Holy Fool

Folding banks, bankrupt insurance firms, government bail-outs, record setting levels of foreclosures are daily news.  The amazing thing isn't that it is happening, but how shocked everyone is that the axe fell.

So why are we here at the crossroads today?

1.  The American Dream is neither universal nor sustainable

The 'American Dream' was a marketing movement that began after the second world war.  As we fought to piece together what it meant to be American in the aftermath of the costliest and deadliest war in modern history we looked to a dream.  The dream started small:

• A house for every family
• A dog for every house
• A chicken in every pot
• A car in every driveway

But somewhere that dream was given a shot of steroids.  Soon the 'American Dream' became:

• A five bedroom house
• 3 cars in the 3 car garage
• Two pure bread dogs
• A cat or two
• A boat
• A vacation home for the boat
• A RV to get to the vacation home in
• Some wave runners to pull behind the RV,
• A plasma/lcd tv in every room
• Surround sound for each TV
• A Playstation, and a Wii for each TV
• A chicken in every pot
• A side of buffalo wings
• A t-bone
• A baked potato
• A trampoline
• An above ground pool
• A pool table
• etc, etc, etc

I know I am getting a bit overboard, but it wouldn't be sad if I couldn't look out of my office window in the suburbs right now and see 90% of this list within a three house radius.  We have bought into consumerism as patriotism hook, line, and sinker in this country; sinker being the operative word.  We have bought the lie that we all can have it all.  Ask yourself how everyone can be equal in a world where 25% of the population consumes 75% of the commodities.  Ask yourself how the 'American Dream' is sustainable in all it's gross obesity.

2.  We live in a culture in which the only requirement for ownership is desire.

In the old days it took an established income, a down payment, and good credit to get into a house.  It used to be that the good things in life were hard to get.  We want a house but we don't want the discipline of saving, of keeping a regular job, of spending less than we make.  But people got drunk on greed.  Mortgage lenders and investment bankers were not satisfied with the growth of the housing market.  After all the more people they could give credit to the more money they could make.  If you ever looked at all of the TV adds from a few years ago and wondered how lenders could afford to make mortgages to be people with no or bad credit, you now know the answer; they can't.

Each time a mortgage is made the lender of the money buys an insurance policy on the mortgage so that if the borrower defaults and can not make payments they will have the insurance to fall back on.  This was true for the sub-prime loans of the past 5 years as well, only thing is the investment bankers only had about 1 dollar for every 30 they were on the hook for.  Now, a few years later, surprise-surprise, the high interest rates of these variable rate mortgages begin to kick in, and because the borrowers were never disciplined with their money to begin with they can't qualify for a traditional fixed-rate mortgage; which means that they can not make the payments anymore.  The investment bankers are screwed now because they only bothered to save back 1 dollar for every 30 they insured.  This is why Merrill crashed, why Lehman crashed, why AIG is on the brink, etc.

When desire is our only requirement for entry this is where it takes us.  'I deserved it' will be the epitaph on many American tombstones.

 

So how do we get out of this mess?  The U.S. government has decided it will purchase the majority of these bad mortgages and hold onto them, hoping that they return some value.  All of this of course at tax-payer expense and adding to our national indebtedness. But beyond a government bail-out the politicians and the business leaders do not have the heart to do what is right; which is begin a nation-wide campaign in favor of personal financial responsibility, one that promotes sustainability, accountability, and savings.

New York, NY.  Today the Soul Index Fund (SIF) dipped sharply.  Fueled by reports of possible genocide in the former Congo republic, and the discovery of nuclear warheads in Syria a heavy sell-off took place in the opening moments.  The SIF fell 4% to 9,872 in early trading, inching upwards to close at 9,904 at an average rate of $21m/100.  Jim Van Kamp CEO and Chairman of LEO partners, the founders of the SIF spoke briefly today with investors in an attempt to assuage any fears of a collapse in the SIF.  "While dire, the situations in the former Congo republic and Syria are isolated.  Rest easy knowing your soul investment is safe, and we have the will to persevere, and we have an unwavering faith in the good of humanity."

USA fell 2% off of yesterday's trading with a rate of $67.2m/100.  Trading for Christians was mixed, holding at $32.4m/100, while Muslims dipped to $12.57m/100, most likely due to heavy selling of Syrian souls.  The Syrians ended the day with a rate of $1.5m/100.  Israeli prices also fell in anticipation of possible military confrontation with Syria to $28.2m/100

The SIF has taken a beating over the last three years as it fought off the effects of civil war in Bolivia, a stalemate between the U.S. and Russia that tied up natural resources in eastern Europe, and the continuing violence between radical Muslims and Hindus on the India/Pakistan border.

The SIF was developed at LEO partners under the guidance of Jim Van Kamp and Michael D. Stormwood, as an effort to economize the value of human life.  The SIF market has several layers segmented by region, country, education level, and religious affiliation.  The higher a collective group scores the more value they hold in trading and contribute to the overall SIF index.

The SIF has not been without controversy, especially with the recent hostile purchase of all Taiwanese souls by the Communist government in China.

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What would it look like if we really did try to place a dollar figure on a human soul?

These are some thoughts lifted from Newsweek's adaptation of Fareed Zakaraia's book The Post-American World, which is now on my short-list to pick up.

• As of April 81% of the American people believe the the country is on the "wrong track."
• The level of gloom in America is at a 30 to 40 year high.
• The world's tallest building is in Taipei. (and soon Dubai)
• The world's largest refinery is being built in India.
• The largest passenger plane is built in Europe.
• The largest investment fund is in Abu Dhabi
• The largest movie industry is Bollywood in India.
• The largest Ferris Wheel is in Singapore.
• The largest casino is in Macao. (Which surpasses Las Vegas in Revenues)
• The Mall of America no longer ranks in the top 10 largest.
• Only 2 of the top 10 richest people in the world are American.
• In 2006 and 2007, 124 countries grew their economies at over 4 percent a year. (More than 30 of those are African nations)
• We are living through the third great power shift of the modern world. (1 was the rise of the western world in the 15th century, 2 was the rise of America, 3 is the rise of everyone else)
• Military and political power are the only two areas where America maintains dominance.  America is rapidly declining in the dimensions of industry, finance, society, cultural influence.
• 80 percent of terrorism's casualties are in Iraq and Afghanistan.
• An American has a better chance of drowning in their own bathtub then being killed by a terrorist.
• Despite the ever increasing visibility of violent acts we are actually experiencing a period of unparalleled peace and global progress.
• The American economy is 68 times greater than Iran's.
• The American military budget is 110 times greater than Iran's.
• If this is 1938, as some say it is, then Iran is Romania, not Germany.
• The rising powers are relatively benign by historical measure.
• Russia's military spending is now 1/20th that of the Pentagon's.
• China has 20 nuclear missiles that can reach the United States, the United States has 830 that can reach China, most with multiple warheads.
• Over two million refugees have fled Iraq for asylum in surrounding countries.
• Hyperinflation is diminishing and has practically vanished.
• The share of people living on 1$a day has plummeted from 40 percent in 1981 to 18 percent by 2004, and is estimated to drop to 12 percent by 2015.
• The global economy has doubled in the last 15 years and is now approaching $54 trillion annually.
• Global trade has grown 133 percent in the same period.
• It's not just oil, all commodities are at 200-year highs.
• Food prices are no longer collapsing.
• A young Chinese diplomat, "When you tell us that we support a dictatorship in Sudan to have access to it's oil, what I say is, 'And how is that different from your support of a medieval monarchy in Saudi Arabia?' We see the hypocrisy, we just don't say anything - yet."
• By tradition the IMF is headed by a European, and the World Bank by an America.  For insiders it is charming, but for those that live outside the west it seems bigoted.
• Despite nay sayers, America has enjoyed unusually robust growth in the face of globalization.
• The United States is ranked as the world's most competitive economy
• The United States is home of 8 of the top 10 and and 37 of the top 50 universities in the world.
• In 2004 950,000 engineers from China and India graduated compared to 70,000 from the United States.
• Foreign students and immigrants make up 50 percent of all science researchers in the United States.
• By 2010, 75 percent of all science PhD's earned in the Unitied States will be awarded to foreign students.
• "American society can adapt to this new world. But can the American government?"
• "Generations from now, when historians write about these times, they might note that by the turn of the 21st century, the United States had succeeded in its great, historical mission—globalizing the world. We don't want them to write that along the way, we forgot to globalize ourselves."

Unemployment

One statistic directly impacted by a recession is unemployment.  While climbing slightly unemployment has not jumped by the increments seen in the last recession at the turn of the century.

*Data provided by the U.S. Bureau of Labor Statistics.

GDP

The main metric for determining whether or not a recession has taken hold is the Gross Domestic Product of the United States.  Despite media calls for a recession we can see that while the GPD has declined slightly it actually fairly stable to growing.

*Data provided by the Bureau of Economic Analysis.

If there is a recession it is certainly not a nationwide experience.  The housing market is down with a glut of homes on the market due to foreclosures and higher lending standards for mortgage seekers. However most of the housing woes were fueled by greedy banks giving loans to people that couldn't afford them.