackofleadershipfromWashington.Its smalltime,smallmindedpoliticiansworkingtohangontotheirjobsby panderingtotheextremeelementsoftheirbases.Theyfeargetting primariedbysomeonefromthelunaticfringe.Andfrankly,weshouldall fearthat.Weneedfundamentaltaxreformandclear,conciseeconomic policyconceivedandexecutedbyadults.whichisafarcryfromwhats happeningnow. JodyGrant,chairmanemeritus,TexasCapitalBancshares 1.Idonotthinktheywerejustifiedinthedowngrade.Eventhoughour debttoGDPhasrisen,ourdeficitisatapostWWIIhigh,andthetrajectory ofbothisunacceptable,wearestillthestrongestcountryintheworldasa reservecurrency.Thereisnoothercurrencythatoffersthedepthof liquidity,stabilityofgovernment,freemarketsystem(byfarthebest systemintheworld),transparencyoffinances(bothpublicandprivate), andfinancialintegritythantheU.S. Switzerland,Germany,Japanarealltoosmall.GermanyistiedtotheEU, whichisstrugglingmightily.Japanhasmismanagedtheireconomyfortwo decades.CanyouimagineChinaastheworld'sreservecurrency?Withtheir managedeconomyandlackoftransparency,thereisnofinancialintegrity. AsunhappyaswemaybewithD.C.,we'vestillgotthebesteconomy,and weareAAA!Abreadbasketofcurrenciesistoocumbersome. 2.Ifthefinancialmarketscontinuetospiraldownward,wecouldevolve intofinancialchaos.Theresalsothewealtheffect.Asassetsdeclinein value,peoplefeelpoorerconsumersbegintocurtailbuyingand businessespostponecapitalinvestment,hiring,andbuildingofraw materials,inventory,etc.Itisestimatedthatthedepreciationof$1trillion invalueofassetscosts1percentinrealGDP. 3.EventhoughIthinkitwasunwarranted,itmaybethecatalystthatforces ustogetourhouseinorder.

4.Theconcernsarebasedonfearanduncertainty.Themarketshate uncertaintyanddon'tworkwellinthefaceofdecliningconfidence. Economistshaveaverygoodunderstandingofthemechanicsofthe marketplacesupply/demand,etc.andhavebuiltwonderfullyintricate modelsbasedonhistoricaltrendsandthemechanicspreviously mentioned.Weknowfarlessaboutthepsychologyofthemarketplaceand whatmakesbusinessesandconsumersactirrationally.Wecouldbeonthe vergeofacrisisofconfidence. 5.Ifweslideintoanotherrecession,Iwouldnotrefertoitasdoubledip. Therecessionof200809ended.Ifwehaveanotherrecession,itisofour owndoingandstandsonitsown.Doesn'treallymatter,though;arecession isarecession.Thechancesofanotherrecessionarestilllessthan5050, buttheyarehighernowthantheywerebeforetherecentfiascoinD.C.We wereonaslowbutsteadygrowthpatheverythingwasimproving. Unemploymentlagged,butitwasdestinedtolagandcouldbetypifiedas largelystructural.Businessesshranktheirworkforceswithlaggingdemand anddon'twanttohireinthefaceofuncertainty.Jobshavebeenshipped offshore,replacedbytechnology,andtheeconomyiscontinuingalong termtransitionfrommanufacturingtoservices.Peoplehavetobe retrained. 6.I'mworriedthatCongresswon'tactuntilthey'reforcedtobya weakeningdollar,adownwardspiralingeconomyandhigherborrowing costs.Asgoodasitis,sometimesthesystemistooreactionaryandslow. Thisisabigship,andittakesalongtimetoturnitaround! MichaelBurns,chiefexecutive,MichaelA.Burns&Associates 1.DoyouthinkStandard&Poorsdowngradewaswarranted? Unfortunately,yes.S&Pisconfirmingwhateveryonealreadyknows. Rhetoricisn'tgoingtobeenoughtosolvethenation'sfinancialproblems. 2.Whatdoyouseeasthelongertermimpactofthedowngrade?Ithinkit couldweakenthedollar'sfuturevalueandroleasareservecurrency.How muchI'mnotsure. 3.Isthereabrightsidetoit?Yes.Ayellowwarninglightisbetterthanared one.It'sboundtosendasignaltoWashingtonthatwillfavorablyimpact bipartisandecisionmaking. 4.Doyoufeelconcernsofadoublediprecessionarejustifiedorbased primarilyonfear?They'reprimarilyfearbased.Businessandconsumers alikearecertainlygoingtobemorecautious,butoverallthingsarepicking up. 5.Howlikelydoyoubelieveadoublediprecessionisnationally;locally? Locally,Ithinkthebadnewshasalreadybeenabsorbedandbusinessesare movingforward.I'mnotsurehowitwillplayoutnationally,butthetoneof theNewYorkTimesisthatthedoublediprecessionisalreadyareality. 6.Whatistheonethingthatworriesyoumost?Thetimingofthisis especiallyunfortunatebecausecompanieswillbemakingdecisionsontheir 2012budgetsinQ4.Ifthedownturncontinuesevenforafewweeks, companiescoulddecidetoholdoffontheirspending,whichcouldextend theslowdowninto2012.

JerryMeyer,chairman,ValhallaHoldingsLtd. 1.DoyouthinkStandard&Poorsdowngradewaswarranted?No.Ifindit interestingthatthepeoplewhoratedmortgagedebttripleAcannow downgradetheU.S.debt.It'snottheirjobtorateonpoliticalmatters onlyonfinancialmatters. 2.Whatdoyouseeasthelongertermimpactofthedowngrade?Almost nonelongterm. 3.Isthereabrightsidetoit?Yes.Itwillimpactthepresidentialelectionand thewholepoliticallandscape. 4.Doyoufeelconcernsofadoublediprecessionarejustifiedorbased primarilyonfear?Itispartiallyjustifiedbecausesomuchisbasedon consumerconfidence. 5.Howlikelydoyoubelieveadoublediprecessionisnationally;locally? 5050nationallyandlocally7525against. 6.Whatistheonethingthatworriesyoumost?Besidesthepolitical quagmire,itisthelackofsmallbusinesslendingbybanksandcommodity prices. EricAffeldt,chiefexecutive,ClubCorpInc. 1.DoyouthinkStandard&Poorsdowngradewaswarranted?Technically no,politicallyyes. 2.Whatdoyouseeasthelongertermimpactofthedowngrade?None unlessthefederalgovernmentfailstowakeup. 3.Isthereabrightsidetoit?Yes,Washingtonwillbeinundatedby concernedtaxpayersaswellasglobalinvestors. 4.Doyoufeelconcernsofadoublediprecessionarejustifiedorbased primarilyonfear?Justified,badeconomicpolicies(globally)mustbe addressed.Pleasesendyourcongressionalrepresentativesandthe presidentacopyofFreakonomics.Incentivesmatter,andgovernmentmust belimited. 5.Howlikelydoyoubelieveadoublediprecessionisnationallyandlocally? 40percentnationallyand20percentlocally.Ireallydon'texpectthereal badstuffuntil2013,becauseIexpectthecantogetkickedfurtherdown theroaduntilaftertheelections. 6.Whatistheonethingthatworriesyoumost?Ourfailuretolearnfrom history.Complacency. BarneyAdams,founder,AdamsGolfInc. 1.Imnottechnicallycompetenttosayifthedowngradewaswarranted. 2.and3.Ifthereisapositive,itsidentifyingthefactthattheAmerican economyneedssomethingtoimproveit.Ifwewerentawarebeforewe oughttobeawarenow. 4.,5.and6.Weneedtoreestablishprideinourelectedofficials82 percentdisapprovalofCongressisatravesty.Thevehiclethatwilldothisis jobs;privatesectorjobs,notpublicmakeworkones.

 ClarkDurham,managingdirector,Jefferies&Co. 1.DoyouthinkStandard&Poorsdowngradewaswarranted?No,noton thebasisofabilitytopay.U.S.federalassetsarevastandsaleabletopay ourbillsfornow. 2.Whatdoyouseeasthelongertermimpactofthedowngrade?Myhope isabalancedfederalbudget.Therealityishighercostsoffundingtwoto threeyearsoutforallborrowers. 3.Isthereabrightsidetoit?Yes.Afocusonanewbreedofpoliticsin Washington,D.C.,reminiscentofRonaldReagan'sResolvetoWintheCold Waronlythistime,theresolveisforaSmallerMoreEfficient GovernmentandSimplifiedTaxCode. WeatJefferieswealthmanagementthinkwecanbuyforthelonghaulin thismarketturmoil. 4.Doyoufeelconcernsofadoublediprecessionarejustifiedorbased primarilyonfear?Basedonfearatthispoint.TheglowofAsianandLatin Americangrowthisstillalivefornow.Peoplecominginfromthecold, eatingprotein,takingmodernmedicine,livinglongerandbetterinChina, India,Brazil,andtheAsianRimisapowerfulforce. 5.Howlikelydoyoubelieveadoublediprecessionisnationallyandlocally? Nodoubledipnationally,justslowgrowth.TexasandDallasshouldsee fastergrowthwithenergy,technologyandeducationjobsbetterthan average.Texasencouragessmallbusinesswithournostateincometax structure. 6.Whatistheonethingthatworriesyoumost?Firstbiggestworry:Arun onU.S.TreasuryBonds;i.e.,anunwillingnessofinvestorstobuyU.S. TreasuryBondsunlessyieldsare10percentplus,similartowhathappened inSpainandItaly.TemporarilythatwouldgrindU.S.businesstoahalt. Secondbiggestworry:TheCowboysdon'tmaketheplayoffsthisyear. DavidCegelski,chiefexecutive,DynamicGrowthStrategies Whetherornotthedowngradewaswarrantedorjustifiedmaynotbethe realissue.Whatmaybethecoremessagefromthisdowngrade(andfrom theactiontakenbytheFederalReserve)isthattheeconomicrecoverywill takelongerthanweperhapsanticipated(orwant)and,moreimportantly, thatitwilltakeleadershipfrombothourgovernmentandtheprivate sectortomakeithappen. IthinkofitmoreasawakeupcallthatbusinessasusualinWashington andonMainStreetUSAmustfundamentallyshift.Ourleadersmustlearn tocollaborate,toinspirethroughvisionaryleadershipandtoallownew ideastoflourishbydisplayingpatienceinplaceofpanic. MybiggestfearisthatmanybusinesseswillbemorelikeChickenLittleand notlookforwaystogrow.Thisenvironmentpresentsgreatopportunities aslongasyoudon'tbelievetheskyisfalling. JerryWhite,director,CaruthInstituteforOwnerManagedBusiness

1.DoyouthinkStandard&Poorsdowngradewaswarranted?Yes. Refereescallthemliketheyseethem. 2.Whatdoyouseeasthelongertermimpactofthedowngrade?Ihopeit willbeawakeupcallforWashingtontodealwiththerealproblemof excessivedeficitspendingpaidforwitheverincreasingdebt. 3.Isthereabrightsidetoit?Evenmodestimprovementswouldboost sentimentandencouragebusinesses. 4.Doyoufeelconcernsofadoublediprecessionarejustifiedorbased primarilyonfear?Theyarejustifiedbasedonaweakeconomyandthe apparentinabilitytogetWashingtontofocusonsmartsolutionstoreal problems. 5.Howlikelydoyoubelieveadoublediprecessionisnationallyandlocally? Itiscertainlypossible,butcontinuingmalaiseismybestguess.Locallywe shouldmalaiseless. 6.Whatistheonethingthatworriesyoumost?Anunexpectedchain reactionofdefaultsandfailurespossiblyoriginatinginEurope. JohnDienes,chiefexecutive,ParkCitiesBank 1.Notwithstandingthesource,theygotitrightbasedonthetoxic/political gridlock,buttheirdowngradewasnotwarrantedontheabilityoftheU.S. topayitsdebts,whicharatingagencysgradeissupposedtoreflect. 2.Norealsignificantlastingimpactbecausesovereigndebtmarketsare relativeandtheU.S.isstillthestrongest. 3.Maybe;ifthiswillwakeupourpoliticalsystemtodowhatisrightforthe Americanpeopleversuswhatisrightpolitically. 4.and5.No.Therearemorepositiveeconomicalfundamentalsthan negative.However,fearandperceptionarepowerfulandcanhave devastatingeffects.Locallyno,becauseofourdiversifiedeconomy,low taxandbusinessfriendlyenvironment.Nationally6040chance.Recent politicaltilttowardcostcuttingwill/couldaffectbusiness spending/expansion,jobgrowthand,thus,consumerspending. 6.Washington,D.C. MaryFrancesBurleson,chiefexecutive,EbbyHallidayRealEstateInc. 1.Yes. 2.ItwillmakeAmericanpublicawareofenormousdebtproblemthis countryisincurring,andwillmakepublicdemandrealdebtreformfrom Congress. 3.WeareinNorthTexas. 4.DependsonactionsoftheFederalReserve. 5.Nationallypossible;locallyno. 6.Governmentinterventioninbusinessandretractionofconsumer spending.

TomNiesen,chiefexecutive,AcuitySystemsInc. 1.Yes.S&PexplanationwasthattheyhadfaithintheU.S.,notinthe governmentcomingtogetherandmakingitwork.Toputitintermsthatwe allhavetolivewith,ifacreditcompanywantstoratemycreditscoreandI havemillionsinthebankbutIdontpaymybillsortheonesIdopayIm always120dayspastdueIwillgetalowerscore. 2.Itwillprobablymakeithardertogetmoneyandbethefirststeptowards higherinflation.whichiscominganyway. 3.Imhopingitisawakeupcalltothecurrentpeopleinofficeandsurelya wakeupcallforthenextadministration.Butthatisahighhope. 4.Fearbased.IonlysaythatbecauseImnotsurewegotoutofthefirst recession.Peoplejustrealizedthattheyhadtogetbacktobusinessandthe economystartedupagain,butwithoutunemploymentgoingaway.Didthe firstrecessionevenend? 5.ComparedtotheEastCoastandWestCoast,Texasisdoingverywell.If thereisanotherdipitwillbenationally,butTexaswillnotbehitveryhard. 6.Thegovernmentsteppingintobusinesseswheretheyhavenorighttobe inandnotmakingdecisionsontheeconomyforthebenefitoftheoverall goodoftheU.S.buttheirownpersonalagendas. JimErwin,managingpartner;Erwin,Graves&AssociatesLP 1.DoyouthinkStandard&Poorsdowngradewaswarranted?Absolutely. 2.Whatdoyouseeasthelongertermimpactofthedowngrade?Nothing inthelongerterm(Exceptperhapspositiveasper#3.)TheS&Pdowngrade issimplythediagnosisofanillness,theillnessisrunawayspendinganda nearexcessivelevelofnationaldebt.Thelongtermconsequenceswillbe attributabletotheillness,notthediagnosis. 3.Isthereabrightsidetoit?Yes,hopefully,Congressnowmaygetserious aboutbringingthegrowthofpublicdebtundercontrol. 4.Doyoufeelconcernsofadoublediprecessionarejustifiedorbased primarilyonfear?Justified.Thestimuluswaslargelywastedasitwas mostlyahandoutofmoneythatwasnotfocusedonjobcreation.The currentadministrationinWashingtonisnotbusiness(andjobcreation) friendly. 5.Howlikelydoyoubelieveadoublediprecessionisnationallyandlocally? Nationally,moderatelylikely;locally,somewhatlesslikely. 6.Whatistheonethingthatworriesyoumost?Thecountryisbeingrunby 2012electionyearpoliticsandnotsoundeconomicpolicy. ToddW.Carter,president,PandaPowerFunds 1.DoyouthinkStandard&Poorsdowngradewaswarranted?Absolutely. Thedowngradewasclearlydirectedatthelackofbipartisanleadershipin Washington.Insteadofdousingthefire,PresidentObamafannedthe flamesthatcausedthedowngrade.HeblamedRepublicans.Thenhe blamedStandard&Poors.Thepresidentthenproceededtobeatadead

horse,sayinghighertaxesandhigherspendingwouldputAmericabackon track.TheDJIAtumbled. 2.Whatdoyouseeasthelongertermimpactofthedowngrade?Ifthe leadershipinWashingtondoesntrespond(sofar,itsnotlooking promising)toS&Pswakeupcall,thenabsolutelynothingwillhappen,at leastoverthenexttwoyears.TheAmericanpeoplegetitandwillrespond accordinglyintwoyears. 3.Isthereabrightsidetoit?Yes,hopefullythiswillbeacalltoarms.The alternativewouldbetoleratinganunderperformingmarketsimilartowhat theJapanesedidduringthepast20years. 4.Doyoufeelconcernsofadoublediprecessionarejustifiedorbased primarilyonfear?Thecurrentconcernsofadoublediprecessionarenot justified.QuarterlyearningsamongS&P500companiesarewayup.Right now,peoplearetradingonfearanduncertainty,promulgatedbyalackof confidenceinWashington. 5.Howlikelydoyoubelieveadoublediprecessionisnationallyandlocally? Nationally,Ithinktheoddsarelow,and,locally,evenlower. 6.Whatistheonethingthatworriesyoumost?Thelackofleadershipin Washington.Wecanfixthedebtproblem,butwehavetohaveleaders whoarewillingtomakehardchoices.Idontwanttowaitanothertwo years. MarkOkada,chiefinvestmentofficer,HighlandCapitalManagementLP 1.Noanswer. 2.Whatdoyouseeasthelongertermimpactofthedowngrade?We hopeitforcesourpoliticianstolivewithintheirmeans,justliketherestof America. 3.Isthereabrightsidetoit?Perversely,theimpactsofarislowerinterest rates,makingfundingthedeficitmoreaffordable.Also,itfocusesattention onourdebtissuesandconsequences. 4.Doyoufeelconcernsofadoublediprecessionarejustifiedorbased primarilyonfear?Businesscyclesduringthisrecoverywillbeshorterin generalandmostoftheeconomicdataispointingtoaslowdowninGDP. 5.Howlikelydoyoubelieveadoublediprecessionisnationallyandlocally? TheU.S.economyscapacityforgrowthisverystrong,giventhehealthof U.S.corporations.However,confidenceisdefinitelylackingandwillbe difficulttorestoreuntilfiscalandmonetarypolicyisstabilized.Locally, Texasisinmuchbettershapethantherestofthecountry. 6.Whatistheonethingthatworriesyoumost?Weworryaboutahard landinginChina,theonecountrythatmostsupportsglobalgrowth.The excessesinChina,inmanyways,aremoreglaringthanthosebehindthe 2007subprimecollapse. MikeMcKool,principal,McKoolSmithPC 1.No. 2.SeriousdamagetoU.S.prestigeinforeignmarkets.

3.MaybethoseinCongresswhoseagendaledtothiswillfacereality. 4.Enoughfearalonewillcreatetheseconddip.It'sserious. 5.There'samaterialchance,thoughlessthan50percent 6.Congress. JohnGoff,chiefexecutive,CrescentRealEstateHoldingsLLC 1.DoyouthinkStandard&Poorsdowngradewaswarranted?TheU.S.has revenuesof$2.2trillionandexpensesof$3.8trillionthatdoesntsound AAAtome.SayingweareAAAbecausewehavethepowertotaxisa misguidedargument.Thatbeingsaid,ratingsarepartvoodoo.Ihavenever reliedonaratingtobuyanything.Whetheryouagreewiththeirdecisionor not,Ipredictthatinfiveyears,itwillbereferencedastheturningpointin U.S.fiscalpolicyjustthecatalystweneededtofinallygetseriouson balancingourbudgetandaddressingthenationaldebt. 2.Whatdoyouseeasthelongertermimpactofthedowngrade?Itwill forcethetoughdecisionstobemadeonspending,includingentitlements. Thisistheapolitical,thirdpartycatalystthatperhapsweneeded. Otherwise,theratingchangeitselfwillhaveminimalimpact. 3.Isthereabrightsidetoit?Yes,itisfocusingthenationonthenecessity oflivingwithinitsmeans.Itwillhelpforcemuchneededpoliticalchange andhopefully,leadershipandmaybeevenaplan. 4.Doyoufeelconcernsofadoublediprecessionarejustifiedorbased primarilyonfear?Basedmoreonfearalthoughitisapossibility.Wemay allfeellikeweareinarecessionfortheneartermwithhigh unemploymentandlowgrowth.Thiswillmostlikelyremainuntilthereisa changeinWashington. 5.Howlikelydoyoubelieveadoublediprecessionisnationallyandlocally? Verylittlechancelocally.Oneinthreenationally.Notalotofdifferencein livingthrough1percentgrowthandarecession.Theybothfeellousy. 6.Whatistheonethingthatworriesyoumost?Lackofleadershipin Washington.Politiciansthathavenorespectforbusinessanddont understandbasiceconomicsorevenmath. NormBagwell,chiefexecutive,BankofTexas 1.DoyouthinkStandard&Poorsdowngradewaswarranted?Noanswer. 2.Whatdoyouseeasthelongertermimpactofthedowngrade?The downgradeofU.S.debttoAA+willraiseanxietymorethaninterestrates. Inabigpicturesense,aslightdowngradeinourcreditratingisless importantthanthegrowthrateandmomentumoftheU.S.economy.The primarychallengeremainsthesamefortheU.S.:Howdowefostergrowth whilesimultaneouslycuttinggovernmentspending? WhenyouthinkaboutthedollarandthecreditoftheUnitedStatesof America,thereisnotabetteralternativeintheworldtodayforsafety.The dollaristheglobalreservecurrency,ourcreditisstillthebestintheworld, and,mostimportantly,ourmarketsarethemostliquid.Evenso,wecant

takeourstandingforgrantedasrecenteventshaveshown.Weneedtoget ourfiscalhouseinorder. 3.Isthereabrightsidetoit?HopefullyaWashingtonwakeupcallanda senseofurgency.Getdowntobusinessanddealwithourbudgetissues. Weshouldexpectourleadershiptocometogetherandtohavethecourage todowhatittakestoregainourfiscalcredibilityathomeandintheworld. 4.Doyoufeelconcernsofadoublediprecessionarejustifiedorbased primarilyonfear?Justified.Doublediphasbeenonthetableforsome time.Thedowngradeandmarketselloffonlyexacerbatetheproblem. Thereweresignsofunderlyingweaknessalready.Wehaveanemicgrowth, ajoblessrecovery,stubbornunemployment,lingeringhousingproblems, generaluncertaintyandlittletractionfromourcurrenteconomicpolicy. AddtothisthelackofdirectionfromWashingtonandimpactfromglobal markets,anditisfairtosaytheeconomyisinasoftspot. 5.Howlikelydoyoubelieveadoublediprecessionisnationallyandlocally? 5050.IftheU.S.fallsbackintoarecession,IwouldsuspectthatTexasis impactedalso,butweshouldfaremuchbetterthantherestofthecountry givenourcurrentsituation. 6.Whatistheonethingthatworriesyoumost?Theuncertainty.Budget issues,excessiveregulation,unwrittenrules,costofentitlements, ineffectivepolicies,partisanpolitics,waningconfidencehavecreateda generaluncertaintythatisholdingbackoureconomy.Itisaverydifficult environmentforbusinessandtheconsumer. WilsonChu,partner,K&LGatesLLP 1.DoyouthinkStandard&Poorsdowngradewaswarranted?Yes,butit's justthelatestDuh!momentfromthesameguyswhobroughtusAAArated pilesofsubprime. 2.Whatdoyouseeasthelongertermimpactofthedowngrade?Minimal impact(relatively)becausewerestillthetallestmidgetfornow.I'm assumingthatyou'reusingtheCapitolHill'sdefinitionoflongerterm;i.e., November2012. Acoupleofdecadesfromnow,wecouldseeaChinamoreinterestedin sellingintoaboomingdomesticconsumermarketthangivingusseller financing.ThenChinawilldumpourdebt,andwe'llbepayingskyrocketing interesttopayourskyrocketeddebt. 3.Isthereabrightsidetoit?Yes,wegettopayourdebttoChinaandother foreigncreditorsincheaperdollars. 4.Doyoufeelconcernsofadoublediprecessionarejustifiedorbased primarilyonfear?Justified. 5.Howlikelydoyoubelieveadoublediprecessionisnationallyandlocally? Bothlikely. 6.Whatistheonethingthatworriesyoumost?Notenoughpeople workingandpayingtaxestosupportthosewhodon't. PatMitchell,managingpartnerDallas,Hunton&WilliamsLLP

1.DoyouthinkStandard&Poorsdowngradewaswarranted?Idon'tthink thedowngradewaswarrantedifthequestionisIstheU.S.abletopayits debts?Butthedysfunctionandbrinksmanshipdisplayedduringthedebt ceilingnegotiationsmayraisealegitimatequestionoverwhetherCongress andthepresidentarewillingtomakethetoughdecisionsthatwillallowus toensurelongtermfiscalstability. 2.Whatdoyouseeasthelongertermimpactofthedowngrade?Overthe midtolongterm,Iexpectthatthestockmarketwillrecovermostofthe lossesresultingfromthecurrentfluctuation.Companieshavebeenposting strongearningsandhavesubstantialcashpositions.Thesecompanieshave alsospentthelastfewyearstrimmingtheiroverheadandlookingfor greaterefficiency,soIamhopefulthatrecenteventswon'ttrigger additionalcontractioninemployment.Thoseindustriesthathave significantexposure,directlyorindirectly,toU.S.Treasuriesand/or governmentsecuritieswillbeadverselyaffected. Therealconcernishowourfederalgovernmentaddressesthenextround ofdecisionsrelatingtothebudgetdeficitandthedebtlimit.Becausethis recentdowngradeappearstobetheresultofpoliticalinstabilityrather thaneconomicconcerns,thenextsixmonthsmaybeveryimportant. 3.Isthereabrightsidetoit?Idon'tknowifthereiseverabrightsidetoa hittotheU.S.spoliticaloreconomicstanding,butrecenteventsmayserve asawakeupcallinWashingtonthatourelectedofficialsneedtofocuson what'srightforthecountryinsteadofwhat'snecessarytogetreelected. Hopefully,wewillseemoredialogueandlessposturingaswedebateand developconstructiveapproachestoresolvingourcontinuingissues associatedwiththenationaldebt,thecostofentitlementprogramsand taxes. 4.Doyoufeelconcernsofadoublediprecessionarejustifiedorbased primarilyonfear?Whetherwearetalkingaboutadoublediprecessionora longtermcontraction,reasonablepeoplearegenuinelyconcernedthat whateverrecoveryhasbeenoccurringmaybenegativelyimpacted.Some maybereactingoutoffear,butIthinkthattheirconcernsaredrivenmore byalackofconfidencethatwehavethepoliticalwillandstatesmanshipto developbalancedsolutionstotheissuesthatweconfront. 5.Howlikelydoyoubelieveadoublediprecessionisnationallyandlocally? ThenumbersIhaveseenrangefrom25percentto75percentprobability ofadoublediprecession,butIthinkthesearejustguesses.Thepolitical reactionoverthenextsixmonthswillhaveaprofoundimpactonwhether theseestimatesareloworhigh. 6.Whatistheonethingthatworriesyoumost?Immostconcernedwith theapparentlackofleadershipamongourelectedofficialsandtheimpact thatthemostradicalvoicesontheleftandtherightseemtohave.We haveseriousissuestoaddress,andweneedseriousdialoguetoaddressit. AdogmaticapproachmaysatisfysomeconstituentsbutIdoubtthatitwill solvetheproblem. MichaelJenkins,presidentandmanagingdirector,DallasSummer Musicals

1.TheStandard&Poorsdowngradewasnotwarranted.Traditionallyithas beenabenchmark.However,ithasprovedtobeinconsistentwithmajor industriesoverthelastthreetofiveyears. 2.Thelongertermimpactofthedowngradewillnotbesignificant. 3.Thebrightsidetothedowngrade,ifany,shouldbeawakeupcalltothe nationtolowerthecountrysdebtratiosonanannualizedandconsistent basis. 4.Idonotknowifdoublediprecessionsarejustified.Afewrecessionsin thepasthavebeentorebalancethecountrytowardrecoveryperiods. 5.Adoublediprecessionislikelynationally,butlocallyitwouldhaveless impactinthismarket. 6.Oneoftheworriesisthatleisureandentertainmentshouldbe considerednecessitiesoflifeincludedinfamilybudgets.LatelythoughI hearaudiencememberssaying,Ihavetobuyfoodandmedicine,andI dontknowifIcanbuytheatertickets.Ibelievediscretionaryspendingis waning. RichardEiseman,owner,EisemanJewelsNorthPark 1.DoyouthinkStandard&Poorsdowngradewaswarranted?Yes.Our debtsituationhasnotbeenmanagedprudently. 2.Whatdoyouseeasthelongertermimpactofthedowngrade?Withthe Fedsmovetofreezeratesuntil2013,businesscanseizeopportunityto growinfrastructure/expandfornextupcyclewithlowestfinancecosts. 3.Isthereabrightsidetoit?Canadasdowngradein1995spurredthemto gettheirhouseinorder.ThishopefullywillasimilarimpactintheU.S. hopingcongresswillrespondastheydidinCanada,lookingatspendingand revenueasbusinessmendo.Iwishourcongressmenhadexperience makingpayrollsandturningprofit! 4.Doyoufeelconcernsofadoublediprecessionarejustifiedorbased primarilyonfear?Ifithappensmyreadingsfromexpertssupportthatit willcomein2013,probablyabitslowerthanyoumightexpect.The housingandbankleveragehasbeenabsorbed,butglobalissues,especially European,persistandarefarworse.Emotionplusfearmaybelessofa factorinpropellingselloffs.Hopefullyrecentmemorycandeferkneejerk reaction. 5.Howlikelydoyoubelieveadoublediprecessionisnationallyandlocally? Tosomedegreenationalandlocaleconomieshaveparallels.But Dallas/FortWorthandTexasproudlyareslowertoenterandquickerto reboundduetoourdiverseandpowerfuleconomy. 6.Whatistheonethingthatworriesyoumost?Asthepublicsearchesfor highquality,longterminvestments,wewillbechallengedtoprovidehigh quality,significantdiamondstomeetthegrowingdemand.ChinaandIndia arefiercecompetitionandrecognizethis. BronwynAllen,president,HighProfileInc.

FromwhatImreadingandhearing,moststaffingindustryexecutivesare sayingthatthedemandfortemporaryworkersremainssteady.Typically,if wewereheadedforadownturn,wewouldseeclientslettinggooflarge numbersoftemporaryworkers,asweveexperiencedinprevious recessionsbefore.Fortunately,thathasnotbeenthecasesofar. AccordingtotheAmericanStaffingAssociationIndex,employmentinJuly was3.6percenthigherthaninthesamemonthlastyear.Withthe exceptionofthetypicaldipexperiencedduringtheJuly4holidayperiod, theASAweeklyindexdatashowthatstaffingemploymenthasbeenedging upwardsinceFebruary. Theonethingthatconcernsmeinallthisisthatwevemadesignificant improvementsthisentireyearinthehiringsectorinDallas,andIdhateto seethattrendmovebackwards.Itssomuchmorefunandfulfillingtowork inanenvironmentwithpositiveenergyandmovement. GregBustin,principal,Bustin&Co. 1.DoyouthinkStandard&Poorsdowngradewaswarranted?Absolutely. IftheCEOsofsmallandmidsizecompaniesthatIworkwithrantheir businessesthewaypoliticiansarerunningthecountryborrowing40 centsofeverydollartheU.S.spendstheydbeoutofbusiness(see below). 2.Whatdoyouseeasthelongertermimpactofthedowngrade?The longertermimpactisthatthedowngradecreatesaspiraleffectonother debtandoninterestrates.OneCEOtoldmethatinnegotiatingpurchases for2011holidaypurchases,Chinesesuppliersarefactoringinriskandusing theU.S.debtasanexcusetoraisecosts.Additionally,metalcostsare increasingduetocurrencyinstability. Allofthisimpactscostsofgoods,makingproductsmoreexpensiveto purchase.Peopleontightbudgetswillcontinuetopullbackon discretionaryspending;peoplewithmoneywillcontinuetohordeiton discretionaryspendingandbuyupfailedinvestmentsforcentsonthe dollar(land,equipmentandbusinesses). IsatbyaCEOonmyflighttoColoradolastweekwhojustspentaweekin DFWafterhavingboughtanoilandgasbusinessthathadfailedunderthe crushofitsowndebt.Remembertheinvestorsmantra:Thetimetobuyis whenthebloodisrunninginthestreets. 3.Isthereabrightsidetoit?MostCEOsIworkwithareentrepreneursand are,bynature,optimists.SowhiletheyhopetheS&Pdowngradeisa wakeupcallforpoliticians,theyfearlawmakersaresimplygoingtoroll overandhitsnooze. Withoutabalancedbudget,thiswillbeawastedcrisis.TheresanAfrican proverbthatsays,Itakenojoythattheholeisinyourendoftheboat. Weareallinthisboattogether,soitstimetostoppointingfingersand startfiguringouthowtoplugtheleak. AsoneCEOsaid,WeneedmembersofCongresstodowhatsrightforour nationevenifitmeanstheendoftheirpoliticalcareers. 4.Doyoufeelconcernsofadoublediprecessionarejustifiedorbased primarilyonfear?Thetermdoublediprecessionimpliestherecession

thatbeganforsomein2007andothersin2008hasended.Theendof thepastrecessionhasbeendescribedasamirage,withtheCEOswhoI workwithbattlingtherealityofhighertaxes,increasedhealthcarecosts, reducedborrowingcapabilities,lowercapexbudgetsandagreater unwillingnessonthepartoftheircustomers(primarilyFortune500 customers)tomakedecisionsandthenhonorthecommitmentstheyve made. 5.Howlikelydoyoubelieveadoublediprecessionisnationallyandlocally? TheinabilityofCongresstoaddressthelongtermfinancialproblemshave simplybroughtoutintotheopenissuesthathavecontinuedtoworsen sincepresidentialcandidateRossPerotshowedthenationhispiecharts andwarnedofagrowingfinancialcrisis. Consumerconfidenceisnotjustameasureofhowpeoplefeelbutwhat theyarespending.Whattheyarespending(ornot)drivestheeconomy. Texaswillfeeltheeffectsofadownturnlessthanotherstates,butmanyD FWcompaniesworkwithandselltocompaniesandpeoplealloverthe world.Aglobalrecessionleavesnooneuntouched. 6.Whatistheonethingthatworriesyoumost?Lackofcommonsense leadershipinWashington>morefederalspending>highertaxesonthe companiesandindividualscapableofcreatingjobs>civilunrestleadingto violence[seeGreatBritain]asentitlementsarecutandthosewhohave littlebegintosteal,destroyandkillthoseperceivedtohavemore. MikeAndrovett,principal,AndrovettLegalMedia&Marketing 1.DoyouthinkStandard&Poorsdowngradewaswarranted?No,itwasa politicalcritiqueinsteadofareasonableassessmentofour creditworthiness. 2.Whatdoyouseeasthelongertermimpactofthedowngrade?Iseeitas awakeupcall.Americansdontliketobecastasanythingbutthebest. Perhapswellstoptakingourincrediblydurableunderlyingeconomyfor grantedandlawmakerswillstartgettingseriousattackingourmajorbut solvableeconomicproblems. 3.Isthereabrightsidetoit?Yes.Thisisabrightlinemomentthat hopefully,willserveasawakeupcallforbothgovernmentandbusiness. 4.Doyoufeelconcernsofadoublediprecessionarejustifiedorbased primarilyonfear?Basedprimarilyonfear.Youcantgowrongmakinglong termbetsontheU.S.economy. 5.Howlikelydoyoubelieveadoublediprecessionisnationallyandlocally? Wellskirtadoublediprecessionnationally.Locally,wereonfirmer footing,andIthinkafterabriefpause,theTexaseconomywillcontinueto grow. 6.Whatistheonethingthatworriesyoumost?Pessimism,fatalismand governmentgridlockOops.Thatsthree.Wehavethesmartsand wherewithaltosolveanyproblemsandovercomeanyobstaclesaslongas wedontgiveintomalaiseandparochialism. RandyBowman,cofounder,MWLogisticsLLC

1.DoyouthinkStandard&Poorsdowngradewaswarranted?S&Ps methodologyevaluatesseveralfactorsregardingsovereigngovernments, includingeffectivenessandpaymentculture.IfmybusinesspartnerandI metwithourlender,revealedthatourfinancialconditionhadweakened, wonderedoutloudwhetheritwouldbetheworstthingifwewereto defaultonourobligations,andourboardwastoodividedtotaketimely actiontoimproveourfinancialconditionandreassurelenders,Isuspect lenderswouldrethinkourcreditworthiness. 2.Whatdoyouseeasthelongertermimpactofthedowngrade?Adamper oneconomicgrowthandjobcreation.Everydollarspentonhigher personal,corporateorsovereignborrowingcostsasaresultofthe downgradeisadollarthatcannotbespentcreatingdemandintheU.S. economy.Theabsenceofdemandisfarandawaytheprimaryfactor impactingthejobcreationatMWL. 3.Isthereabrightsidetoit?Whenacountrysspendinglevelsaresuch thatitmustfunditselfwithborrowings,itstrainstheconceptof optimismtoplaceasilverliningaroundadowngradeinyourcredit rating. 4.Doyoufeelconcernsofadoublediprecessionarejustifiedorbased primarilyonfear?Justified,butnotanassignedfate.Itdependsonthe privatesector;thegovernmentcantpreventit.Iftheprivatesector deployssomeofthecashonitscollectivebalancesheet,itcangrow demand.Evenifwegetitrightdomestically,thedoubledipcouldhappen. WereinaninterdependentglobaleconomyinwhichtheEUmember countriesarefacingseverechallengesandtheeconomicconsequencesof theongoingArabSpringremainsuncertain. 5.Howlikelydoyoubelieveadoublediprecessionisnationallyandlocally? Ineachinstance,likelyenoughtoprepareforit,butnotlikelyenoughto bankonit. 6.Whatistheonethingthatworriesyoumost?Asabusinessman,myfirst worryisthelackofdemandinthemarketplace.Nothingelsecomesina closesecond.Asacitizen,theinsistencebyourelectedofficialsonfocusing onstrategiesmoredesignedtowinthepoliticalgamethansolveAmericas problems.Whenwasthelasttimeaproblemofanymagnitudewassolved inamannerthatinspiredconfidence? ChrisYoung,partner,QuestCapitalManagementInc. 1.DoyouthinkStandard&Poorsdowngradewaswarranted?Notbased ontheirpreviousratingshistory. 2.Whatdoyouseeasthelongertermimpactofthedowngrade?Longer termhigherinterestcosts. 3.Isthereabrightsidetoit?Itdoesforceus,theAmericanpeopleand Washington,todealwiththisinsteadofjustkickingitdowntheroad. 4.Doyoufeelconcernsofadoublediprecessionarejustifiedorbased primarilyonfear?Primarilybasedonfearbutmaybecomeaselffulfilling prophecyasconsumers/businessesholdoffonspendinguntiltheyfeel better.

5.Howlikelydoyoubelieveadoublediprecessionisnationallyandlocally? Seeabove.ButIdon'tseethereismuchfluff.Youmentionedsmelltest, andIthinkthatsumsitupperfectly. 6.Whatistheonethingthatworriesyoumost?Fearfactorexasperating theissues. GinaPuente,chiefexecutive,PuenteEnterprises 1.DoyouthinkStandard&Poorsdowngradewaswarranted?Ifeellike economicanalystsarelikefootballanalystsinpreseason.Predictingwhere theeconomywillbeatyear'sendisjustasimpossibleaspredictingwhois goingtotheSuperBowlnow,duetotheactualdynamicsofthegame(i.e. injuries,playingconditions,coachingandplayers'attitudes).Likethe movie,OnAnyGivenSunday. 2.Whatdoyouseeasthelongertermimpactofthedowngrade?TheFed announcedthatinterestrateswillremainflat.However,Ibelievetherestill willbeasubstantialcontinuoussuppressiononspending. 3.Isthereabrightsidetoit?Lowinterestrates,seeminglyflatforthenext fewyears,willhopefullyspursmallbusinesses'growth. 4.Doyoufeelconcernsofadoublediprecessionarejustifiedorbased primarilyonfear?Fearbased. 5.Howlikelydoyoubelieveadoublediprecessionisnationallyandlocally? Unfortunatelymylocalcircleofbusinessassociatesfeelslikeitisinevitable. Wearebracingourselvesandourbusinesses.Wearealloperatingina newnormal. 6.Whatistheonethingthatworriesyoumost?Bankswillcontinuetostifle thegrowthoflocalsmallbusinesseswithoverlyconservativelending practices;andwhetherRobRyanwillhavetheCowboys'defensereadyfor seasonplay.WhatweneednowisagoodoldfashionedHailMarypasson bothcounts. BobKaminski,principal,KaminskiInterests 1.Thedowngradewasprobablywarrantedacoupleofyearsagoifdeficit spendingandtotaldebtisthereprimarycriteria,butIgivelittlecredenceto ratingagencies.Othermarketindicatorsareabettergauge.DidntS&Pgive tripleAratingstotheresidentialsubprimesecuritizations?Thismove seemedmoreastatementontheterriblestateofourleadersin Washingtononbothsidesoftheaisle. 2.Therewillbeshorttermvolatilitybutnolongtermimpact.Themarket willprevail.Perhapsthelongtermimpactwillbelesspeoplepaying attentiontoS&Pinthefuture. 3.See#2above 4.Concernsofadoubledigitrecessionmaybeprimarilybasedon programmedfearinourmediaoutletsandelectronictrading. 5.Wehavealongrecoveryinfrontofuswithadjustedbaselinestodefine recoverybutnodoublediprecessionnationally.Iamnotsurewehada recessionlocally.

6.IammostworriedaboutthelevelofconfidenceintheU.S.andglobally aboutthewaytheUnitedStatesisbeingmanaged. ThoughtfortheDayfortheSuperCommittee:CutU.S.government spendinginallcategories5to10percentacrosstheboardandsetrevised spendinglimit.Raisetaxeswithalladditionalrevenueplacedinaspecial accountanddedicatedsolelytopaydowndebt.Thatswhatmybanker wouldmakemedo. RobbieBriggs,chiefexecutive,BriggsFreeman 1.DoyouthinkStandard&Poorsdowngradewaswarranted?Whetherit wasornot,Iamactuallygladthatithappened.Maybenowour governmentanddecisionmakerswillevenlookharderforsolutionsand stoptheinsanespendingandbuildingdebtwecantafford. 2.Whatdoyouseeasthelongertermimpactofthedowngrade?Hopefully wewilltakestepstocorrectoursituationandsowecanbereestablished withaAAArating. 3.Isthereabrightsidetoit?Therealitycheckisthebrightside. 4.Doyoufeelconcernsofadoublediprecessionarejustifiedorbased primarilyonfear?Fearisalwaystherootproblem.Asthepublicoverreacts, consequencesfollow.Thingsareneverasbadasonethinks,orasgood, either. 5.Howlikelydoyoubelieveadoublediprecessionisnationallyandlocally? Adoubledipismorelikelyonanationallevel.Theeconomynationallyin therealestatearenahasnotrecoveredyet,sothemarketsinmanyareas likeFlorida,Arizona,NevadaandpartsofCaliforniaarestillsensitive.Texas isntbulletproof,butweareinthebestpositionnationallyandbusinesses aroundthecountryandtheworldknowthat.Wearestillexpectingmore relocationsthatwillbuoyoureconomy. 6.Whatistheonethingthatworriesyoumost?Overreactionand sensationalism,especiallyinthemedia. RubenM.Duron,chiefexecutive,ServantEnergyPartnersInc. 1.DoyouthinkStandard&Poorsdowngradewaswarranted?No,weare talkingabouttheU.S.Althoughthedebtishigh,theU.S.isstillasafebetto payitsdebt.Thedowngradewassomewhatpoliticallymotivated. 2.Whatdoyouseeasthelongertermimpactofthedowngrade?There mightbehigherinterestratespassedontoconsumersandunsteadinessin themarketcausedbyuncertaintyofwherethisdebtissuewilltakeus. 3.Isthereabrightsidetoit?Yes,therewasstillconfidenceinthemarket aswitnessedbythebuyingofU.S.Treasurybonds.IamhopingAmericans willtakenoticeofthegovernmentinplaceandlooktomakechangesinour leadership. 4.Doyoufeelconcernsofadoublediprecessionarejustifiedorbased primarilyonfear?ThereissomejustificationasitseemsliketheU.S.has gottensomewhatoutofcontrolonitsdebt,butfearcanbeafactorthat affectshowpeoplereactintimesofuncertaintywiththeeconomy.

Spendingcouldbeaffectedduetowhatpeoplefearmighthappen.Idont feelitisjustified,butitcouldhappen. 5.Howlikelydoyoubelieveadoublediprecessionisnationallyandlocally? Therehavebeensomegoodsignswithemployment,butwhetherwecan keepthatupremainstobeseen.Itseemstherearecompanieshaving recordgrowthbasedoffthelastfewyearsandalotofthatislocally.Idont thinktherewillbeadoublediprecessiononbothlevels,butIdonthavea crystalball. 6.Whatistheonethingthatworriesyoumost?Ourleadership.Iquestion thepeopleinpowerandthedecisionstheyaremakinghoweveryone seemstobestrivingforthesamethingbutcannotcometoaresolutionon howtogetthereandgetthingsdone.Everyonehasanopinion,butgetting therewithleadersbeingonthesamepageisamajorproblem! BobBuford,philanthropistandauthor 1.Yes.Theresnodecisionmakingconsensus.WedontdeserveaAAA rating. 2.Moredowngradesandmorelivingbeyondourmeans.Thiswontbe enoughforarealitycheck.Myevidenceforthatistheyran[the compromiseagreement]downto10hoursbefore[thedeadline].Theyre stillallmadatoneanother.Theyrestillallrunningforofficeinsteadof runningthecountry.Andthenumbersdontmakeanysenseatall.Even$4 trillionwouldhavebeenaminorfractionofanykindoflivingwithinour means. 3.TheonlybrightsideIseeistoquote,Wehavemettheenemy,anditis us.ButIstillseepeoplemoreworriedabouttheirownpersonaladvantage bethata[congressional]joborabonusoftensofmillionsofdollarsfor JamieDimon[CEOofJPMorganChase&Co.].IdontseeanyAbraham Lincolnstodrawustogether. 4.Astothedoublediprecession,mosthistoriansholdWorldWarIand WorldWarIIasonewarthatdidntgetresolved.Wehaveonerecession, andwehaventgottenoutofityet.Wehaventhadarecovery[injobs]. Werecrawlingalongonthebottom.Therearemillionsofjobsthathave goneoffshore.Therearehundredsofmillionsofpeoplearoundtheglobe whowantamiddleclasslifestyleandtheyreourcompetitors.Itisntjust thepeoplequeuingupatthesejobfairs.Theyrequeuingupalloverthe worldforjobs. 6.Whatworriesmemostis:WerelosingtheAmericanDream.