For a couple of years now people have asked me why I am so deeply concerned about the economy (though it has become self-evident in the past year why I was in an economic funk). I have normally answered that with our leaderships out of control spending and lack of restraint even an entrepreneurial revolution in the US would be choked by the massive debt we call the US Federal Deficit. I have been told I am "crying wolf" and our deficit as a percentage of GDP isn't so high historically, but for some context from someone who should know read the following quotes from David Walker, former head of the Government Accountability Office, the nation's auditor-in-chief.
"Our off balance sheet obligations associated with Social Security and Medicare put us in a $56 trillion financial hole—and that's before the recession was officially declared last year. America now owes more than Americans are worth—and the gap is growing!" Walker follows with further context: "Our $56 trillion in unfunded obligations amount to $483,000 per household. That's 10 times the median household income—so it's as if everyone had a second or third mortgage on a house equal to 10 times their income but no house they can lay claim to." As for this year's likely deficit of $1.8 trillion, Mr. Walker suggests its size be conveyed thusly: "A deficit that large is $3.4 million a minute, $200 million an hour, $5 billion a day," he says. That does indeed put things into perspective. When asked if there was hope on the horizon for reform he said the following:
"We have four deficits: a budget deficit, a savings deficit, a value-of-the-dollar deficit and a leadership deficit," he tells one group. "We are treating the symptoms of those deficits, but not the disease."
Mr. Walker identifies the disease as having a basic cause: "Washington is totally out of touch and out of control," he sighs. "There is political courage there, but there is far more political careerism and people dodging real solutions." He identifies entrenched incumbency as a real obstacle to change. "Members of Congress ensure they have gerrymandered seats where they pick the voters rather than the voters picking them and then they pass out money to special interests who then make sure they have so much money that no one can easily challenge them," he laments. He believes gerrymandering should be curbed and term limits imposed if for no other reason than to inject some new blood into the system. On campaign finance, he supports a narrow constitutional amendment that would bar congressional candidates from accepting contributions from people who can't vote for them: "If people can't vote in a district not their own, should we allow them to spend unlimited money on behalf of someone across the country?"
These remarks and those from others I respect are the reason for my pessimism. I hope and pray for men and women of courage and integrity. I see no reason for optimism short of a reformation in the hearts and minds of our leaders who choose to serve and submit to the love of others over self.
I love it when people tell their story in a clear and articulate manner. I'm saddened when the perception is one that leads to the conclusion Ricky Gervais arrives but this is real life for the majority, not the minority. If Ricky were a new acquaintance or your child's friend from school what would you say to him? He could have a place at our families table but it would be frightening with my four young kids. Would we have a grand conversation or be more like his mom shushing him to change the subject? Our kids will share meals with the Ricky's of this world. Are they ready?
Before you lose your mind and begin to think I am becoming political in my writing I want to assure you I am not. That being said I am amazed by the amount of energy and TV air-time being spent on the issue of President Obama and the Congress' health care solutions. Obviously this is something citizens feel very strongly about and debate is good. Yet as I listen I am wondering where the thought of loving your neighbor has gone? Not supplying healthcare to everyone 'just because' it is too expensive is not the reason not to do it. However, working together as a country to truly address the broken nature of insurance, government and health delivery is something worth shouting and organizing around. It appears most wealthy and well insured want to keep what they have at their employer and many self-employed or under-employed would like to have coverage or greater access for their families but just cannot afford it. Is there a comprehensive answer to this delimna?
On my last trip to Africa our group came away with the conclusion that most of the good health and community care was being accomplished by the church and faith based community. Men and women who chose to serve others and give freely of their resources were changing lives and communities. Usually this happened on a community by community basis and those who were served were generally grateful. Yet all of this was voluntary and the men and women giving of their lives and living well below their financial aptitude were filled with purpose and joy - though their lives were not easy.
Where is that drive in our health care debate showing a concern of others first? Not by forcing collection of taxation and redistributing wealth, but men and women of good faith giving of themselves and the church organizing around this issue. Not advocating for more or less government but working through the problem. I have served on the board of Mercy Health Services in Franklin, Tennessee (mercytn.org) where a model for child health care is being created and lived out every day. No government money is spent. No taxes necessary. Yet getting the community to voluntarily give their wealth to care for children is difficult. Perhaps because current taxes and compulsary fees leave little to give?
We can care for one another without a government program, but in a fallen world where sin abounds God has given us civil government to check those who would line their pockets at the expense of the poor. Perhaps that is why so many have gotten behind Obama and his system of care? Maybe in a post-Christian culture the needs of the least have gotten lost in the pursuit of 'more' and now laws must be created to stay the covetous hand of man? I have heard it said cutures reap what they sow. Just thinking!
I am encouraged the emergent church is maturing and committing to issues of justice. Their energy and heart for God are another sign of the coming of THE Kingdom! Here's to praying relative Orthodoxy leads to practical Orthopraxy.
Today I read an article at Marketwatch.com that is offensive to the world view I propose God has granted his followers. I would suggest following this articles instructions would create just the type of world he says is coming...one of scarcity, fear and The End of Civilization because he implores you to act "uncivilized" as a first, not last, act.
I propose there is greater poverty in Paul Farrell's world view than the one that would come for the men and women who follow the Golden Rule which is the antidote to this poverty of life and thought.
Paul B. Farrell
Jul 28, 2009, 12:01 a.m. EST
Surviving the 'End of Civilization' 2050
Six rules for investing in the worse-case scenario
ARROYO GRANDE, Calif. (MarketWatch) -- In his 2008 bestseller, "Wealth, War and Wisdom," hedge fund manager Barton Biggs warns that investors must "assume the possibility of a breakdown of the civilized infrastructure."
And to prepare for a breakdown of civilization, "your safe haven must be self-sufficient and capable of growing some kind of food ... It should be well-stocked with seed, fertilizer, canned food, wine, medicine, clothes, etc." Bloomberg Markets suggested that by "etc." he meant guns, as Biggs added "a few rounds over the approaching brigands' heads would probably be a compelling persuader that there are easier farms to pillage."
The end of Wall Street
Chapter Three: This final chapter of the crisis on Wall Street tells the story of the $700-billion bailout, as seen through a reporter's eyes, and looks at what's ahead for the global economy.
That warning's not from a hippie radical. Biggs was a respected Wall Street guru at Morgan Stanley for 30 years. As the chief global strategist Institutional Investor magazine put him on its "All-America Research Team" 10 times. Smart Money said: "Biggs is without question the premier prognosticator on the international scene and a mover of markets from Argentina to Hong Kong."
Biggs is advising America's wealthy elite. But what about Main Street Americans? Investors often ask me where to invest today, even Bogleheads and investors committed to the Lazy Portfolio strategy. They see the Goldman Conspiracy manipulating this rally. That worries many.
What do you believe? What value do you give to "the future." First, answer these three questions: What's your investment strategy if you know you might die on Dec. 21, 2012, or possibly this year after getting a negative diagnosis from an oncologist or maybe not till 2050 when the United Nations says global population will be 50% higher (from 6 billion now to 9 billion), while demand for energy, oil, gas and coal doubles and the global supply of those commodities remains relatively constant.
Disaster films, terminal illnesses, 2050 and 'The End'
Behavioral economists have answers. But your gut's also good at predicting. So here's what you'll likely do:
You'll go see the new disaster film, "2012" about the end of the Mayan calendar. After all, it's by the same director who "destroyed" the earth in "The Day After Tomorrow," "Independence Day" and "Godzilla." No new investment strategies, but a must-see film, a great catharsis and distraction.
If you had a terminal illness, the future is here, now. There's no tomorrow. You're concerned about protecting loved ones and future generations with what you have, and enjoying time with them.
But how to invest for the "End of Civilization" coming around 2050? The next 40 years will be confusing: Accelerating struggles between aging populations and disenchanted youth, soaring commodity prices, global warming, peak oil, food shortages, famine, blackouts, rationing, civil disorder, increasing crime, worldwide jihads, riots, anarchy and other dark scenarios of a tomorrow with "warfare defining human life."
Yes, that's how doomsayers label the worst-case scenario. It also must be what Ultra-Conservative-Guru Biggs worries about in his darker moments.
So back to the question: What will Main Street investors do? Here again, even with the planet's survival threatened, they'll go watch "2012," be entertained, experience a catharsis, feel relieved, and afterwards, have dinner, slip back into denial. And later, they'll vote against anything that offers solutions to future problems, especially if it raises taxes.
Why? Very simple: Our "Brains Aren't Wired to Fear the Future," writes New York Times columnist Nicholas Kristof. We're wired to respond to crises, while pushing off the real big problems (health care, Social Security, etc.)
That's basic behavioral economics: Over tens of thousands of years, evolution has programmed our brains so that collectively we will behave counter-productive with the future, making an "End of Civilization" scenario inevitable, a foregone conclusion, a self-fulfilling prophecy. Why? Because our brains are handicapped, we are literally incapable of acting soon enough to solve the problem.
Six simple rules
But there must be a very small percentage of you out there with a desire to make your remaining days on Earth as pleasant as possible for you and your loved ones. So here are "Six New Rules till the End of Civilization 2050." If they don't scare you, hopefully they'll amuse you. Or better yet, wake you up, maybe get you into action ... before it's too late ... before your grandkids are fighting over what little is left:
1. Greed is really good
Yes, if you are going to follow the same advice as the rich, you and your family always come first. Grab more than your share, many times what's fair. No remorse, because 2050 is coming sooner than you think. Create a protective wall of money and resources that will make whatever time's left as comfortable as possible.
2. Invest in Goldman Sachs and its Wall Street co-conspirators
Seriously, these guys are the poster boys for the word "greed." The Goldman Gang, Goldman Conspiracy, whatever you call them, these guys just took control of Washington and the Treasury; their rapid recovery is proof that "greed is great." Do what they do. Amass as much capital and goods as possible, ignoring the rest of us, then cruise to the finish line.
3. Frugality, stockpiling, hoarding
"The Millionaire Next Door" says it's very simple: "Frugal Frugal Frugal! ... Millionaires live well below their means ... Being frugal is the cornerstone of wealth-building." That way you can stash away lots more for later when the going gets rough, when others attack to get what you've stockpiled.
4. Return to your roots
Remember Biggs' advice about subsistence farming. Survival instincts and personal ingenuity will be your best investment. Your family could be without electricity, water, gasoline in the final days, so keep "well-stocked with seed, fertilizer, canned food, wine, medicine, clothes, etc. Think Swiss Family Robinson."
5. Global warfare, plus ammo and guns
Five years ago Fortune did report on the "Pentagon's Weather Nightmare." Yes, the military warned of "the mother of all national security issues" as "the planet's carrying capacity shrinks, an ancient pattern reemerges: the eruption of desperate all-out wars over food, water, and energy supplies." So invest in the defense industries America needs as the rest of the world reacts more to our greed.
6. Accept death
Back in 1973, my first year at Morgan Stanley, I read Ernest Becker's brilliant Pulitzer Prize winner, "The Denial of Death." Today his message is even more powerful: Yes we will all die, tomorrow. But to enjoy the days left, you must accept death today ... accept even now as behavioral economists warn us that our brains are our own worst enemy, as well as the planet's, for we are on a self-destruct path of no return.
Parable at the Pearly Gates
Too macabre for you? So you don't miss the satire, here is a final message, in the spirit of Milton Berle's classic movie, "Always Leave Them Laughing." It's from USA Today, told by that great comedian Carol Leifer:
"Mother Teresa died and went to heaven. God greeted her at the Pearly Gates. 'Be thou hungry, Mother Teresa?' asked God. 'I could eat,' Mother Teresa replied. So God opened a can of tuna and reached for a chunk of rye bread, and they began to share it. While eating this humble meal, Mother Teresa looked down into hell and saw the inhabitants devouring huge steaks, lobsters and pastries. Curious but deeply trusting, she remained quiet.
"The next day God again invited her to join him for a meal. Again, it was tuna and rye bread. Once again, Mother Teresa could see the denizens of hell enjoying lamb, turkey and delicious desserts. Still she said nothing.
"The following day, mealtime arrived and another can of tuna was opened. She couldn't contain herself any longer. Meekly, she asked, 'God, I am grateful to be in heaven with you. But here in heaven all I get to eat is tuna and a piece of rye bread, and in the Other Place, they eat like emperors and kings! I just don't understand it.' God sighed. 'Let's be honest, Teresa,' he said. 'For just two people, it doesn't pay to cook.'"
So, cheer up, maybe the "End of Civilization" won't be all that bad, even for Wall Street, if you take Barton Biggs advice and stock up on something other than tuna and crackers. END
I propose there is greater poverty in Paul Farrell's world view than the one that would come for the men and women who follow the Golden Rule which is the antidote to this poverty of life and thought.
Like that bewildered savage who has picked up a strange object… perhaps something thrown up by the sea, perhaps disinterred from the sands or dropped from the heavens…an object intricate in its convolutions, which shines first with a dull glow and then with a bright shaft of light…who keeps turning it over and over in his hands in an effort to find some way of putting it to use, seeking some humble function for it, which is within his limited grasp, never conceiving of a higher purpose…
Chad Kyojun Kleitsch
So we, too, holding art in our hands vaingloriously considering ourselves to be its master, undertake brazenly to give it direction, to renovate it, reform it, to issue manifestoes about it, to sell it for money. We use it to play up to those who possess power. We employ it at times for amusement—even in music-hall songs and night clubs—and also at times, grabbing hold of it however we can, for transient and limited political and social needs. But art is not desecrated by our carryings-on. It does not lose sight of its own origins because of them. And each time and in each mode of use it sheds on us a portion of its secret inner light.
But can we embrace all that light? Who is there so bold as to proclaim that he has defined art? That he has enumerated all its facets? Yet perhaps in ages past someone did comprehend and define it for us, but we grew impatient: we listened in passing and paid no heed and discarded it immediately in our eternal haste to replace even the very best with something else just because it is new! And then later on, when what is old is restated, we forgot that we heard it before.
One artist imagines himself the creator of an independent spiritual world and takes on his shoulders the act of creating that world and its population, assuming total responsibility for it—but he stumbles and breaks down because there is no mortal genius capable of bearing such a load; just like man, who once declared himself the center of all existence but was incapable of creating a balanced spiritual system. And then, when failure occurs, it is all blamed on the external disharmony of the world, on the complexity of the shattered contemporary soul, or the stupidity of the public.
Another artist realizes that there is a supreme force above him and works away gladly as a small apprentice beneath God’s heaven, even though his responsibility for everything he draws or writes and for the souls which perceives it is all the more strict. But still: it was not he who created this world, nor is it he who provides it with direction, and he has no doubts of its foundations. The artist is only given to sense more keenly than others the harmony of the world and all the beauty and savagery of man’s contribution to it—and to communicate this poignantly to people. And even in the midst of failure and down at the lowest depths of existence—in poverty, prison, illness—the sensation of a stable harmony will never leave him.
However, all the irrationality of art, its blinding twists and turns, its unpredictable discoveries, its soul-shaking impact on people are too magical to be contained within the world-outlook of an artist, in his conception or in the work of his unworthy fingers.
Harrison Mitchell
Archaeologists have not yet discovered any stage of human existence without art. Even in the half-light before the dawn of humanity we received this gift from Hands we did not manage to discern. Nor have we managed to ask: Why was this gift given to us and what are we to do with it?
And all those prophets who are predicting that art is disintegrating, that it has used up all its forms, that it is dying, are mistaken. We are the ones who shall die. And art will remain. The question is whether before we perish we shall understand all its aspects and all its ends.
Not all can be given names. Some of them go beyond words. Art opens even the chilled, darkened heart to high spiritual experience. Through the instrumentality of art we are sometimes sent—vaguely, briefly—insights which logical processes of thought cannot attain.
Like the tiny mirror of the fairy tale: you look into it and see—not yourself—but for one fleeting moment the Unattainable to which you cannot leap or fly. And the heart aches…
Dostoyevsky once let drop the enigmatic phrase: “Beauty will save the world.” What does this mean? For a long time it used to seem to me that this was a mere phrase. Just how could such a thing be possible? When had it ever happened in the bloodthirsty course of history that beauty had saved anyone from anything? Beauty had provided embellishment certainly, given uplift—but whom had it ever saved?
However, there is a special quality in the essence of beauty, a special quality in the status of art: the conviction carried by a genuine work of art is absolutely indisputable and tames even the strongly opposed heart. One can construct a political speech, an assertive journalistic polemic, a program for organizing society, a philosophical system, so that in appearance it is smooth, well structured, and yet it is built upon a mistake, a lie; and the hidden element, the distortion, will not immediately become visible. And a speech, or a journalistic essay, or a program in rebuttal, or a different philosophical structure can be counterposed to the first—and it will seem just as well constructed and as smooth, and everything will seem to fit. And therefore one has faith in them—yet one has no faith.
It is vain to affirm that which the heart does not confirm. In contrast, a work of art bears within itself its own confirmation: concepts which are manufactured out of whole cloth or overstrained will not stand up to being tested in images, will somehow fall apart and turn out to be sickly and pallid and convincing to no one. Works steeped in truth and presenting it to us vividly alive will take hold of us, will attract us to themselves with great power- and no one, ever, even in a later age, will presume to negate them. And so perhaps that old trinity of Truth and Good and Beauty is not just the formal outworn formula it used to seem to us during our heady, materialistic youth. If the crests of these three trees join together, as the investigators and explorers used to affirm, and if the too obvious, too straight branches of Truth and Good are crushed or amputated and cannot reach the light—yet perhaps the whimsical, unpredictable, unexpected branches of Beauty will make their way through and soar up to that very place and in this way perform the work of all three.
And in that case it was not a slip of the tongue for Dostoyevsky to say that “Beauty will save the world,” but a prophecy. After all, he was given the gift of seeing much, he was extraordinarily illumined.
And consequently perhaps art, literature, can in actual fact help the world of today.
Aleksandr Isayevich Solzhenitsyn is the author of major works of fiction such as Cancer Ward and The First Circle, and of several works of history, above all the volumes of the Gulag Archipelago.
Life is difficult. And it's no fun wrestling with big questions concerning life, money, calling, media, culture and possessions without the assistance of a community of like minded friends. This blog is a world view resource and forum for those, who like me, are searching for wisdom. Hopefully we will learn together. Feel free to add your two cents or resources you find that should be shared.
Tom Grimm has consulted as family wealth advisor for more than 15 years concerning the opportunities and challenges of wealth. His unique history and perspective on wealth make him a valuable advisor to families whether a young family who desires wisdom in how to plan for the future or someone struggling with the Weight of a fortune. Please use the information on this blog as a tool to navigate the joys and peril that come with wealth. Tom can also be reached at 615-310-0637.
