They say that if you aren’t living on the edge you are taking up too much space. I don’t think that anyone will argue that Charlotte has been hoarding space. Life in Charlotte has been…well, uncertain over the last few weeks. While it may feel that Charlotte is turning into Roanoke Colony, don’t carve “Croatoan” into the trees yet. Some good things are happening that impact us all and we haven’t even seen the impact of it yet.

The Financial Accounting Standard Board (FASB) has modified their guidelines for accounting for mortgage related securities. The standards, which have been cause for many of the write downs, have required that securities be recorded at market values. As the market for securities has fallen through the floor, the assets held by the banks have been adjusted to the “market value”. In a declining economy, this poses a serious problem as to how to estimate a value on these assets. The FASB has consequently modified their guidelines to allow financial firms more leeway in recording these assets.

This will allow financial institutions to keep what they are holding on their books at values that are more accurate to a more rational market level. This new ruling should allow financial institutions to stabilize the financial reports and reduce the sensitivity to the increase in volatility that has been rampant in the market place. The result should be a decreased likelihood of a Lehman type of collapse and more stable reporting.

You may be thinking, “That’s great, but what about the Wachovia, Citi, Wells Fargo merger?” The answer is simple. I don’t know what will happen; nor does anyone else.

If the presence of Wachovia is removed from the Uptown, someone else will take their place. It might not be right away, but someone (maybe not even a bank—gasp!) will move into the spaces that Wachovia holds. Charlotte is far from dead and the pools of talent and the number of educated and experienced professionals in our city is a recipe for a successful business that will attract some big name in its place--maybe even the creation of a new bank.

Here’s a thought. What if there were more than two big banks? Short term, it could mean less jobs, but I’m talking longer term here. I think that could be a good thing for us especially when the banks learn how to turn big profits again….which, by the way, will happen again. Profits are nothing more than estimates of financial performance. As long as you have money deposited in a bank, they will figure out ways to make the estimates of performance reflect favorably (profits)--even if it means changing the rules. So when the banks or the FASB figure out how to make a profit again, things will start improving. It is more likely, though, that the FASB will be the ones to fix the financial mess that we’re in, but that’s another story for another day.

All this to say that life will keep going on and things will smooth out over time. The same irrational exuberance that drove the market up is currently driving the market down and will drive the market up again. Real estate will stabilize. It has stabilized in parts of the country and sales are starting to happen again. Hopefully Charlotte can avoid the drastic down swing in prices that has precipitated an improvement in the sales but all that depends on real demand that is driven by real jobs.

My advice is simple. Invest everything you can afford into whatever you think will pay in the long run. Think big picture and invest where you think will give you returns. If you don’t want to believe me, look at Warren Buffet for advice. He just purchased $3B of GE stock. If the most prudent and successful investor in the history of the US is investing in a down economy, then we should probably pay attention.