Mortgages, deeds, and other various forms of paper relating to real estate investments are nothing more than commitments...promises that possess values only insomuch as they're keepable, and that there’s a marketplace ready to affirm and trade upon it.
Welcome to the branding crisis unfolding on Wall Street.
Branding, you ask? The bankruptcy of Lehman Brothers, fire sale of Merrill Lynch, restructuring of AIG and stock collapse at Washington Mutual are all about dollars and cents, not brands. Yesterday's crash of the Dow is simply a matter of math, right?
Beyond the storied firm names, and the vast resources of people, assets, infrastructure, and art collections, these companies all rely upon individual transactions. Millions of them. Whether as buyers or sellers, people have to make deals with one another. Electronic or not, and blessed by the gods or simply a shared grin, these are glorified handshakes.
It's upon these behaviors that the businesses depend, and the trust and implicit veracity of the paper that changes hands builds brands. Or not. Each individual action is a little brand moment that, when collected, add up to big brands.
So where was all of the "brand value" that these companies possess, whether as goodwill or other intangibles somehow factored into their stock prices? Poof. Turns out that stuff that isn't discernable without a squint and a vague hope is, well, not really there.
Instead, what drove events were the "warning signs" for Lehman (like Bear Stearns before it) that appeared first in the day-to-day transactions...prices didn't hold, traders were wary, time horizons were pressured to get shorter. Like a retail store, comp sales began to trend down, and otherwise attractive merchandise had to get red-lined sooner.
No amount of declarations from above could influence what was happening handshake-by-handshake. The glorious corporate signage didn't matter on the trading floor. Reputations and awareness built over generations didn't make a difference when two parties had to make (or not make) commitments to one another.
Sure, there were and are lots of influences on these circumstances, and lots of moving pieces to the puzzles. But the fundamentals of value -- of the pieces of paper individuals must trade, or the worth of the businesses that rely upon those transactions -- are essentially what constitute brands.
And, right now, the value of brands on Wall Street is just north of nothing.
It will be interesting (as well as gut-wrenching) to watch the drama unfold over the coming weeks and months. There'll be the requisite declarations of confidence in the economy from the administration, and perhaps a symbolic rate cut (or more). Stay tuned for lots of those full-page ads in the major newspapers, sporting faux reasonable advice for consumers...exhorting everyone to see the Big Picture and that over the long haul, everything works out. Value goes up. Trust us.
Typical branding responses all, and none of them will alleviate the problem.
These brands will only get fixed when real actions...behaviors occur...that are relevant, useful, and trustworthy in regard to each of those handshakes. Branding needs to be built up from the ground of everyday reality...
...on Wall Street, just like on Main Street. Now this is the truly frightening observation, because that means there could be lots of unrealized...I mean, imaginary...value factored into the consumer and other industry brand names with which we're so familiar.
If and when holiday sales start to trend down, won't the observations and fears of what it means whack everyone's confidence in those little, individual purchase transactions? And once that happens, it percolates up to the big brand names.
Marketers take heed. Reality matters. And when brands sneeze...