History

One cannot under estimate the power of imagination. Barack Obama has captured the hopes and dreams of a nation and a people. This can be seen in just the number of people who have come to see the first black president sworn-in. http://news.yahoo.com/s/ap/20090120/ap_on_go_pr_wh/inauguration_scene

It is truly amazing that Martin Luther King’s prediction that this event could happen in 25 years but probably in 40 years. Forty years from that prediction in 1968, Barack Obama is elected. We have truly come a long way. We do have a long way to go in order to have open and honest conversations about race, and economics, but today we have at least answered part of the dream that we are capable of judging someone by the content of their character not by the color of their skin. It is a great day, and one that will change our views of the world forever. We cannot underestimate this moment, nor should we.

Several of things come to mind as we go through this day. We have elected a man with a Middle Eastern background, who has been raised with Muslim and Christian backgrounds. There will always be those (of any race) who use race as a divisive tool, but today we know that race should no longer be a discussion as a barrier to opportunity. As my grandmother use to say “we have bigger fish to fry”, and as a country we need to focus on the right things and be ready to make choices that are not based upon feel-good politics, but reasoned approaches to solving difficult problems. Not everyone will be happy.

I hope that several things that President Obama mentioned in his speech come to pass. The most important is the cutting of programs that do not meet their objectives. He singled out several such as social security, Medicare, overall health care, and Home Land Security. With the exception of Home Land Security, these programs have been under scrutiny for over 30 years and have not been reviewed, reconditioned, or even modified. Let us hope that we can address issues such as people owning and controlling their destiny. If people make mistakes, then they must live with the consequences of their actions. This is contrary to what we the people have been seeing happen to those in leadership positions. United Airlines, the Big 3 automakers, Wall Street, all have dodged the proverbial bullet, and have not had to live with the consequences of their actions. If you or I went to the bank and took 500 dollars from the till, we would be in jail with killers and rapists. Madoff is not in jail for bilking billions, he is under “house” arrest in his 7 million dollar apartment. This is what makes people upset.

We are an amazing country, in that we can look past things that have divided us in the past and move forward with new visions. Let us continue this move forward and begin tackling the hard issues and not waiting for someone else. It is not their responsibility it is ours.

U.S. Seeks Rest of Bailout Cash

The definition of insanity

We have to be insane. We keep doing the same things over and over again and expecting different results. Maybe if we just keep dumping money that we do not have into a poorly run organization that has overpaid their executive teams for years, things will get better. In their Wall Street Journal article, Deborah Solomon and Damian Paletta write that, our president “on behalf” of the incoming president has kept alive a program that most seem to believe is a failure. http://online.wsj.com/article/SB123177778175873781.html

In my non-scientific polling and based on the results of the wall street journal poll most would give the program a failing grade. Why? The government is continuing upon its standard course of a poorly defined vision (clear ones alienate some constituents), a complete lack of accountability (someone may not get voted in next term), and a completely missing objective (other than fix the economy). Our objectives are so vague is it any wonder that we cannot seem to get our arms around the problems, and we cannot seem to make difficult choices because they are painful. Wait, isn’t what everyone is enduring now painful?

Lack of a clearly defined objective

What do you want for lunch? Most people struggle with this very simple question every day. If you really want to get confused, ask a consultant what to do for lunch and you will get 5 different options. It’s not the consultant’s fault, it is his/her job to offer options and not express strong opinions either way. If lunch is an issue, then what to do when things get a little more interesting? If there are 50 people offering 50 different solutions to your financial problem and 15 of them even sound like they could offer a solution, what do you do? The mistake is not being specific enough. The more specific something is defined the better the likelihood of a solution. We keep refusing to go below the “fix the economy”, or “fix mortgages”. Politicians are experts at redirecting us back up so they can offer solutions that are both nebulous and undefined. This method allows for when something does not go as expected it is not their fault, and if anything goes right they can take credit.

What does this have to do with the current economic and geo political situation? Everything. There are no clearly defined issues, therefore no clearly defined solutions. We wander through a morass of nebulous thinking and feel-good solutions. As long as everyone feels good about the solution then everything is fine. This is why we have not found Bin Laden, addressed a crumbling infrastructure, not funded some programs such as “no child left behind” and over funded others such as the war in Iraq. Individual members of the House and Senate are not accountable for granting themselves pay raises and only stop when they think the American people would not “feel good” about giving them a raise, like right now. The vote to not allow a raise had nothing to do with fiscal responsibility but how they feel we will feel about the situation. There is not an objective to balance the budget, control spending, or invest in industries that will take America into the future. Short term thinking and plans allow this behavior to continue.

We need clearly defined objectives; this means that we have included clearly defined measures for success. You get what you measure and compensate. People (that includes Senators, Representatives, Presidents, and business leaders) behave accordingly. Unfortunately if you measure and compensate differently, then you get what you reward. This is has been proven by behaviorists for decades. We have been rewarding our leaders on only single measures. In politics, how much money can you generate for the party committees? In business how much stock price gain? These measures are not balanced with anything. Until that changes we will continue to complain.

Lack of a well defined plan

Problem Solving 101 requires you to clearly identify the problem BEFORE the solution is contemplated. Right now there is 350 billion dollars of a solution looking for the problem. Bush and Obama are demanding that congress release those funds, but to whom? How will these funds be dispersed? How will they be accounted for? Will these funds be paid back or are they a gift? If a gift, I would like some of my money gifted back to me. I digress, the problem has not been clearly identified, and we are throwing money at an area we know is problematic and hoping that something miraculously solves our dilemma. Hope has never been a good strategy. It is a fundamental ingredient for success by providing the drive to identify the problem and a solution. The problem of the banks not lending is a banking problem. While getting to play with someone else’s money is a great thing, they are playing with our money and lending it back to us. This is smart for the bank, not so much for the American people. Where is the 50 billion that went to Bank of America? It was for loans. We could have paid off all of the mortgages between the Appalachian and Rocky Mountains. I think that would have been a better use of the money than the black hole things are flowing into today.

Let the American people figure out how to spend this money. Invest in them, pay off the mortgage, and see where the extra money is invested. I bet we start doing amazing things such as going into space, fixing the bridges and roads, or even correcting the educational crisis that is affecting millions. I am sure that it would even create a few jobs.

Lack of accountability

Obama’s choice for the Secretary of the Treasury, Timothy Geithner, has many concerned. They should be. Why would you put someone who will be heading the IRS in place who is in trouble for not paying his taxes? While I am for the abolition of the IRS as much as anyone, the arrogance in choosing the highest ranking individual to oversee the department of the Treasury reflects the lack of thought to the repercussions of the choice. At this time we need people who can think of solutions, understand the impacts of those choices, and be able to look in the mirror afterwards. At this time we are lead by committee, and no one individual (with the exception of the president) is called to task. It is always Congress (which side, the House or the Senate?), and is it one, several or all of the members? If a democrat has a good idea, must all republicans automatically reject it publicly and then vote for it as if ashamed? There are serious problems facing this country, and thus creating serious problems for all who live and work here.

The lack of accountability is prevalent in the spending bills that, by the time the pork is finished, the bill that would actually have done something positive becomes unrecognizable. We do not make projects stand on their own merit, nor do we hold those managing them to be accountable. That does not mean that if someone makes a mistake that they are immediately crucified, which is too often the case today. People make mistakes. We must be accountable to the solution as well. Did we contribute to the situation, and what is our level of accountability? The American people are responsible for the situation today. Our votes and lack of participation have allowed the current environment to flourish. We can fix it. It will be difficult and we must come together in order to affect real change. If we want control in our lives we must first take responsibility for ourselves and then hold others to the same standard.

What can we do?

Each individual must understand their role in the overall situation. I find many interesting corollaries in history that tie today to the periods before the French, American and Russian revolutions. The excessive taxation of the populous contributed to all three revolutions. These did not happen overnight and each would have been avoided with different choices by the leaders. Today, many disillusioned individuals are joining more radical parties such as the National Socialist Movement. This dangerous trend is demonstrating the key problem of letting something other than reason govern actions. These parties play on the fears of individuals with key topics much like the democratic and republic parties have done in the past.

Make a study of a particular problem that is important to you. Study it, read for 1 hour a day and gather information on that problem. At the end of a month you will know more enough about the situation to make a meaningful choice for action. Develop a personal plan for affecting others into building a group plan. Then take things one step further and assign tasks and hold people accountable for executing the plan. Lastly don’t quit. Things will go wrong, the situation will change, be willing to adapt and know when your objectives are being met. This is not rocket science, but it can be difficult. Keep on track and measure your success. We can fix everything, one step at a time.

The Financial Services Bubble Burst

First there was the .com bubble...

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First there was the .com bubble, then real estate, then our credit markets. How do all of these things relate? Simply in people's desire for the easy way to be rich without the understanding of the sacrifice necessary. Thierry Magon de la Villehuchet, who recently took his own life, understood this concept including a few others such as honor, integrity, and courage. http://www.bloomberg.com/apps/news?pid=20601087&sid=aSZkOg5o2apk&refer=home

The SEC could not have protected anyone from this...

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Unfortunately, he paid the price of not doing enough due diligence and relying upon a government agency to do the job many thought it was assigned. The SEC could not have protected anyone from this anymore than the FDA is stopping the toxic insertion of products into our foods and medicine. Remember the dog food, baby formula and lately heparin? We as the public have made two critical errors that have allowed these things to flourish. The first is we have turned our responsibility to of due diligence over to our government and thus in turn over to other governments. The second is we are no longer holding individuals accountable for their actions.

Continuous advancing returns even in down markets...

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Mr. Magon de al Villehuchet placed his faith in a flawed system, and did not do his own due investigations into the investments that made many rich. Why should he? Continuous advancing returns even in down markets. What could be better? Why are we blaming the SEC for not protecting us from our own folly? The SEC is there to only govern the reporting of results, not to ensure that fraud isn’t taking place. They have never had either the resources or the talent pool to execute that mission. In order for departments like the SEC, FDA, and EPA to adequately police an industry, the number of qualified people to execute that mission will need to substantially grow, and consequently taxes will have to be raised to cover the costs. Or we can look to people to take care of themselves as they have always done in the past. Did anyone visit the offices of the Madoff companies? Did they ask to see the products or even did they use the services to see the quality of the investment? Did they investigate any further than the meeting in the Hamptons? Of course not. As many of us do, the investors get a tip that this stock or that stock is going to do something, and they buy, not for long term gain, but for the quick return. This is the dark side of greed where we want something for nothing and end up paying the price plus interest. There is not enough government oversight possible to prevent very resourceful individuals from taking advantage of others.

These advisors trusted when they should have been skeptical...

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The one thing that must be clear is new legislation will not solve this problem. Congress believes just because there is a law that the problem is solved. The one thing that must be taken away from all of the events is the use of reason and to reduce the emotional aspects of our choices. Let's look at social security. A bankrupt program that punishes the poor, but is protected by fear. Verify death rates, poor vs. wealthy, and see who lives long enough to see retirement. Madoff played on that fear. Not being able to show a large enough return, our choice for outsourcing our thinking as well as our manufacturing and the desire for the new car combine to produce a compelling picture for the investment advisors. A guaranteed return, continually advancing profits. A sure thing. These advisors trusted when they should have been skeptical. While things are going well they do not have to look too hard. We must look at our choices about where we purchase products, what we expect of our leaders (business, government, spiritual), and understand that we will have to pay the price for our decisions. How expensive that is will truly be up to us.