Chancellorsville

Now that the slaves were considered free in all of the Confederate states, the war for many became a crusade.  Any slave who escaped to the Union lines was declared a free person; often they immediately volunteered to fight for the Union.  However it took a while before blacks would wear the Union uniform.  The film Glory depicts the brief history of the 54th Massachusetts regiment, the first all black unit in the Union.

Lincoln once again changed commanders after Ambrose Burnside disappointed his superiors.  Fighting Joe Hooker, an aggressive corps commander at Antietam, was promoted to command the Army of the Potomac.  His orders were to destroy Lee's Army of Northern Virginia, and was given vast resources to complete his task. He devised a very sound plan to trap and destroy Lee. 

He moved the army into Virginia and crossed the Rappahannock River in April with a force fully 30,000 men larger than Lee's army.  In early May he began execution of his plan to flank Lee near Chancellorsville and destroy the Confederate force once and for all.  But Lee, taking great risks, divided his smaller army not once, but twice and outmaneuvered, surprised Hooker's flanking force.  Lee's army, led by the audacious, pious General Stonewall Jackson, drove the Union force back in disarray.  Hooker was stunned when a shell slammed into a porch he was standing on and took him out of the battle.  But he was completely unnerved by that time and later apologized to Lincoln for his failure.

Chancellorsville is considered Lee's masterpiece.  His tactical brilliance and exceptional use of resources are still studied at military academies today.  Prussian observers were so impressed with Lee's management of the army that they incorporated much of what they learned in their 1870-1 victory over France.  Lee's stunning success further added to his gathering legend, and added to Union morale problems. 

But Lee suffered one loss that would have profound impact throughout the rest of the war.  On the evening of the second day of the battle, Stonewall Jackson was shot by friendly fire as he inspected the lines.  He died a few days later, and his last words were reported as "let us cross over the river, and rest under the shade of the trees."

Nevertheless, Lee decided the time was right to invade the North again. He prepared to strike north and west of Washington toward the important railhead of Harrisburg PA.  The stage was set for Gettysburg, the greatest battle ever fought on the North American continent.

Some Good News

The recent report by the NAHB and First American shows that 29 metro areas have been added to the list of improving real estate markets.  The list now totals 98 that have shown appreciable improvement in the past 6 months.  The index is based on local employment and housing price, housing growth trends. 

Among the new additions are Miami, Tampa, Boston, Detroit, Omaha, Salt Lake City and Kansas City.  Many mid-sized cities such as Syracuse NY and Youngstown OH have also joined the list for the first time. 

A few markets dropped off the list, once more demonstrating that this recovery is likely to be uneven.  San Jose, DC, New Orleans and Jackson MS were in retreat, at least for the moment.  In the case of DC, the change is likely due mostly to the unusually robust market over the past year that may not be sustainable for at least a time. 

Let me know if you want to learn how to access and use this information.

Housing Recovery Comments

There is a lot of discussion about reducing principal balances on underwater mortgages.  The head of the FHFA recently estimated that even a small reduction on Fan and Fred loans could cast $100 Billion, which would have to be funded by taxpayers.  That is not a very palatable option when over $150 billion has already been sunk into Fan & Fred.

Bailouts of homeowners (e.g, reducing their principal balance)  are unpopular for other reasons. First, one third of Americans rent. Why should they help bailout homeowners that are underwater? Second, 30+% of homeowners don't have a mortgage. Why should they help bailout  heavily indebted homeowners, when many over-extended unwisely? Third, The overwhleming majority (probably 85%) of homeowners with a mortgage are current in payments. Why should they help bailout other homeowners?

There would have to be a load of political air cover for these sorts of actions.  Opposition to homeowner bailouts was, after all, one of the early motivating forces in the Tea Party movement, along with TARP.  And, we already have a huge deficit and debt to manage: adding to it is problematic even in a non-election year.

Maybe people should look at their houses as homes, not assets, and just stay put until we settle into normalcy. 

Emancipation

After Antietam, Lincoln proceeded with his plan to proclaim the Emancipation of three million slaves.  It was a bold act that some of his closest advisers, and members of his cabinet, opposed.  But he was determined to proceed and knew that his act would change the nature of the war.  Instead of a war to preserve the Union, the war would now be seen as a crusade to end the national disgrace of slavery.

Of course, the end of slavery had only practical effect where Union forces were in control, and this was not the case in most of the 750,000 square mile Confederacy.  The plantation economy was already severely strained with cotton markets cut off by military blockade.  And, the loss of slave labor would change the economics of cotton, rice and tobacco production.

But, there was still a war to win, and Lincoln was determined to press aggressively to destroy Robert E. Lee's Army of Northern Virginia.  Lincoln sacked McClellan after Antietam when the general refused to follow up on his repulse of Lee's invasion.  Ambrose Burnside (he of the grandiose sideburns) replaced McClellan and in December marched south to the environs of Fredericksburg VA, on the Rappahannok River only 60 miles from the Confederate capitol at Richmond.

Lee was entrenched across the river in a nearly unassailable position.  (It seemed at times that Union commanders forgot that Lee was a superb military engineer).  Burnside hurled his army of 100,000 against Lee and was thrown back with heavy losses.  The Army of the Potomac fell back, having been routed by the rebels, and retreated toward Washington. 

Many thought this terrible defeat would cancel out the effect of Antietam and cause Lincoln to reconsider his decision.  But on January 1, 1863 Lincoln signed and issued the Proclamation.  It immediately freed 50,000 slaves and would apply as Union armies advanced.  It did not make slavery illegal - that would be left to the passage of the 13th Amendment to the Constitution in 1865.

Longer shadows

Freddie and Fannie just announced payment relief for unemployed borrowers.  It appears these folks can have an up to 12 month moratorium on payments.  The effect for the real estate market is to make the already persistent inventory shadow even longer.

Recent data on home values is mixed as usual.  Only local data is worth taking into account in business decisions - the national numbers are just guesses, and the market will be troubled in most places for years.  So plan accordingly.  Don't react to these frequent spots of good news in a national context. 

Rental prices are increasing as the young folks who used to buy in the 25-35 years are renting, and commercial construction of rental units is improving.

Altos, FHFA, Case/Shiller, AVMs, are still good sources for local trends but treat each home as a risk management assignment and enlist the real estate pros with realistic outlooks and demonstrable success valuing and selling home in our long winter of discontent.

When a complex assignment comes in, tag-team the deal; put your best people on it.  These times are not for those short on experience or for the faint of heart. 

Leadership Resolutions for 2012

As we continue with the no normal, new normal or whereever we land once we are out of these economic doldrums, it will take leadership - more even than technical skills and management - to succeed.  So here are a few leadership tips I have used with mid-level and senior executives:

Maintain a positive demeanor, even during heavy squalls.  Move with confidence and authority; the attitude and morale of your colleagues will be favorably influenced.

Establish clear priorities, complemented by clarity in direction you give to people.   Avoid vagueness and generality; change is hard enough on folks.

Emphasize short-term objectives when a few solid wins will elevate morale.  Ask people to stretch but make goals achievable, then shoot off fireworks when they are surpassed.

Go looking for bad news; get resistance to change out in the open.  Make it easy for people to let you know about what requires attention.  Don't be the last to know!

Pay close attention to transitions - people, clients, systems, economic.  Careful monitoring (but not micro-management) may be needed to keep everyone on track.

Re-recruit your best people.  Uncertainty brought about by change often makes them receptive to outside enticements.

Encourage risk-taking and initiative.  Make it clear that you will tolerate mistakes as long as there is thoughtful effort, and action-orientation toward improvement.

Protect your service quality, and reaffirm your supplier partnerships.  Stay close to customers (someone else wants their business!).  Client satisfaction is your top priority even as change might be occurring internally.

A leader's job is to make others succeed, and to feel that their contribution means something. 

Happy New Year, and here's to a prosperous 2012!

Antietam

By September 1862, the Union position was grave.  Lee had manhandled Union armies, Maryland's support for Lincoln's cause was cooling and Great Britain was threatening to recongnize the Confederacy - perhaps even use the powerful British navy to break the Union blockade of the South.  Lincoln needed a victory badly.

Knowing the stakes were high, and that another victory might tip the balance heavily in favor of the Confederacy, Lee decided to invade Maryland.  He crossed the Potomac and camped near Frederick.  There he issued orders to divide his force and gave instructions to his commanders to concentrate near Sharpsburg, along the Antietam creek.  McClellan, in command again, kept his much larger army between Lee and Washington, and moved slowly west toward the rebels. 

Then a stroke of luck - a Union officer found Lee's orders in a field near Frederick wrapped around cigars.  A rebel officer had carelessly dropped them while in camp.  McClellan now had the key to defeating Lee, since the orders revealed that the rebel forces were divided, and gave details on the routes to be taken by each of the Confederate corps. 

Lee's army was arrayed along the Antietam Creek east of Sharpsburg MD and McClellan moved into position to attack.  Lee urgently called all of his forces to oppose the Union army.  On the morning of September 17, 1862, the 75th anniversiary of the Constitution, the battle opened.  The two armies battered each other all day, with the rebels falling back then holding all along the line.  By day's end, the positions were nearly the same as morning, except for the carnage.

Antietam is the bloodiest day in American history.  More than 23,000 casualties were suffered by both armies, more than the US on D-Day.  Both sides had suffered equally, but McClellan still had large fresh forces to attack, and Lincoln urged him to destroy Lee's army.  Next morning, the attack Lee expected never came, McClellan being an inordinately cautious field commander.  Lee escaped across the Potomac.

Lincoln had a victory at last against Lee, and decided to issue the Emancipation Proclamation.  The British backed away from supporting the Confederacy.  And Maryland confirmed Union support.

Yet, by failing to destroy Lee's battered army the next day, McClellan missed a chance to end the war, and avoid the killing of another 400,000 Americans in the next 30 months of war.