Investing for the post-Boomer era

I'm not much into making predictions. Trends, though, do interest me. A trend can tell us about our future. All too often, predictions are wrong. Trends, though, are proven right in more ways than one.

Demographics, for instance, change the economy. Follow the demographic trend, and you'll see a pattern. In the 1950s, babies were born. Companies with offerings like Pampers prospered. Later, it was Milton Bradley and their board games; hula hoops for teenagers. Later on, as the Boomers aged, they needed cars and starter homes.

Throughout the Boomer generation lifecycle, companies have sought to capitalize on the number of potential purchasers of their products, their market. This number is quantifiable--the number of people of a certain age shapes the size of the market for any particular good or service.

The downside to a demographic up trend is of course a demographic down trend. Just as the size of a market grows, so too does it inevitably shrink.

Capitalism has come up with a number of ways to analyze changes in economic variables over time. Perhaps the most compelling is the Kondratieff cycle. The idea is that capitalism has a long drawn out growth cycle, which ends in corrective episodes every 70 years or so. Take the Depression (1930s) and add seventy…well, you get the idea.

Rather than fixate on the length of time between cycles, it's far more valuable to understand capitalism is not a linear economic progression but rather a economic process that needs to reset itself in order to grow to the next plateau, where hereto unimagined possibilities can be realized.

Many on the Right speak of creative destruction, the pain and suffering that needs to come as part of the economic growth process.  Typically, creative destruction is seen as a short-term sacrifice necessary to purge the existing order of inefficiencies related to the allocation of capital.

The allocation of capital is just a fancy way of saying where the money goes. In our age, we tend to assume anyone can invest anywhere, like through a stock market. Well, we didn't get to the point where we could have the range of investment choices we now do without having gone through a transition from a less efficient capital market to the one we have now. Before we could select from mutual funds, we could only pick individual stocks, or savings bonds.

The capital markets now offer investment choices that were unheard of a generation ago. It was only through the liberalization of financial products--innovation--that we got to where we are today. Without changes in product offerings, we'd never have had the democratization of stock market investments.

Look at the 401(k) for instance. It's a product that allows any employee offered a 401(k) by their employer to invest in the stock market. It's a regulated product. Whatever matching the company offers to one employee, it must offer to another. If the CEO puts in 3% of his pay, the company's 401(k) contribution will be matched for him just like it will be for the janitor.

410(k)s are regulated under ERISA (Employee Retirement Income Security Act.) This is an essential element of fairness. If for instance, the CEO were the only one participating, the plan could be stilted to serve the interests of top management, and exclude equitable provisions for lower level employees. ERISA requires plans to be periodically tested so that this doesn't occur.

Another risk if plans aren't regulated is of course the misappropriation of funds. Federal laws governing contributions force companies to place the money in the hands of plan director who can be sued by plan participants.

401(k)s do require individual participation. Unlike pensions, which vest over time and depend on the employer's investing acumen and fiscal solvency, 401(k) funds are kept elsewhere. The company has a fiduciary responsibility to make sure the plan participant's investments go to the fund and stay there; the plan administrator may or may not be the company itself. Typically this function is outsourced, due in no small part to the liabilities involved with mistakes for which the employer is legally accountable (the plans aren't liable for market losses.)

One of the huge threats to retiree financial security todays are pensions (defined benefit plans.) The federal entity responsible for insuring pensions, the Federal Pension Guarantee Corporation, is woefully underfunded. With so many retirees, companies have to allocate huge sums to meet their pension obligations--or not. Unlike 401(k)s, pensions aren't guaranteed. (In both types of plans, you have the risk of market loss, but with pensions, there's the problem that the money the company promises to put in--the vested portion--won't be there.)

Without proper stewardship, 401(k)s investments can be misallocated. We saw this in the past with Enron and takeover targets. If company employees are allowed to own company stock, then they face a risk of losing not only their jobs should something happen to the company but their retirements as well.

The Ayn Rand crowd praises individual responsibility for retirement, and appreciates 401(k)s more because they're not an entitlement like pensions, which every employee of a particular age is entitled to get, based typically on their years of service.

401(k)s serve as a wonderful device to broaden market participation. More people invest when they're allowed to do so through tax-deductible contributions. Taken out before taxes, a much larger amount is available to go to work in the markets. Like an IRA, the 401(k) investments are freed of taxes on income and capital gains thrown off over the lengthy span of time known as our working years. Four or five decade of tax-free compounding provides people with return far greater than would be the case had they kept the money outside the IRA tax shell, or bucket, as I often describe it.

Market participation is a wonderful thing for the markets because individual investors are better for the stock market than speculators. Yes, you heard me right, despite all the hype about day traders, the better path is to get average and ordinary people investing. You won't hear that in any of the financial service company marketing: they're geared towards more frequent transactions because they make more from trades than they do from investments, which are typically buy and hold.

Individual investors are more likely to weather the storms that regularly batter the financial market. 401(k) investments in particular offer a far better alternative to speculative trades because the frequency of trading is limited by plan rules. Also, with the exception of company stock, many 401(k)s limit what they offer to mutual funds. Funds aren't are not immune from market risk--spreading investments out among a number of stocks or bonds--but they do reduce risk associated iwht holding a single stock or issue.

Another wonderful benefit of market democratization and individual investors is the positive feedback loop generated when the markets rise. Who hasn't heard a co-worker brag about how much they "made" from their investments. As with any feedback loop, there's a negative side as well. If the markets tank, broader participation might exacerbate market pessimism, and discourage participation or risk-taking--which does need to be done in order to earn superior returns. Fortunately, people are far less likely to admit market losses…Joe at the office water cooler won't be talking about his bad days like he will his good ones.

With demographics, what makes a trend beneficial can become a big liability if the trend dies. The Hula Hoop industry, for instance, didn't do so well with the aging of the Baby Boomers. What happened instead was that as the opportunity for one industry shriveled, another grew. As the Baby Boomer kids left their Pampers and Monopoly behind, they went on to Schwinn bicycles and cars.

We're clearly in a transition now, brought on by an end to the Boomer's peak earning years. The next question, and scary one, is how much pain we'll have to go through before the old investment paradigm finds a new and better balance.

Trends in retail investing

According to CNBC's Maria Bartiromo, retail investing is dead. The banks aren't making any money selling to individual investors. And if they aren't making money on selling something, they of course won't try as hard, although Maria did question the wisdom of spending a lot to make a little, which is quite significant for any potential investors in Morgan Stanley or JP Morgan stock.

That's the problem with CNBC these days: they're far more concerned with investor class (the 1%) than they are with retail investors. Back in the soaring market days of the 90's, retail investing was quite the rage. In the media, fund managers like Peter Lynch (Fidelity Magellan) were deified almost daily. His style of picking stocks based on companies that he used as a consumer led to huge returns.

Looking back on it, a gorilla throwing darts to randomly pick stocks could have done exceptionally well during the Baby Boomer ascent period. Still,t he media did have a big role in educating investors, a crucial first step in inducing them to invest, and navigate the ups and downs with some degree of confidence.

Market performance begs the question--do higher returns in themselves inspire higher returns? If market performance lags, then people will be less likely to invest and market malaise follows, which then discourages new money from entering the system and diminishes expectations and appeal, etc.. 

The market crashes of 2001 and 2008-9 provided plenty of reasons for individual investors to avoid the markets. There's a general impression that market volatility has increased; perhaps it hasn't but the size of big prices movements that comes with a higher Dow does contribute to that potential misperception. At Dow 1000, a move of 2.5% or so--like Friday's-- is only 25 points. "Dow down 25 points" sounds a heck of a lot better tab "Dow down 250 points."

Whatever, the investor psychology, the demographic trends means that fewer people have rising incomes as the Boomers age. Incomes typically peak at age 46 or so. Fewer people holding decent-paying jobs also means less money available for investing. The statistics are scary: under half of all Boomer's have saved more than $10,000 for retirement; the average net worth of Americans in their age bracket is something like $1,000.

Basically, the increasing costs of living mean people will be forced to pull out their retirement savings to keep up with costs. Health care is a huge drain of retirement savings--it wouldn't be a stretch therefore to say that health care costs are therefore a drain on the stock market?

I saw a survey from Fidelity that said retirees will have to spend $240,000 of their retirement savings on health care expenses, inferring that Medicare really won't be there for you when you retire, or at least not cover the true, full costs of medical care. Rising out-of-pocket costs for health care are a huge threat to people's solvency and, by proxy, their ability to keep their retirement savings in the capital markets.

As the Boomers' withdraw from retirement accounts, the net effect on the stock market is negative--financial industry professional truly concerned with the long term effect of rising health care costs should help fight them by pushing for universal care and the containment of costs.

As appealing as it might be to market financial services to the top 10%, market democratization builds a more stable market which attracts more investment. Sure, incomes aren't what they once were, and the costs of living are going up. But the amalgamation of individual investor into pooled investment accounts like the 401(k) can provide a recurring source of working capital going forward. And the benefits of democratizing the returns can act as a feeder for further gains and investments into the economy, with all their concordant benefits, not only in the financial markets but the Real Economy as well.

Economically, the Boomers' were the most successful generation in American history. A tragedy it would be if the result of so much societal advancement is an inter-generational relapse away from more efficient and prosperous capital markets.

The best way that the financial industry can move forward is to embrace the individual investor.  Media companies like CNBC can do a great deal to de-glamorize the day trader and market speculators, who simply can't provide an appropriate role model for our young people, who need to be encouraged to invest for the long haul. 

The media need to emphasize how stock market investing has advanced our standard of living not just for wealthy Americans but for the average citizen as well. The best benefit of putting money into the economy is that it creates jobs and economic growth; the financial implications evolve from that primary function rather than substituting for growth in the Real Economy.

Deferred gratification is perhaps the best lesson that long-term investing offers. All too often in young people and their media-saturated environment today, marketers stir wants into needs, and offer immediate gratification as the solution. In order for the next generation to mature and accept responsibility, that chain needs to be broken.

Older Americans have an obligation to offer the young opportunity that they had. If the Boomers are content to just sit back and draw down their retirement accounts, they shouldn't be surprised if they find their portfolios fading faster than they anticipated. Younger Americans need to have economic opportunities available to them and the best way to do that is to feed income and saving back into the economy through the capital markets, instead of using them to speculate, or pay for wars, or health care, offshoring, or whatever.

Looking at the recent bubbles, one in tech and the other in housing, we know the investment landscape is vulnerable to short-term thinking and profit-taking. Nothing great ever came easy. Until young Americans are taught to defer gratification, and capital markets democratized, our country will be headed in the wrong direction, and the economic/financial transition to the post-Boomer era will be especially and unnecessarily painful.

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The Roads Not Taken

"We learn more through our mistakes than our successes," a former mentor of mine used to say.

I like to wonder where I'd be at the opening of the second half of my life, what other lives I could have had.

Professionally: something straight out of Butler perhaps? A Broad Ripple condo or bungalow. Socially: Probably no marriage, being that I was a drinking man in the first half.

Right after graduation, I did apply for the Navy, which did force me to refocus on the physical side.

A 60-day period of physical exercise did suspend for a while the awful stress of a stream of job interviews and jobs I really didn't want to do anyway (but I ended up doing ten years later, at least part-time.)

Joining the armed services would have boosted my Japanese language skills. I did get to graduate school, though, down the road where I did improve them.

Maybe I'm not at the stage of life that you can write your memoirs, but at my age you think of how differently they might have been written.

I was talking with someone else who'd joined the military but not made it through the selection process, a few years before me. Anyway, he was musing about why his admission into the Marines hadn't worked out.

I don't think he was regretting not getting into the Corps, but rather truly perplexed to find himself where he was, on the back half of life, on a downward trajectory, at least in terms of how he viewed his professional achievements, or the lack of them. It's at this stage of life that a lack of achievement does limit your professional opportunities in the time you have remaining.

It's a slippery slope whens life's twists and turns take you so far from where you'd thought you'd be, striding into the recruiter's office, young and confident. The effect is largely emotional. It's easy to assume that you'd be happier, better off, as the grass is always greener on the other side--or, down the road years later in whatever alternative reality your imagination cooks up.

Then I started thinking about how different he would be if he'd been a Marine. I mean, he'd certainly have been someone far different after that, as surely as I would have been after serving as a Navy officer. And like me, perhaps the person he became is the person he should have become, regardless of what he wanted. Perhaps unhappiness vests more in the person we need to be and happiness in the other we never were.

In middle life, we question who we might have been in that alternate universe twenty years later. We're regretful of our mistakes, yes, but more importantly we forge through the flow of the waters of time, upstream, and come to accept more of who we are and who we've become: our fate.

I for one feel made the richer for who I didn't become. I see demonstrations of wealth that might work for others. That doesn't for do it for me, though. I end up thinking of how much less ambitious I'd be for lack of want; how much weaker I'd be without a gritty realism, a passion for living that too much wealth can diminish, through contentedness perhaps.

I admit to being humbled by others who've achieved levels of success in their fields of choice, yet I field no overbearing sense of failure as a result, at least not anymore. Professional jealousy might have given me depression ten years ago. I might have been waylaid by the examples of others who'd by that time had achieved solid mid-career positions, well-paying and secure while I'd been nowhere close, or as Pink Floyd might say, "missed the starting gate."

I will admit to a pang of jealousy when I see the signs of their wealth made obvious in their homes and cares. But that emotion passes. Or maybe more accurately, I've learned to let go and grant them their gloating. It's just easier that way than to admit with every glance that you've been outdone.

As a person at the midway point of life you begin to accept your position, I guess. Perhaps part of that process is wondering who you would have been. Pondering that question acts like a release valve as a stream of memories begins to replace the jealousy, memories as precious as the finest jewels or nicest homes. Because they're yours, and no one can ever take them away.

Stealing the show, again

Perhaps the greatest friction exists between those with professional momentum going at this point in their lives and those who don't. So much of life is a monetary game, yes, but it's more than that. It's not so much having more income as having stability, enjoying the fruits of a half life of labor.

Pensions become more critical. Retirement takes on a new urgency. 401 (k) investing isn't just a cute IRS code. In financial matters, the infirmity of youthful indiscretion must be corrected, a more stable ordering of life final half achieved.

A population's "graying" might lead to a shift in values to reflect those of the largest generation--in our case, the Boomers. As a matter of fact, no study of economics can exclude a basic understanding of Boomer spending trends.

As the Boomers grew up, so too did a range of consumer offerings materialize to meet their ever-shifting needs and wants. Demand for cars, recreation, houses, and investments has all vacillated for decades around the habits and preferences of Boomers.

You probably heard the list: Pampers(tm) for babies, Matchbox(tm) for toddlers, then frisbees and hula hoops. As the Boomer kids hits their twenties, the construction of starter homes boomed.

And for the financial industry, it's the Boomers' income and investment patterns that mean the most. When their incomes climbed, with it too was the demand for investments and insurance. Stock markets soared, with the 1987-2001 bull market the largest in history.

It's not by coincidence that it was at a financial services company where I learned about the economic evolution of the Boomer generation, back in the 90s. And they were right, but only to a point. Since 2001, it's been as if the Boomer demographic has worked against rising stock market values.

To be fair, there exist many economic reasons behind any stock market trends, and the recent past cannot be explained by retiring Boomers alone. I've said in older posts here that middle income investors have been disenfranchised from Wall Street, and the recent class wars indicates that the trend persists.

Perhaps it's anecdotal but we did see better stock market performance when participation was broader in the 90's. The middle class saw wages rise steadily under Clinton/Reich and much of that money found its way into the stock market. Unions were stronger, wages were better, and those rising incomes helped everyone in the country.

Since then, unions have been hobbled by policies that encourage offshoring and divestment by multinationals. Yes, there's a global labor market as well: a company like Apple would not have been as profitable as it was without cheap--some would say slave--labor. [By the way, congratulations to those responsible for higher wages down Apple's supply chain, thereby proving 1) collective action can work and 2) profits can't be the only purpose of corporate conveyance, hinting that perhaps there are other metrics than monetary to measure our time here in the planet.)

I guess if all that money went in and made the markets go up, the opposite--that pulling investments out will depress the market--stands true.

Will the Boomer generation continue to influence as it has?

If we're dominated demographically, the Boomers will exercise at a minimum a strong effect on our society. With financial matters, the fear of change manifests as a bunker-tyype mentality resisting any potential change, a reactionary attitude that in my opinion makes economic decline more likely.

My mentor, who I quoted at the top, also just to say, "people will rise or fall in regard to your expectations towards them," is so right. If the Boomers are seeing a ghost behind every branch, and a threat to their financial security in every proposed change, no matter how healthy, we most certainly have a problem.

In such a society, the urge to maintain the status quo is so strong that economic vitality can become stagnant, trapped by the top heavy, upside pay scale favoring the Boomers at the expense of younger people.

Those on government pensions like our soldiers, sailors and Marines crave the benefits they receive. Those who never had a chance to serve, despite volunteering, have no faucet from which to draw.

As wealth held by the Boomers tends to coagulate, stirring little demand as more and more is socked away in order to secure the financials needs of the retired, rather than put to work through the markets as it was in the 80s and 90s.

Statisticians call that "I," or private investment. As "I" hasn't increased, government has seen fit to make government spending ("G") more a matter of policy.

Our deficits have created a huge drag on our collective financial future, our nation's credit score, and ability to borrow in the future, when we are certain to need it more. Paradoxically, the more G, the deeper the trough but less seems to make it down the trough--i.e., it's shallow out in the periphery, deep in the fly-over where housing values and unemployment are still problematic, although agricultural subsidies do offer some rebalancing of wealth geographically.

The take away

I'm not a gambling man, nor am I prone to predictions, but I will venture a stab and say that our system today can't last, for a variety of systemic reasons far more than a single demographic trend.

A broadening span of the populace is getting poorer, denied access to health care and job security. As is explained in Josh Purdy's book In Search of Common Things,he describes the tragedy of the commons where those with resources--corporations, for example--become increasingly more efficient at depleting the shared resources of the commons, and those with fewer resources are therefore left with a more depleted commons, or public area.

Public commons can still be seen through many New England towns. They worked for a while, until the population rose rapidly, imposing too much demand upon the resources of the Commons. The system was unsustainable, like that of our government today perhaps.

With the public commons, Colonial-era Americans faced resource scarcity problems that are perhaps not too different from those the world now faces, albeit on a larger scale. The world's space and resources are finite. Not only must we get more efficient at extracting them (as they will run out), we will need to consume less, and shift our values away from an economic system that puts materialism first.

Through our heavily commercialized lifestyle, our economic future has been put at risk. We'll need to create an economy that doesn't depend on the extraction of natural resources and their energy-intensive transport over vast distances.

In a more modern sense of Commons, a government like ours enables an invasive parasite called private banking to infest the system. You may be familiar with the system: it entrenches workers in a state of modern debt-based peonage wherein tax revenues and interest payments go up the money pyramid. I ramble. For more see Dr. Chris Martenson's website.

Meanwhile banking industry losses are fostered upon the public through the Treasury's borrowings, in what Roubini's calls "lemon socialism."

The consequences of excessive risk-taking and inadequate regulatory enforcement made themselves obvious in the 2008-2009 debacle. Nevertheless the potential for another massive bailout persists as the underlying systemic causes persist, most notably the constant over-leveraging and weak regulatory environment, manifesting in the criminal MF Global debacle.

To put a twist on Yogi Berra's saying that "if something won't last forever, it won't," I'll say that if something is unsustainable, it won't be sustained. It won't be sustained because it can't be sustained. It can't be sustained because the monetary system on which it is based is broken and self-depredating, resulting in severe damage to the economic system in which it's housed.

Sources
The article's title refers to a favorite poem of mine by Robert Frost. It's available at this link.

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Future a product of past Karma

The New Year finds me choosing whether to blog about the last year, or the one to come. The past finds a lot of troubling events. The future, meanwhile, is blessedly free of all history's garbage, or is it? We may or may not be able to live a future free and clear of all the ramifications of our past.

The Buddhists have a Buddha of the future, Matreiya, whose role as harbinger of the future carries special merit. The Buddhists know much about the passage of time, with so much of what we base our lives on just an illusion to them. We can't escape our karma, except through enlightenment.

To Buddhists in some lands, enlightenment can come to anyone, where in southern Asia enlightenment is reserved to those who choose a monastic life, one of celibacy. To these scholars and monks falls the task of freeing esoteric knowledge locked away in arcane sutras and vast volumes of written material.

I bring up the Buddhists because they have a balanced life of sorts. Fundamentalists of Buddhism exist, but the religion itself emphasizes compassion and understanding, which are the opposites of ignorance and hate which motivate so much hate in fundamentalist Islam and Christianity.

In short, the Buddhists know how to get along with the world in which they live. They tend not to be prone towards extremes but rather strive to live a more fruitful existence by establishing harmony and abandoning mental attachments.

Such a state of mind must be learned and nurtured. In this regard it must be cultivated through the exercise of discipline and restraint, while accumulating knowledge (dharma.) And when the world inevitably intrudes on the still mind, the physical form is vulnerable but through powers of concentration--alongside a little help from the Buddha, which is always appreciated--the outside world's many distractions and pitfalls can be avoided.

I know someone who cast away all his possessions, and became a simple monk. He abides in various Buddhist monasteries of his order, which is known loosely as "Thai forest." He doesn't have a car or a bank account. Nor does he stockpile food. His possessions are limited to an alms bowl and a pair of saffron robes. (Alms is the process by which some kinds of Buddhist monks get their food--which they cannot touch--through gifts by those in the believer community.)

The point is that there is another way. We don't have to pile up goodies and claim victory in some monumental struggle: "He who has the most toys wins."

We don't consciously decide to be good consumers. We are programmed instead.

During Christmas-time, it's easy to see the hyperconsumer model so plainly--it comes out of its cave. It's as if the Invasion of the Body Snatchers has come, and that those who don't shop are considered deficient in some way. So bad was the rabid consumerism this year that melees erupted in the Mall of America and elsewhere. At least one individual died in a early morning retail stampede.

It's our attitude that kills us (or enslaves us, rather.) Americans also are taught that they can remain optimistic and wish away all the things they don't like, either but ignoring them, or pretending they don't exist. In this regard, our culture conditions us to be perfect debtors.


You may have heard the expression that "those who forget the past are doomed to repeat it." The average American's understanding of history is pathetic; like Vonnegut's Fahrenheit 451, who needs the past? It's only the present future the matters in a world focused totally on material gratification.

My thinking is that Americans think on a time scale far different from most other cultures, although I guess our model is being emulated everywhere. The plan is to get everything, now. The past is ten seconds ago. The not-so-subtle implication: Dare not be left behind, for the world moves at light speed. If you miss that call, you miss everything and we'll never go back!

In CSPER.org's "Renaissance 2.0," Dr. Martenson identifies this as what he calls the velocity problem in our society. Here I recite Lesson 5.2:

"The transformation is more than financial...(it) devalues traditional beliefs like Rest, Delight, Spirit, Philosophy, Joy, Love, Family, Humanity, and Relationships."

The speed at which things happen handicaps us. We lack time to decompress, to think, to reason. The ramifications of a hurried lifestyle are readily apparent in the prevalence of ADD/ADHD among children, who crave constant interaction with a bely of media and gaming options from the second they awake 'til bed.

Weaning one's child off a diet so rich in immediate gratification is no easy task. Yet it can be done, in a process not altogether different from overcoming addiction. At first, the child will no doubt resist, as an absence of constant action and immediate gratification is like stripping away the child's best friends and yanking them outside their comfort zone.

Medication might be one path to go, but I don't know because I'm not a parent of one of these children. The pharmaceutical companies are certainly lining up to cash in on every personality disorder. At a certain point, if a child gets too used to the velocity problem, then it might be too late for them to modulate their attention span or control their impulses, creating a lifelong condition.


Rapid consumerism is destroying the planet. If people in developing nations envy the American standard of living, with its dependence on cheap fossil fuels and consumer goods, then our world is surely done.

The American style of hyper-capitalism makes so much demands on the earth's resources that it simply can't be a model to offer to the developing world. If everyone needs a car and a house, there simply won't be enough natural resources to go around. The amount of money that needs to be generated to consume demands a income, which requires a job or, the accumulation of large amounts of debt.

Spending is our lifeblood, much more so than the income we make it access to capital that determines our quality of life. From the days of our youth, we subconsciously adopt a materialistic mindset. Brands forged into our minds lead us to be good consumers first, and responsible users of bank credits second. We taught to believe that work solves

What we get instead is a dangerous level of overconfidence, which turns us into perfect debt slaves. This happens gradually over time, without ourselves consciously accepting that we'll be paying off debt for the entirety of our lives.

The amount of debt we carry shows something in our lives is out of balance. On a purely secular level, increasing debt means our spending exceeds our income (an obvious fact, I know, but you'd be amazed at how few accept at that reality.)

Easy it is to rack up debt when so much credit is available. Nowadays, the credit is less available to middle class people, but of course the debt they accumulated lingers. And despite politicized pronouncements of "low interest rates," the interest on most forms of consumer debt isn't low, it's very high! It's not uncommon for banks with access to infinite amounts of money charge 18 to 20% or more on the debt they're owed. Not too fair. Nor are the interest payments beneficial to the general economy: the interest payments represent a transfer of spending from the real economy (R.E.) into the financial one, where the money likely goes into deep dark pools rather than work its way back out into the Real Economy (R.E.).

Credit unions offer an alternative. Their interest rates are lower--showing that they don't have to be, unless of course the lending entities' shareholders demand it. That credit union rates on their credit cards run under 10% came as a complete surprise to me, not so much because they were lower but because the lower rates showed credit cards don't have to be so costly to use.

If the banks were nationalized--credit union'o'fied--think about how much interest would be freed and spent, remain in circulation, where it could be reinvested. Way it is with interest payment these days, the money disappears forever from the economy where it was earned. If it resurfaces, it'll likely be in a major financial center, where it will likely be used to speculate or possibly reenter the Real Economy as compensation for the already rich who work there. Wages for P.O.P.O.P--pushers of piles of paper (really not paper but digital investments)--have been rising far faster than other industries, with record bonuses even as Wall Street collapsed in 2008-9.

In this way things might look just fine in the nation's major banking and financial centers even as depression-like conditions dominate out in the far flung expanses of empire. Condo prices can go up; luxury good makers (who hire many middle income people) increase their sales.

I don't know if we've become an economy built to pleasure the rich. Not so sure how well that kind of economy would function. My take on the economy is that it needs to be broad, inclusive, and focused on building wealth not only for the already wealthy but for everyone, in what's called social mobility.

The stock markets are good evidence of how the wealth effect works. By increasing participation in investing, individual investors add a stabilizing force to the market (institutional holders tend to be more skittish.) And the dollars going in to the market get invested, put into work to make more money, rather than sequestered as is the case with most interest payments.

The opposite is just as true: when stock market participation is low, the markets tend to become more volatile, and trend sideways. Participation also indicates healthy income growth, something we've not had if the top quintile of income earners is excluded. As a matter of fact, adjusted for inflation, middle class wages have remained flat since 1980. Yes, 1980! Meanwhile, income for the wealthy went up over 15% in a single year! This due of course to Bush's tax cuts, which have drained the Treasury but made the wealthy much wealthier.


Many of our problems that we face here in America are the product of too much debt. Collectively we consume so much that the amount we owe simply can't be repaid by the present generation.

The debts of the Treasury are so large that the interest alone will consume a significant portion of our overall spending, something like one-fifth of the overall budget by 2020.

Now debt is one thing, but when spending gets cut look out. You'd think that we're doing a better job here than in Europe, with all its "social programs." Think again, even with a population aging faster than ours and so-called "entitlements," government spending has been cut far more in countries like Greece than the U.S..

Just look at the last page of The Economist magazine: it shows the percentage of Gross Domestic Product of various countries. Guess whose number two in the list, exceeded only by Greece? The U.S.. Spending $1.4 trillion more than you take in is an unsustainable problem.

The reason for American fiscal deficit higher than Europe's is simple: defense spending. We're tossing away over $600 billion on "defense." No one in Europe--heck, no one in the world--is spending so much on their military.

Another reason for our debt woes--and also suppressed in what's formerly been known as the media in this country--is the inability of our government to tax. Congress is beholden to powerful interests. Essentially federal politicians are being reelected based on their ability to attract campaign donations. And with such huge sums being directed towards lobbying efforts to protect the wealthy and their interests, it should come as no surprise that Congress passes laws that reinforce the economic status quo, which is more like a pyramid with the 1% and their enabling organizations like the Fed at the top.

The real surprise is how gullible Americans are about their tax burden. If they knew their dislike of taxes was setting us up for a budget collapse, they might demand fairer tax policy. But masterfully the forces of the Right have sold average Americans on lower taxes--I mean, who doesn't want that?--despite the reality they will pay more and derive less future benefit from services currently provided by the federal government.

Medicare is an excellent example. People in the system today paid in only a fraction of what their medical expenses now cost the program. With so little going in and so much going out, the benefits will be scaled back.

Now maybe the rich will be asked to pay more when the time comes to adequately fund our government's spending, sometime in the future. Yet I'm not so convinced that Washington politicians will be able to impose financial demands on their wealthy supporters and the corporations they own, being that the crony system we see there today is so firmly entrenched.

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American model of empire bound by fate

Prescient writers like the late Chalmers Johnson have spoken about the "boundaries of empire" which confound and constrain the expansion of empires. Is the U.S. model bound to historical precedent, or are we exempt--what's known as "exceptionalism"? As much as we may want to believe we're different, history says different.

Think about it: every empire in history has perished. In their heyday, all these empires impressed people worldwide. Look at the Romans: their feats were legend, imperial wealth unsurpassed, its military forces unbeatable, and engineering far ahead of it time.

I'm sure the Romans thought in their heyday that they were an exceptional, and wouldn't go the way of empires that had come and gone before them. Perhaps arrogance is an unavoidable characteristic of ascendant civilizations.

Then little things began to go wrong. Perhaps it wasn't a strategic defeat that set the Romans--or great empires in general--back. Empires tend to decline over time, to slowly squeeze their citizenry for more and more until eventually, inevitably, support for the empire evaporates.

The Romans did a lot to postpone the end. They incorporated many of the frontier tribes they conquered into their armies. Roman legions were the best trained in the western world. At what at the time was considered exceptionally tall--5 feet, ten inches--height requirements stood 'til the (Western) empire's final days (link).

Masters of diplomacy, the Romans lured many to their side to enjoy the many benefits of increased trade. The economic benefits of inclusion brought new luxuries to everyone within Roman borders. Unification was further encouraged by roads and aqueducts that stand to this day.

Why is the history of the Romans so important? Well, it's not so much the Romans per say, despite all the parallels drawn to present day imperial America. Instead it's the imperial model of governance that needs to be fully understood by anyone with an interest in the future since the factors precipitating a decline tend to be held in common by all empires.

All empires die. No matter how great their accomplishments, no matter how long they reign supreme, sooner or later they will fail. For the things that make empires great are often their greatest weakness. The luxuries, for instance, that flowed into Rome from the east cost the empire great sums. The Roman Emperor Pliny the Elder scolded Roman women for their costly silk imported from China (link).

As long as the Roman empire could maintain a transportation network necessary for trade, it offered those within the empire security and opportunity. But centralized power, essential to maintaining an empire of vast size, can become a vulnerability. If all decisions are made by a central authority, the empire is bound to good decisions as well as bad ones. Sometimes the empire's fixation on control can breed ludicrous results, like when the Soviet Union mandated all time zones to be on Moscow time. That'd be like starting one's day in Los Angeles at what is now 5 AM (or in Russia's case, 8 time zones east from Moscow wouldn't exist).

Like all empires, Rome had its share of bad rulers. It's actually a miracle the empire didn't collapse based on the quality of leadership, which strayed from pettiness and vulgarity into outright madness, typified by the Emperor Caligula. What we can draw today from Rome's past is the lesson that source of imperial authority lies not with the quality of the people who run it but rather the willingness of the masses to submit to the central authority. For the interest of peace and stability which were key to economic security, it made sense to be loyal to the empire. By mutual cooperation and sacrifice on the part of its citizens and slaves, the Roman empire was able to stay together.

Rome was a known. Anarchy and barbarism were also well known, and not much of an alternative. In the shadow of a strong military, Roman citizens (a privilege not extended to the many) could live in a lifestyle far more stable and predictable even than that of people living during the Middle Ages centuries later. As long as tribute kept flowing into Rome, and Roman armies stayed across the Rubicon (a symbol for avoiding civil war), Rome could flourish, with economic strength at the heart of its vitality. And with the size and stability came multiculturalism and other progressive values.

Remember the empire needs to be outward focused, to bring in new participants on its fringes. The inclusion of new markets keeps the empire growing. Stagnation signifies not the attainment of economic achievement but the beginning of decline. People are drawn to greatness--it's exceptionalism that sets empires apart from lesser forms of government. To be believe in the strength of empire, arrogance may be required, and a dose of denial as the empire weakens. One of the most obvious signs of decline is the strength of the empire's currency. In ancient times, the best measure of fiscal fortitude was the raw amount of silver or gold in the coins of the realm.

Over the centuries, things went wrong with the Roman denari. The costs of maintaining expensive fortifications and standing armies rose to unsustainable levels. As the empire ran into fiscal difficulties, it proceeded to water down the proportion of silver in its coins, then force the newer, less valuable replacement currency upon the people.

To collect the older coins, Roman authorities demanded, on penalty of death, that all citizens turn in their older, more valuable coins to the treasury. This autocratic measure allowed Roman rulers force people to acceptnew, intrinsically less valuable currency.

Had the old coins been retained in circulation, we'd have seen Gresham's Law, which states that older, more valuable coins disappear when newer, less valuable coins (in terms of their intrinsic value) are introduced. Of course, some of the older coins with higher silver content did disappear, but under these penalties few would dare use the coins as a medium of exchange within imperial boundaries. No doubt many more intrinsically valuable coins made their way to lands beyond the empire, where most were likely melted down (although apparently not all, as coin collectors would have nothing to collect.)

The value of the empire's money is a big deal because economics offer a clear indicator of the empire's wealth, and the stability of imperial model. A decline in the value of the empire's currency signifies pending decline not just of the empire's economy but its sociopolitical health.

Remember for purposes of analysis that it's not whether the empire is American, or Roman, or Greek that matters from an economic perspective. To work, the empire needs to be not perfect but a source of stability and opportunity.

And when the empire overextends itself, its financial circumstances worsen. And the overarching cause of imperial overextension is, as those in the Austrian school of economic know well, military adventurism. As an example during the Roman years, endless Punic wars brought no direct benefits to the empire, only financial drain. Perhaps earlier in the history of the empire, during its rise, the wars would have strengthened public support and developed self-confidence that the Roman empire was the right side to be on.

Odd how it is that history repeats itself. With oru country, today, we've reached this crescendo of military overextension that seems to do little to preserve our security or stabilize our economy. Instead, we've taken to the dangerous precedent of lashing out at those we perceive to be our enemies, with virtually nothing to show for it.

For the purposes of historical comparison, we need to factor out emotional bonds to the empire and decide in a purely objective fashion what is in our interest and what isn't. Of course there Romans, just like there were Austrians, or Russians, who knew their empires were pursuing needless wars of conquest that only drain the resources of the empire. And perhaps no one understand the perils of large standing armies than our Founders. They knew that constant meddling in the affairs of other nations would lead to wars, which in turn would damage the fiscal stability and economic prospects for our new country.

American model

Moving forward, we've created a distinct form of capitalism. We need to ask ourselves in this age whether our style of capitalism enjoys the popular consent it once did. Or is the US model thrust upon the people of the world, like it or not?

For decades, American multinational businesses have set the supreme example of capitalist achievement. We became the ideal. Our standard of living ranked as the envy of the world. No one can beat us on the battlefield. Like the Romans, perhaps our military supremacy parallels our economic ascendancy. If so, then from Vietnam forward we're on a mostly losing course. But about our economic power, there was no doubt: we were supreme.

Then came 2008. We know well all the turbulence that has followed. More than the economic damage, and eventual recovery, is the introduction of doubt into the capitalist model, or at least the American version which depends on consumer spending and borrowing. 2008-9's market collapse continues to impact the markets even as they've rallied in the aftermath.

From a budgetary perspective, the US is already doomed. Maybe analysts--this one included--have grown too bearish on the inevitability of failure. Bears do tend to dwell on negativity. Maybe what some consider an impending collapse in the value of the dollar is but a passing correction. After all, the dollar's value isn't that much weaker-in purchasing power vis-a-vis commodities perhaps, but so too have other currencies faltered so in relative terms neither has been devalued. It's an easy thing to run the printing presses: there are no older, more valuable coins to collect on penalty of death. Supplanting the older, more valuable currency with a newer, cheaper one is a far easier exchange.

Mass psychology depends on people drinking the Koolaid. Adherents to free market ideology are as likely to believe that "it's different this time" as those who believe in the infallibility of a long lost ancient empire. If enough people--not necessarily Americans but people who buy into our style of capitalism--lose faith in the system, it peaks. The culmination of economic ascendancy can spell maturity or perhaps something far darker--impending decline or even collapse. After all markets are built on popular perception; when confidence in the system drops, market participation falls. And individual investors have abandoned the US market--quite a contrast from the rip roaring 90's.

Of course this recent crisis isn't the first time that Americans have doubt in their capitalist system. Bankers have long been distrusted and blamed, with political forces coalescing in opposition to money interests since the days of Andrew Jackson, who disbanded a national bank, and before. And during the Depression, economic stress was so great as to bring into question the worthiness of capitalism itself: millions were drawn to communism, socialism, and other political ideologies that terrify those in power.

Even with a "jobless recovery" we can't say that doubt in the equity and sustainability of our economic system has been overcome, despite what the market fundamentalists constantly preach. People will see what they see and right now, persistent unemployment is draining confidence in the system. Young people in particular (like those demonstrating in the streets of Cairo) have the most to lose in a system that offers the uncertainty of low-paying jobs and rising taxes without a corresponding guarantee of security in old age.

Nowdays the young in America seem curiously unaffected by political mobilizations occurring in other parts of the world. Is it because they don't believe political movements can have an effect?

If Americans were better informed by the media--or their friends, or parents, or whatever the source--about what's really happening, popular opinion might be more likely to be galvanized against a cabal of wealthy who game the system as the most grow poorer. Maybe it's the inability of so many to think critically, a skill abandoned in our industrial-style education system. Or maybe it's just a lack of belief that the political unification of self-interest can actually lead to the betterment of all's interest. Then again, Obama's campaign did mobilize young people. Then again his post-election performance may have done more to engender cynicism in the process and politicians in general than was gained during the period of higher expectations that preceded his victory.

One hallmark of the rat race that our money-is-everything system is that everyone is in it for themselves. Concepts of steady, consistent efforts have been replaced with get-rich schemes created at the top of the system, largely centered on the mortgage industry. The role model of choice is Wall Street's Gordon Gecko, who said infamously that "greed is good." OK, so we tried that and many grew rich, but most simply grew poorer, culminating in 2008's correction.

The capitalists know they need to reestablish confidence in the system that continues to enrich them, even as the majority grow poorer. The Horatio Alger story--rags to riches--may not be enough to convince people that unregulated, debt-based hyperconsumption really works, at least in the long term. For many immigrants, the concept that one could get ahead by simply working hard was a shining beacon, bringing many to our shores.

If America doesn't present the opportunity to get ahead, then it's surely in decline. This shrinks the time frame between economic peak and decline. Social mobility--the chance you'll live better than your parents--is actually below Europe's. As much as government might try to redistribute wealth, the have's seem to always have more, while those with little lose even what little they have, a Biblical foretelling (Mark 4:25).

If this model is to last, it'll have to enlist the help of non-Americans. And what kind of message are we sending? Look no farther than 9-11 for the origins of much distrust by non-Americans. Our reaction to 9-11 revealed to the rest of the world how cruel we can be, and the fundamental disconnect between doing what is right and how we've treated our enemies. Torture became commonplace, alongside extrajudicial killings in Iraq. All the while we' pretended we were the good guys, and justified our actions as vital to our security. I'm sure the Romans were equally dismissive of the plight of their enemies, or the collateral damage that resulted from the wanton waging of war.

However much control over the mass media the elite have, they can't sell faerie tales and myths forever. The economy has peaked, and already Americans are turning to the war economy or public trough for their sustenance. Just look at the headlines: "Gov't to create jobs" or "spending to generate growth." Neither of these goals is the task of government. Once we concede control of the economy to the public sector, the private sector begins a slow death. This inevitability is rooted actually in public borrowing, which is deferred taxation, plus interest. Eventually the unsustainable won't be sustained, but in the meantime government will borrow, then tax all it can.

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Inevitable collapse offers real change

Election results to come in tonight! I've heard the Republicans will retake the House and possibly the Senate. I confess that I don't believe that a non-choice between two substantially similar parties will make a difference in the long run. While I have more in common with Democratic candidates than Republican, I've lost faith in the American political process.

The problems we face are systematic and unlikely to be resolved by ballot alone. We need real change and not just false prophets selling campaign messages. Political dialogue in this country has become dominated by hot air and froth.

I'm aware that my position might be considered heresy by most political analysts, who make their living from presenting a false choice of candidates and parties neither of which can govern without serving some corporate interest or wealthy constituency. If apathy were the desired outcome, our two party system has hit its goals.

Many of our problems are internal, despite the tendency to find threats abroad which should unite us, although they haven't. Trends evolving out of our present day political climate include:
1) Corporatization: he who has gold makes the rules, or so Machiavelli said. Corporations feed at the federal trough in a quid pro quo exchange of campaign financing for politicians, made legal by Citizens v. United.
2) Privatization: services formerly provided by government become run by for-profit entities. Look no farther than Goldman Sachs' buy-out of Chicago street parking meters--Indianapolis has done the same, albeit for 10-year periods not Chicago's 75.
3) Militarization (the classic Military Industial Complex.) Ongoing wars serve a bloated and inefficient war economy that drains from the productive sector. Politicians too afraid to question military spending.
4) Abuse of power (cataloging since 2001.) The War on Terror is a gateway to abuses like the Plame outing and fake terror warnings timed for political motives, like those framed by Olbermann's Nexus of Politics and Terror.
5) Police state/surveillance society. Give up your rights to fight an fabricated terror threat. Government violates citizens' privacy and legal rights with impunity.
6) De-democratization. Black box voting allows corporations to manipulate voting results. Two corporate parties present illusion of choice: twiddleedee and twiddleedum both lead nation downward.
7) Prisonization. Prison industrial complex now warehousing some two million Americans, due to failed (but not for its financial beneficiaries) drug war.

I could continue but the list can depress the reader. Wouldn't want to depress anyone now. This was never my intent, though making an emotional impact on the reader is a fundamental goal of most forms of expression.

I've never meant this blog to depress anyone but how else will Americans become informed? If they're so fearful of being depressed--or is it change they so fear?--then the public doesn't deserve to know. The status quo, as I've been warning, is sending us off a cliff--if the sheople are lemmings and go over the cliff, at least I can say I tried to warn them.

I'd be reluctant dismiss the trends I've outlined above, whatever the emotional price. Many of my previous predictions have been accurate, about Obama and the designed-to-fail war strategy, just to name a few. But this blog wasn't created as testimony to my skills as an analyst, or to blast the co-opted mass media, but rather to influence others who might spread the word.

If you know anything by now, and judging from your visit to this blog you already know this, the mainstream media is not the place for the truth. The Web isn't necessarily a hotbed of intellectual truth, but it isn't a bunch of sanitized hogwash either. In my case and yours too I hope, I'll take honesty over untruth any day, substance over style, no matter how messy and ugly the truth.

The mass media isn't the only party at fault. Raising public awareness is a worthy purpose, but it's a task only achievable if the public gets involved. Today many won't vote today, believing their vote will only go to unsympathetic posers who care nothing for no one but themselves, despite the elaborate effort to pretend they offer real change, or constructive leadership.

The facts speak for themselves. Our present situation has come about in part due to the lack of political participation in our nation by its citizens. The corporate takeover hasn't come overnight but rather has been brought about by a series of gradual encroachments on our liberties and quality of life. The process hasn't ended and thus might still be abridged, but not if all the political candidates--the so-called "choice"--are controlled by campaign donations and the same corporate interests.

Going forward--in reverse

Our society may not be advancing just because our technology has. Some Web media tend to isolate individuals within a pantheon of largely consumption-oriented choices. Like basketball, connect with others who do. Consume something? Well, most everyone's brand has space on the Web. Like a particular celebrity? No shortage of that.

Most of the growth in Internet's popularity can be attributed to hyper-consumerism and celebrity worship rather than lofty intellectual goals. People may need real news, but they don't want it. Like a child, most Americans tune out the world, and our recent wars epitomize the individual's inattentiveness, their cultivation into consumers of the highest order.

Yet people can produce and grow by sharing their interests with others. Truth-sharing becomes a much more prolific endeavor when friends meet. People don't take kindly to bad news, and believe me when I say most of the news is bad (another lesson drawn from years of intensive news gathering.)

Rather than focus on truth and substance, style and image are massaged to give media viewers a perception of political candidates and corporations in their most beneficial light. This process is fundamentally dehumanizing--how can you alone have a relationship with a celebrity who will never know you? This obsession in entertainment is idolatry in its smoothest package offered to date.

People don't want the truth. To quote Jack Nicholson in A Few Good Men: "we can't handle the truth!" So we're offered a mostly mindless smorgasbord of meaningless media consumption chocies. Then we pretend we're different from others because our choices of consumption differ.

While geographically unlimited, and pentrating broadly, the Web hasn't reached its potential as a medium of communication, although twitter and social networking has utilized the Web in profound ways.

We've all heard about the perils of the Internet. Given the anonymity granted by the Web, our children are coached not to trust strangers. The speed and quantity of data can overwhelm--these are the negatives.

Positives of the Web include rapid dissemination of data, and the ability to circumvent conventional mass media. It's also a vehicle for content, allowing artists to work within the digital media and present to anyone with a Web connection and a computer.

The Web's a part of us now, tied to our collective conscious. When the Web works, we connect; our organic tapestry comes together. Web users have all known the feeling of friendship created online. People have been married, hired, murdered through it. Yes, that's right: the Web can be used for sinister purposes by people of ill intent, reflecting whom we are as a people whether saint or sinner.

At the same time, the Web is limited. We are bound by the proposition that into which we put our endeavors should come a corresponding reward, advancement, or personal gain. We can measure what we've accomplished with our lives only in others. Who will sing of our praises or even remember us if not for what we've done for them?

Many of the "things" (oh, yes, how many things) you think you cherished, you'll realized don't matter. Therefore it's a tragedy to see so many labor so hard to create not art but generate an attic full of things.

Our inner psyches would likely collapse if we had to face down all the petty obsessions (fixations, the Dalai Lama calls them) that drain our better selves. We settle for less because we believe that's all that we can have. Maybe a simpler and more agrarian lifestyle could slow us down. The hard work might set us free from the constantly accelerating world, one that surely spinning out of control.

I guess my time to look more towards myself and spend less time on others will come. But in some ways, I guess it's when we contract into ourselves that we begin to die not physically (although it can often manifest this way) but spiritually. Better to continue to keep an open mind, and connect with others, rather than lose that path on a road to individualism, a very American concept that may not serve us well into the 21st Century.

Bound by economic realities

I've focused on issues in the economy and financial system for the better of four years. Numbers matter, as do details like the ugly fact our government now has an unpayable quantity of debt. Yet the Federal Reserve threatens to churn out even more debt in the form of quantitative easing (QE 2).

Remember that every dollar that comes into existence brings with it debt-someone must be owed in order to spend any newly created money. Not by coincidence, that someone is a bank, who can borrow for free these days. The debt-based economy requires debt to grow. Eventually the quantity of debt (which is money!) will grow so large that the initial investors/lenders can't be repaid. In criminal law it's called a Ponzi. In our financial system, it's legalized fraud. The scam works fine until people don't pay enough in taxes (put new money into the Ponzi), then the debt begins to debase the currency itself.

The exertion of corporate influence over government policies brings very real risks to the financial system. Like Greece or Argentina, a sovereign debt downgrade could wreak havoc on financial markets. The risk premium paid to non-government issuances could further hamper corporate borrowing and economic activity. Like a Third World nation, Americans would have to turn to foreign sources of borrowing, and submit to the will of international bankers once public debt becomes unmanageable.

By the way, I am watching the mortgage mess, which is more accurately described as lender fraud PLUS misrepresentation (a term with criminal implications in the field of securities litigation.) The banks misrepresented the mortgages that they sold to investors, being that the banks didn't observe the proper chain of custody over the documentation required to transfer ownership. The robo-signatures on fraudulent foreclosures are therefore only a part of the much larger problem of identifying who holds legal title to the properties, and thus defining exactly how much control investors in the mortgage securities retain vis a vis the banks who sold them.

Banks aren't lending. They're risk averse, like anyone whose got something to gain from the status quo; or anything to lose by change. The federal trough runs so deep the pigs' snouts are buried in it, lapping up the future tax debts while ignoring the public interest or any sense of morality. Of course the best example are the consultants quite literally ringing the capital city who make a living from the war machine and corporate contracts belching forth from our capital.

Hands off my gov't paycheck

There might be more hope if not for the fact so many have been dumbed down. I live in a town that once had jobs for plenty. Economically, I'm surrounded by people who know not what will come tomorrow nor have they prepared for it. The lack of education carries most of the blame, or to be more accurate the lack of respect for the power of learning. Like poverty, this attitude gets passed on down generations, boosted perhaps by disdain for the better educated elite.

First to go must be the presumption that a public high school degree will cut it in the 21st Century economy. The public school process does institutionalize stupidity by not challenging younger Americans. High school graduates simply aren't competitive in the global economy. I'm shocked by how deficient many Americans' writing skills are--most read at a middle school level.

Many here have parents who worked steady Industrial Era jobs, and have been able to live a reasonable quality of life...'til recently. Yet the future is going to be much more dependent on self-starters, with good communication and money management skills.

There will of course be people still working the trades and other occupations who might not think they need anything like that. But who among them doesn't have debts to pay, or investments to build and track? If we are indeed in a "YOYO" Economy (Your On Your Own), then shouldn't people be taking more responsibility over their retirement?

Don't think for a second that Social Security will be enough, or that Medicare benefits will continue in their present form. The money is running out. And a Republican victory will mean more cutting of social services, especially considering they're too weak to cut war spending (perhaps because that requires acknowledgement of its ineffectiveness?). And even if they can lower taxes--inherently good--the Republicans will simply be delaying and worsening the eventual fiscal reckoning.

We all need to come together, first to inform one another and acknowledge the problem, then take action. It begins with each of us, and the desire to become informed about issues that effect us. Without the assertion of self-responsibility, I don't see how our society can advance, much less not fall backward if for no other reason than how it--if taught, monitored and enforced--can benefit the collective good--a term I seldom here any more.

Our society has become boomers on steroids. We want to get as much for ourselves as we can, before the clock runs out. The only question is whether Earth's clock will run out before, or who will seize control of the world's last resources?

Yes, it really comes down to the rat race and humankind's descent to it. Does any empire have the chance to outlast time? In the waning days of every Empire, the periphery weakens as resources are plundered and profits repatriated to the capital. Imperial power may erupt from the inside out but economic decline begins on the outside and works its way in.

American-style consumption of Earth's resources simply won't continue. Already, we've got such huge trade deficits, and we're exporting so little that we can only offer more shiny pieces of paper to overseas creditors, who export things upon which we've come to rely.

Just how safe is it to presume our way of life will be forever there for us? Economic turmoil could easily create an intense transition overnight.

Prepping

I'm taking the steps toward being prepared. No, I don't plan to hole up in some bunker somewhere. Survivalists and preppers are two distinctly different breeds.

As my movie reviews a few months ago showed, so much of our present day preoccupation with the Apocalpyse is based on dominating others. The message: be strong or a victim. A true crisis could actually be better met by cooperation and communication among the affected. For everyone to hunker down may be a necessity but for a short time. Human contact will be restored. Violence is really the antithesis of this approach--killing people probably won't bond you to others. So don't fight, I say, unless your being attacked. I wouldn't raise a weapon in defense unless I were forced. And, yes, while they're times when you might be forced to protect yourself, your property, or others, those encounters are far less likely to happen if you're prepared.

While using firearms may sound good, and self-defense is necessary, I'd argue firearms have no place at the communal fire except when the group is threatened by outsiders. Take the Swiss, for example, who require military service from everyone, not to secure some corporate goal or spending trough, but for the collective defense. I can't buy into this Lone Ranger, John Wayne-type concept of holding out against the vampires like Charles Heston in The Omega Man.

No economy operates in isolation. People will adapt to changing economic opportunities and limitations. Our future will be shaped by who you know and key skills. Survival requires partnerships with people, trust, and sharing resources. Trade and immigration won't stop; they'll simply shift from place to place. Taking one threat--ecological changes--back in human history and you'll see astounding distances that were travelled. We're an adaptable species, of that we can have no doubt.

We are bound by our physical needs. As nice it is to cater to intellectual pursuits, at some point we must consider our circumstances. Just think of what it'd be like without fully stocked supermarkets, or gas stations. I don't want to fearmonger but rather deprogram you. We Americans assume that our elaborate distribution systems will be there for us 24/7. They won't. Sooner or later, the corner store won't be open, store shelves will empty, or the opposite: prices could shoot up.

My wise readers need to contemplate what to do under various scenarios, so as to not be caught totally unprepared. Have a supply of water, a water filter, and enough canned food to last a month or two. Better yet, look to create renewable sources for food and energy.

Prepping has both logistical implications but also a softer side: the aspects that make community agriculture, barter, and re-localization viable. Until people are willing to rely/trust/use local sources, chances are they'll be inadequately developed. Self-sufficiency is an action-oriented goal--people in your town need to do specific things to get results. If they simply rely on the present situation, they'll be at the mercy of food conglomerates and monetary systems beyond their control.

The key is to start. Small is OK. Do something to prepare for the possibility of a crisis. Don't horde costly you may never use. What's more you want a sustainable path; once everyone begins to hoard, stocks will be depleted to the point buying large quantities from retailers in the future won't be possible. Another reason not to horde is that much of what is bought won't be used. Purchases should be limited to things you'll consume anyway.

While planning for a worst case scenario can be good, if for instance #2 below happens and you live west of the Mississippi and can't fly out, you're done anyway, so why care? Better it is to assume something less than total destruction. Perhaps an intense but brief economic crisis is something most easily prepared for. Food supplies might shrink but in a few months could be restored. A fuel embargo--not on the list--could aggravate and lengthen a crisis, but in time it would end, like most all the causes listed below.

Many kinds of future crisis may be short-lived. Others could be entrenched and lasting, like the devaluation of the dollar. Here are my big seven:
1) Coronal Mass Ejection (CME). Been researching this one. Could wipe the Web, digi-comms, etc..
2) Earthquake. Could be Yellowstone caldera like the movie 2012 or something in New Madrid or California.
3) Tornado. Probably localized.
4) Nuclear accident. I've written on the fallibility of the nuclear power from sourcing to use and disposal. [Potassium Iodate is recommended.]
5) Civil disorder. If enough people get unhappy enough, they could loot and pillage.
6) Flooding. Likelier due to unconstrained sprawl and deforestation plus more erratic rainfall/bursts.
7) War/Terror strike. Any terror strike will justify the state's monoply on use of force, seizure of liberties, etc.. More than a hassle issue if you happen to be a targeted subgroup, or caught on the transport grid away from home.

Lastly, don't be worried about everything that could happen--it's a waste of energy. Simply consider the implications of various events for the purpose of prepardeness. One result of the planning process could be the gradual accumulation of silver or other physical stores of durable value, as inflation might be the most likely. Don't spend too much as a crisis might never happen, then you'd look like a jackass.

Provisioning Lifeboats

Agrarian societies may play well into a resurgence of lifeboats, places where people can come together in communal self-support and live a sustainable lifestyle in a barter-oriented economy.

The idea is that should some crisis arise, people could transport themselves to another area where they've already established a network of CSA's (Community- Supported Agriculture) hubs. If people can generate agricultural goods, they can build for themselves a level of food security not possible in an economy built around Big Boxes and long-distance (and thereby fuel intensive) delivery. By acquainting themselves with the products peculiar to their region, people can support each other while reducing dependence on imports. If money is spent outside the community, it will only benefit outsiders.

It could take a good amount of time to establish a lifeboat. Included in such a scenario would be the following:
1) Educational system: avoid forced Big Pharma vaccine programs and the threat of autism.
2) Water. Hopefully devoid of Pharma run-off as many prescription drugs don't break down in the body.
3) Food. Not knowing what's used to grow what you eat can be dangerous. Better you grow it or face frankenfoods (about which government will do nothing to protect you from Big Agra and their toxins.)
4) Energy. Will need affordable and sustainable sources. Biodiesel has a lot of appeal; solar/wind will be huge.
5) Permaculture. Make renewal a key functional goal of community farming. this way, don't need as many petrochemicals/fertilizers.

Note to readers

Always like writing on the 1st of the month. Gives me a chance to be first. You may have noticed I've cut back on my blog frequency to about once a month.

Writing is art. So I've enjoyed my artistic allotment here, which has been no small thing in time and effort. Continuity in writing over extended periods with no pay is challenging. Yet I consider the effort well worth the reward. By writing, I can expose my observations then create as part of my artistic complement through the written word.

Economics might be seen by many as too dry a topic to be art, but remember science has its place in any display of art. No art form can exist outside its medium, no statute lean at such a tilt as to defy gravity, nor no painting recreate the sound of a horse's clicks on cobblestone.

Art is bound. Forces constrict it. No amount of creativity can overcome objective rules and limits. Compromise is a necessity as is awareness of one's limits in trying to explain things, which I see as a fundamental purpose of expository writing.

Like the Indiana painter T.C. Steele, I like to see nature around me. Whereas he caught his subjects with pen and brush, I seek to capture many of the same landscape scenes he did through photography. I don't know how well I'll be able to achieve that task but its a goal I'll savor.

I'll be working more on my photography in the coming years, as well as archival work on others' pictures.

While I doubt I touched on many lives, I know I did change the way some people see their world. And the exercise of blogging provided distinctly personal benefits; it's quite an accomplishment to stick with any challenging task over the long haul.

If the mission is therefore to inform, this blog has done that well. Whether you paint, or write, or express yourself in any form, you'll come to experience art as a very personal, inward journey, whether broadcast across the Web or sealed forever in personal diaries.

You'll know you're coming to the end of an artistic adventure, assuming you've applied yourself fully. The end to the inquiry could come years after you set out on your journey. When you get back, no matter how many lives you've contacted, you'll find that it about you that you've learned the most--about your limits, aspirations, and priorities.

As I learn more about the ways of the world, I desire to shrink from it, to get closer in touch with the environment-Earth. We all need to forge a relationship with our Maker, I believe. Our origin is found in Nature, so to know one's self, one needs to come into close contact with their natural world.

I've said we need to come closer to our physical environment for some time now. Fortunately we have a path towards sustainably on the North American continent offered by its Native Peoples. The Iroquois revere the Snake, as they say its a holy creature because it spends its time next to the Earth. Their Snake Dance pays homage to the Snake and Mother Earth, forces they see as unshakable.

I don't think society can shrug away the passage of time, like the Amish, whose numbers are actually growing. Luddites seek to shun the technology that the passage of time brings. They see the expenditure of energy on things modern better be directed elsewhere, like into the Earth. Maybe their escapism should be seen not as a step backward but the realization that the passage of time and adoption of technology don't improve us, or make us any better people.

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