When Will Obama Go To War

 "History does not repeat itself but it does Rhyme"

Mark Twain

 Barack Hussein Obama and his administration along with the "Great Depression" historian and Federal Reserve Chairman Ben Bernanke are repeating almost every move executed by Franklin Delano Roosevelt during the 1930's "New Deal."  This can be seen right down to the wording of their speeches and the "fireside chats" replaced by the "town meetings" to boost the "feel good" factor.

 "The only thing we have to fear is fear itself"

FDR Inauguration speech.

 

"On this day, we gather because we have chosen hope over fear"

Barack Hussein Obama Inauguration speech 2009

 

However as we enter the "greatest" depression ever in US history (see my article of September 11th 2007 http://jonsyrose.blogspot.com/2007/09/liquidity-crisis-little-reflection.html) and face what could be the end of the American Era of Global Dominance; history teaches us that the $3.5 Trillion will not be enough just as the $2.5Bn wasn't enough in 1932. The incredibly job building programs of public infrastructure that Barack Hussein Obama proposes, mimicking  the 1935 public works will not be enough and the 1.5m that became homeless during the 1930's will likely and sadly repeat itself. Foreclosures are headed towards an all time high and bank lending is tightening whilst fear runs rampant throughout main street America where job security is non existent. Henry Paulson replicated the FDR bank holiday and cash injection on October 14th 2008 with some $250Bn invested in the banks in an attempt to prevent the homelessness if not the rush on banks. This didn't occur as he raised the FDIC limits to $250,000 much as FDR brought the FDIC into being to prevent or mitigate the rush in the late 1920's and early 1930's. Timothy Geitner has proposed the Public-Private Investment Program to further try to avoid the mass foreclosures  but America's consumers are overleveraged as are our businesses. Spending grew out of control and the checks and balances of the economy are attempting to right the sinking ship.

Foreclosures are Inevitable

People do not earn enough to meet a three and a half time ratio for earnings unless house prices return to realistic levels. The only way to achieve this is for them to be foreclosed upon and resold. This was seen with the penny auctions in the 30's. Rents must return to being fairly close to the mortgage payment, this is, in my opinion, the essential fair value of a property and the yardstick I have always invested by. Seeing as earning cannot support higher rents then this is another reason for the overheated property market to reset. Hold off your buying for at least another 12-18 months while the government and banks realize that this is inevitable and must be done. Banks must realize and actualize their losses or the government must assume and actualize these losses through the Public-Private Investment Program.  

Suicide and the Reality of Returns

Lets hope that suicides do not once again reach their height of 18 per 100,000 as during the 1930's although the high profile suicide of Rene-Thierry Magon de la Villehuchet who lost in the region of $1.3Bn with Bernard Madoff does not bode well. Bernard Madoff exposed the weaknesses and cracks in the system which cozy's up to insiders as his scheme grew to such levels that it collapsed under its own weight and demands for injections of new cash; much like Charles Ponzi's Scheme did in 1920. Harry Marcopoulos was ignored as were many others who explained that some things were too good to be true and the basic rules of math's and economics do not and cannot be changed. Greed, Euphoria and the desire to "keep up with the Jones's" kept people investing speculatively and chasing the dream of rags to riches/ overnight successes and quick millions. Even now diner tables are still filled with people talking of the one deal they invested in where they got high returns etc and ignore and gloss over all the others they lost on. The average investor doesn't achieve more than 5-6% per annum if the truth be known although to hear them talk you would think you are missing out all the time and they are raking in 15-20%. 

Why Obama May Choose War

World War II resulted in the US government expending $500Bn and it still took till 1943 to restore employment (with a significant decrease in the male population) and till the late 40's-early 50's for the stock market to return to its pre 1929 high. This in modern money would be government war expenditure of in excess of $10 Trillion and probably closer to $20-30 Trillion in real terms. History teaches us this is the kind of figure necessary in simpler time with a less complex and interwoven global economy. 

"These are the indicators of crisis, subject to data and statistics. Less measurable, but no less profound, is a sapping of confidence across our land; a nagging fear that America's decline is inevitable, that the next generation must lower its sights." Barack Hussein Obama Inauguration speech 2009

In Conclusion

Don't lower your sights, just remember that no one gets rich over night, there are years and normally decades of hard work that lead up to "overnight" success. Slow and steady growth of investments from savings put away on a weekly or monthly basis is what built the middle class and will rebuild it again. Solid cash flowing businesses that produce essential products and utilities will always be in demand and will provide constant dividends that if reinvested will far outperform equity value growth over decades. Think long term, the Chinese and Japanese are and they are the societies most likely to take the lead in growth and power over the next Era which I like to think of as the "Asian Era." This doesn't mean that one should discount Europe which will always be a solid performer or America, just don't expect to see the kind of dominance and world leadership that has been witnessed over the last 100 plus years.

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America in Crisis

The current financial crisis we are in is escalating out of control, I question whether the current administration has anyone who understands what is happening, why it is happening and is operating without some vested interest; never mind whether they have the correct answers as to how to solve it. The creation of a new entity "The Public-Private Investment Corporation" to purchase toxic debt funded by some $1 Trillion of taxpayer money is going to buy up mortgages, car loans, credit cards loans and other toxic debt off balance sheets for banks and other lenders....... If these assets are sold to large investor groups, hedge funds and other such entities at 5cents on the dollar then it is an open admission that the tax payer will never see any return on its investment and those in power will have scratched the backs of many who put us in this position in the first place. This is the definitive version of the AIG bonuses being paid and we will unwittingly agree to this, not that we have any say, because of the language and structures used to deceive us.

We are talking about a quarter of the total bail out funds which will never even be attempted to be recouped, it would be impossible for it ever to be returned and it will be small component of the $10 Trillion of additional debt that will be created by the Obama plan. The question is will the repayment of this money be handled as cavalierly. At least in Europe the governments have taken shares and stakes in the banks they bailed out so they will get share growth and dividends, the lack of commercialism and understanding in the US government is a strong indicator of how we got ourselves in this mess in the first place. If our representatives can sign the patriot act without reading it and give away our civil liberties why would we expect them to have read how the money will be used and where it will come from.

We the people need a voice, we need to speak out and someone needs to derail the coming travesties and injustices that are about to occur.

The Institutions

The financial institutions essentially walk away scot free and start business anew with and unblemished and untarnished record as a result of the bailout. Now I wish I had been running an unethical business where short term bonuses were put ahead of the interests of the company and its shareholders. I could have leveraged up and paid off my leveraged loans with new loans from another institution without ever having developed an additional cent of cash flow. The price of the underlying asset having undergone a paper increase so someone could write the new loan, pocket the commission and sold it on to an unsuspecting third party who was blinded by the supposedly independent rating of the supposedly impartial credit rating agency who was charging $50,000-$5,000,000 for the pleasure. Lets be honest this is in truth what has been happening for the last 10 years or so.

Government Regulation has missed the point entirely - why haven't they taken over the Rating Agencies

The government claims it will tighten regulations to ensure that such situations will never occur again but there are fundamental changes that need to occur for this to happen that will not happen without a broader scale collapse of the existing system and with the maintenance of status quo. The entire ratings system requires not just revamping and overhauling but a new and different uncorrupted system, "power corrupts and absolute power corrupts absolutely." With so much blame being directly attributable to the rating agencies who were evaluating investments and attaching to them double and triple A credit ratings. Kudos to their PR and PM firms who are keeping them out of the press and are enabling them to fly under the radar at a time when they should be chastised and probably shut down entirely.......

Corporate Ownership/ Responsibility

Current executives are being paid enormous amounts and quite clearly do not have any great degree of competence, a few such as HSBC and Porsche stand out. These executives are being paid in proportion with people who built and created businesses and who really created or earned their rewards, which often took a lifetime of effort and much financial hardship along the way. As a salaried employee you have minimized your risk and therefore should not be paid proportionately to someone who has ownership and therefore carries all the risk. If you are paid after all others and are paid out of profit and profit alone then fair enough. Obviously there will be some leeway to tax planning in this situation. 

The corporation has to return to private ownership, or some semblance of this, when the Rockefellers, Carnegie, Gates and Buffett owned a business they pocketed the profits at the end of the year and they funded the losses, these were actual figures to them that affected how they were paid and how their managers were paid. In the modern world the accountability of ownership doesn't exist, everyone is milking the huge amorphous entities so big and diverse that no one really knows what is going on, they are managers taking the salaries and benefits of owners and that is very wrong. They have always had the security of a salary and never staked all or nothing on the success of the entity, with this reduction of risk should come the reduction of remuneration. With international taxation and offshore tax havens these entities are so complex that it takes a degree of genius to understand it. That kind of genius is found in someone who establishes and builds a company (Rockefellers, Carnegie, Gates and Buffett ) not in some employee who has risen through the ranks. If he had the capability to run the organization properly he would have done it himself.... look at the ultra successful hedge fund managers, the Bill Gates and Warren Buffets', they are not out running someone else's company. 

The Bankers and Banking Professionals

A whole generation of Bankers have grown up with what was always explained to me as the new model which made no mathematical or economic sense. Keeping said individuals in the job is a recipe for disaster as they cannot rectify the problem as they don't understand how the underlying system works, the principles it was established upon and they do not have ownership of the problem.

The toxic debt is not what people think it is, it is actually real assets owned by real people it isn't some ethereal accounting principle.

What is the government going to do with the toxic debt it is buying from the banks that created the loans in the first place, it is being treated as some ethereal unsubstantiated piece of paper which is what got us into this problem in the first place. There is a loan behind each number, that loan is made by someone who has been financially imprudent or had the misfortune to be laid off in the economic downturn stemming from the worlds rapid deleveraging. Will said Joe Blogs be allowed to keep the property he purchased, many of the banks have ceased foreclosure activity, or will he be foreclosed upon and evicted. If he is allowed to keep his beautiful home that he couldn't afford then the average man on the street who wasn't imprudent is being financially punished for his caution and education. This would represent one of the greatest tragedies in capitalistic history. Thus impugned for intelligence what should you do, buy a house you cannot afford as everyone else is doing it and getting away with it? No one in their right mind will buy these except at such cut down rates 5-15 cents on the dollar that they are bargain enough to justify the handling and carrying costs of defaults. No one has the liquidity to do this without gearing up again which is how the whole problem occurred in the first place.

The Media

Many in the media are making statements that are reassuring and attempting to waylay a lot of the fears of the public and the investment community. These statements are false, unsubstantiated and in my opinion down right misleading and deception. There is no way we can turn any corner or see improvements in the economy this year or next. Much of the campaign rhetoric from the presidential campaigns is just downright impossible. The nationalization of the healthcare system is too expensive for us to pursue. Effective increases in the quality of schooling is manageable but not with the current crisis and no matter which way we look at it social security is running out of money and state pensions are going to be impossible to maintain without some delusionary system with ever escalating debt that is never intended to be repaid. The knock on effect of this is no one outside the US wants to buy treasuries and the value of the Dollar collapses raising cost of living of all out China/ Asian products. Without immense increases in domestic production this will lead to Hyper inflation, which is something we should have had long ago except for Greenspan and Bernanke's artificially low rates which created this bubble.

Long Term Consequences

We live in a universe governed by cause and effect, the second that an imbalance is created in this system it moves to right itself. With artificial measures put in pace to prevent this check and balance system from operating we are causing a far greater, wide reaching and longer lasting reverse. This could well without being melodramatic mark the implosion of US global dominance as the pendulum swings back to reestablish balance. We stand in a pivotal moment as a country and as an economy where arrogance and ignorance are all that are required to mark the end of a short but bright epoch of American dominance.

Remembering that it takes about 12-18 months to foreclose on a property we haven't even seen the beginning of the impending crash, we are no where near a midpoint. The banks have held off on a lot of foreclosures and many people are only now and over the coming two years loosing their jobs and income that will bring them to the edge of bankruptcy and force them to face impending foreclosure. This could be the largest class shift we witness in the last 1000 years as so many people who formally owned their own homes are forced to rent and those who can afford to own rental properties grow their wealth dramatically (ending up with a European/ German/ French ownership structure)

Hedge Fund Managers - Not Villains just making profit in a society where profit is placed above all else

Why are we berating hedge fund managers who made billions of dollars shorting the current crisis, I believe we should complement their intelligence as they would have been vilified by investors had the market gone the other way. America was made great by saluting the greatness of those who succeed, jealous and creating laws to crush ingenuity are the antithesis of what made America great.

 

If the government was to decide to increase regulation on Hedge Funds we really would be in trouble as they wouldnt know what they were seeing, how to deal with it or what regulations to put in place. There isnt a single person that could figure it out as if they could they would be running their own funds. They would be unable to understand or calculate the future impact of their legislation it woul just be some knee jerk, popularist response as with almost everything the current administration has done.

 

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I am so Confused and i am not alone Ben Bernanke and the Government must be too

Okay so today the Federal Reserve announced it was going to start buying government treasury bonds to boost the economy and prop up the market.

This $1.25 trillion i presume is not part of the $3.8 Trillion already pledged by congress et al to battle beleaguered banks and troubled home owners. But here is the thing....

The Federal Reserve doesn't have money and prints money as it needs it, the treasury department sells bonds to fund its activities and if this isnt sold to a foreign government it becomes a part of the national debt as it is purchased by the Federal Reserve with money it doesn't have.

Can one conclude that foreign governments have lost all faith in the US government to repay its debt and that the currency will devalue and is not a good investment. If so this is a doomsday scenario for the US economy and spell infinitely higher interest rates and inflation long term as well as saddling future generations with a debt they cannot pay and a country with minimal self reliance with an ever weakening currency that will buy far far less if the Yuan of China decouples.

Then the Fed will buy toxic loans essentially following the banks into what caused the credit crunch in the first place, thus allowing banks to offload more bad debt off the balance sheets and into the government coffers..... Could the Dollar soon be valued in a similar way to the Italian Lira in the 80's and 90's.......

Sell Dollars and buy Yuan and Euro

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Key Business Growth Areas

There are several areas of the US and Global economy that should experience significant growth in the next several years making them great investments with strong potential returns. Looking to these areas will pinpoint key technologies and individual companies that should outperform the market and will make great entrepreneurial opportunities. These areas are Energy, Healthcare, Bonds/ Guilts/ Treasuries, Computing, affordable rentals and Green Enterprise. Here is a breakdown of each area of growth in more detail:

1)Energy

One of the most significant growth area will be utilities and energy companies, particularly in emerging economies such as China and India who do not have strong infrastructure in place. This will lead to a boom in power generation as consumer and industrial demand increase at a constant an unabated pace. Even though these economies will experience recession and downturn due to the current global climate they needed this chance to catch up with their growth before they reach a cataclysmic infrastructure collapse. The fact that so much output is necessity and basic products essential to sustaining the first world way of life will undoubtedly save them from significant depression and enable them to clear a recession by 2011.

America and Europe will continue to increase their demands at a slower rate as economic downturn has a greater impact and where greening of energy sources and particularly energy utilizes (bulbs etc) become more economical. However as recycling (eg Smelting etc very energy intensive) and computing power increases this will pick up alot of the slack.

2)Annuities

Whether the markets crashed or not alot of people are due to retire and or have retired and need to take annuities to finance their retirement. This will be a huge growth area and people will be looking to make reduced resources (401k and home equity) go further. Cashflowing investments will fall into this category and that will make an interesting contrast to fiscal instability of the asset classes normally used to finance such annuities.

3)Healthcare

A greying population means a huge growth in Heart, Cancer and Brain related diseases. Barriers to entry to all markets are huge so expect to see the existing companies continue to grow and provide safe returns.

3)Bonds/ Guilts/ Treasuries

Flight to safety will continue for the foreseeable future, this asset class has been damaged by the reduction in credibility of the rating agencies (who are utterly incompetent0. Expect a strong recovery over the next 3-5 years

4) Computing

We have not seen the end to computing revolution, whilst it is hard for mature companies such as microsoft and google to continue double digit growth there is no doubt that we have only seen a fraction of the impact that computing will have on our lives. Look for robotics, alternative control methods (optical input) and personal assistant companies to rise to the fore. This bodes well for all fibre optic telecoms as data transfer will become more and more critical and infrastructure means high barriers to entry. Watch also for the emergence of city wide wi-fi systems.

5) Affordable Rentals

Whether the american consumer belives it or not and no matter how much the government denies reality to themselves the market has to bottom out and unless the governemtn pays off a significant percentage of the mortgages of the millions of people facing foreclosure, they cannot afford their houses, never could and the inflation the governments solution is creating will result in them being even less able to afford the property in a few years. Therefore affordable rental units people can afford that will allow them to put themselves back on their feet after bankruptcy and foreclosure woes will be a boom market. These are not hi end condos or any other such development as was being flung up during the last 10 years. It is more the rent controlled properties such as those of Manhattan.


6)Green Enterprise

The world is going green not through choice but through necessity. Higher gas prices, electricity costs etc mean that consumers and businesses have to green up to reduce costs. Expect to see diesel making a strong entry into the US market, increased sales of energy saving lightbulbs and devices and energy saving devices.

Also with the ever increasing water shortage expect to see water recycling and re filtration come to the fore as it becomes a necessity. Waste water utilization the middle east, Australia and the west coast of USA will be one of the boom industries of the next 15-20 years.



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Implosion, Meltdown, Who can truly comprehend $3.55 Trillion?????

Okay so another $410Bn was approved by congress last night and the question is where will this all end. With $3.55 Trillion now sanctioned, thats 1/3 of the entire national debt, one has to ask, why are they giving away all this money they dont have when they havent even spent the original $900Bn and seen the economic impact and fallout.

They always say you dont truly see the impact of a Presidents bills until 8-10 years later and alot of the consequences of Bill Clintons actions are now being felt (giving away panama canal, deregulation of finance - where the hedge funds really grew as a phenomenon, changes to foregin labor visas etc). I truly feel sorry for our children who will feel the ful economic impact of Obama and the Democratic run congress and senates bills. I am no republican and i was a very big critic of George Bush but i think we are truly about to witness the implosion of the US economy and an end to its global dominance.

Bring on the next decade, it probably belongs to China and India.....


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Travelling like a Rock Star kills the economy

So who would like to charter their own provate jumbo jet and fly from Washington to Chicago for dinner for Valentines night..... Why the president of course, Barack took his wife to chicago for dinner on airforce one for Valentines day at a cost of several million dollars.....

Didnt the motor company bosses just get hammered for making a similar flight......

Grounding airforce one which is getting ridiculously over used right now would save hundreds of millions of dollars a year which would go some way toward making up the incredible budget deficit our new President is planning to create.

Amateur hour has begun in Washington, can Obama even count high enough to work out how many commerce secretaries have resigned to date. If we add another $2-3 Trillion to the budget deficit then we will saddle the country with an unsurpassable burden which will lead to China or Europe suceeding the US as a world super power and the leading economy. This could be the death throes of an empire if we dont let the markets bottom out naturally and start over with a new improved and unbroken system. The patchwork quilt we are creating will leak like a seive and no the wasnt an SIV i was talking about although that works just as well.

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Secrets to Travelling Like a True Road Warrior (Relocated from another of my blogs, written - 3/21/2008)

Everyone talks about the big things in travel, I want to bring up a few of the smaller items that people so often omit or don't even know about, the creature comforts that make travel not just easier but a pleasure. Her is my top 12 items that could change your perspective......

1) The difference between a 5* hotel and a 1* is invariably their sheets - I turn the worst bed into a luxury with a 100% Silk Travel Liner. It comes complete with a pillow pocket so that even my head is lying upon the finest silk and it all fits in a 3x2" 6oz bag.
You can buy one for $60 from REI - http://www.rei.com/product/695429

2) Never check a bag again or borrow an iron. Use Space Saver Vacuum Bags are the best way to pack for travel, they will compress your clothes to 1/4 or 1/8th the size, they will leave the clothes wrinkle free and the airport TSA staff wont open them and mess up, touch or expose your clothes/ dirty laundry in public. I always carry 3 - 1 clean, 1 dirty and a back up.
You can buy them for $20 from Bed Bath & Beyond

3) Rain X Wipes - These could and will save your life, grab one and give your windows a quick wipe before you set off and for the next 3 days, no matter how much rain or snow fall you will be able to clearly see your way - make sure you get wipes as TSA will remove the liquid.

4) Buy your own GPS - It will cost you from $150 for a basic system up to 350 if you want traffic - this will take a lot of the stress out of finding your job, your hotel and your way late at night in the dark. If you work it out renting units will be more costly within 10 days. I also program my job and hotels prior to leaving home or in the airport or even on the flight so that I dont have to deal with it when I arrive and I know what time I will arrive

5) Energizer battery charger - plug it into your phone or your computer and use normal batteries to get you by!

6) Dry Cleaner Secret - Put any suit or piece of clothing in a tumble dryer for 20 minutes on medium heat and it comes out like new

7) Yak Trax are indispensables in snow and ice if you don't want to end up on your ass or looking like one! Slip them on over and pair of shoes for perfect traction in any conditions. Visit http://yaktrax.com/productspro.aspx but shop around you can get a pro for as little as $16.95

8) The dreaded 4S's may seem like an excerpt from the 7 deadly sins to you but to the frequent air traveler 4 SSSS 's in the bottom right hand corner of your ticket means extra special attention from the TSA. Your going to get everything searched and its gonna take and extra 10-50 minutes to get through security as a result..... Avoid this like the plague, adding an airline frequent flyer program and talking to your airline can reduce how often you face this problem, especially when you have last minute, one way tickets!

9) Clinical Strength Deodorant makes sure you make it through a long harrowing and often energetic day without any telltale wet patches or odor - add anti odor, anti bacterial, cooling undershirt for the perfect finish and finish with a 50ml bottle of EDT aftershave for that fresh scent.

A little more Expensive but these items make a huge difference for me:

9) IPOD Shuffle/ Noise Canceling Headphones/ Eagle Creek Travel Pillow/ Eye Mask - primarily used as white noise to block out the crying babies, engine roar on props and insulate me from the rest of the world for a little while. The travel pillow has a great pocket it folds up into and also allows you to carry all your travel items in one place - i keep my mask and ipod etc in there all the time.

10) Tom Bihn Empire builder suitcase and Brain Cell are the perfect briefcase and laptop combination. Whilst expensive the pockets are so well thought out it makes work and travel a breeze, the padded laptop case means you can drop your bag by mistake and get away with it. It will also ride ontop of your work case effortlessly.

11) You will think i am mad but quality pays for itself - Victorinox 22" Carry on plus Suit Carrier is expensive but should it break for any reason the company will get a brand new bag to you within 24 hours for free and that is for life. Expect to go through 2 lesser cases a year, so go figure, little extra upfront saves a lot of hassle in the long term.

12) Tablet notebook computer- laugh at me all you want but 20% of my jobs are a go as soon as i pull the computer out and start writing on the screen like a notepad. It saves you carrying pads of paper and writing up your notes later - use all the free time you have for the recognition training and it will virtually never make a mistake.

I hope this helps ease the woes of Travel

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The Ultimate Gift (Relocated from one of my other blogs - 12/21/2007)

Every once in a while there comes a movie that embraces or harness the power of human goodness, lifts us to want for or strive for more and to do better. "Pay it Forwards" " Forrest Gump" "Meet Joe Black" "God Grew Tired Of Us" are good examples of this inspiring genre. I was blessed to watch such a movie recently, "The Ultimate Gift" which incorporated and embodied so many values that I personally aspire to hold true.

If you haven't seen the movie then don't read on!


The 12 gifts are:

The Gift of Family
The Gift of Love
The Gift of Dreams
The Gift of Laughter
The Gift of Giving
The Gift of Friends
The Gift of Learning
The Gift of Work
The Gift of Money
The Gift of Problems
The Gift of Gratitude
The Gift of A Day

Take a little time and watch this movie, allow it to inspire you, don't be afraid!

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World Shift (relocated from another of my blogs, written 12/21/2007

The world stands at the edge of a cataclysmic financial abyss, and no i am not talking about the current housing and liquidity crisis, i am talking of something a little further away and somewhat grayer (excuse the pun).

The financial timebomb that is the graying population of the industrialized world.

We live longer, live better, consume more and expend more. If you sit down and read the social security/ welfare document sent each year to every tax paying american, you will also see that the US welfare system is budgeting to run out of money within the next 20-30 years!

yes

thats correct, they admit their funds will have run dry and they will not be able to provide for anyone after that time without a drastic increase in taxes (probably to a scandanavian style 60%) Why is this, because the baby boomers will mature, the first of them passed 59 1/2 in 2005 and thus over the next 10-15 years there will be more people claiming social security pensions than people working and paying into the system, creating an insurmountable deficit.

What do i propose or advocate as a solution, don't just throw stones, give solutions, provide answers that spark debate and could ultimately lead to some kind of resolution. So lets try this, Romania "i believe" recently told its populace they would not be paying for their retirement, people had to plan for it themselves! I think that the social security system is somewhat archaic and grotesquely mismanaged and rather that continue it, make everyone more that 25 years out responsible for their own retirements!!! These people must take financial responsibility and accountability now and start saving.

Several things that need to happen to help society survive;

The government find ways to become more financially efficient and stop or even reverse inflation.

reduce dependency on oil as it is a finite supply and prices will continue to rise even on the exaggeration on the speed of reduction of this decreasing supply. Like Diamonds, it isnt as scarce as prices would indicate, but neither is its supply going to last out our lifetimes!

My solution will have several consequences, many of which i think are inevitable either way, that will be interesting;

The first being that as a collective generation, those that come after the baby boomers will probably be poorer than their parents!

The second that property values will fall significantly as more housing stock is returned to the open market with less inhabitants!

Immigration will increase from countries such as China and India that will become overly populous and lower more affordable prices will draw people in. These countries will ultimately come to resemble Japan and Tokyo in terms of density and expense.

Our generation will have significantly fewer children than our parents as we will simply not be able to afford them.

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Credit Rating Agencies - The One Business That The Government Should Run

I am not a fan of the government running businesses and I am even less of a fan of the rating agencies, who are even less able to demonstrate any degree of competence whatsoever.

Here is the problem, they are in the business of providing ratings and they charge the company for the pleasure... do they make a sale or give a good rating?

When you speak to them they have actuarial style tables that investments have to fit into to be rated and then they charge you between $50-250,000 for the rating. In my opinion if you get ratings from three agencies which is pretty normal you end up with $150-750,000 in fees which significantly reduces your yield unless you put together huge funds/ portfolios or deals to justify the costs. The bigger and more complex the deal the less opportunity they have to truly vet an investment or even to be able to understand it. With offshore structures, tax mitigation strategy and complex structures the people scrutinizing the deals are not exactly a location for the cream of the investment, financial acumen gene pool.

The government would have no bonus structure, no side interest and therefore may hopefully have a little less bias if no greater understanding of the deals. Truly what we need is a more astute investor assessing the validity of deals, the problem is that deals are not clearly explained and defined. This would end the perpetual cycle which currently occurs where companies spend huge amounts of money on a rating and cook every figure they know the agency will look at to make sure they get the right rating. (the consultants specializing in this cost about another $50-150,000) The government would be able to avoid so much of this situation..........



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