Every leader has at least one number that looks stronger than it actually is.
The Salton Sea just proved what happens when nobody checks. California’s largest lake has shrunk by seventy square miles, and the desert wind is now lifting pesticides and heavy metals off the exposed lakebed, carrying them into towns across the Imperial Valley. Researchers at USC and UC Irvine found the dust is stunting lung growth in local kids. The state is racing to cover thirty thousand acres of shoreline before 2028.
That lake was never really a lake. It formed by accident in 1905, when the Colorado River breached an irrigation canal. It only stayed full because farms poured contaminated runoff into it for the next hundred years. People built resorts on the shoreline and assumed the water would stay. The poison in the soil was always there. The water just kept it buried.
I see this exact pattern in companies constantly.
New York Community Bancorp’s loan book looked rock solid for years, because cheap borrowing kept property values climbing and let building owners refinance whenever they needed to. The bank grew fast, crossed a hundred billion dollars in assets, and absorbed parts of the failed Signature Bank. The numbers held up, quarter after quarter.
Then rates rose. Refinancing dried up. The loans that had looked safe stopped looking safe almost overnight. In early 2024, the stock fell thirty eight percent in a single day, and within weeks the bank needed a billion dollar rescue and a new management team.
Cheap money was propping up that loan book the same way farm runoff propped up the Salton Sea. The rate environment receded, and it exposed the same risk that had been sitting there the whole time.
This Week
- Name the support. Figure out the one outside thing holding up your best-looking asset, whether that’s cheap money or a single big customer.
- Test it without the crutch. Ask how that asset performs the day the support disappears, and treat that answer as a real liability.
- Clean it up early. Deal with the risk the support is hiding now, while you’re still managing the timing and liability.
What’s the one asset in your business you’d least want to test this way? Reply and tell me. I read every response.
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