Category: U.S. Economy

I’d like to address a number of forms of depression that I think currently grip our American communities.

First, the disclosure…I am neither a psychologist nor an economist….just an observer.

I recently heard an NPR report that Bill Ackman, a well-known hedge fund manager, believes Herbalife is a financial pyramid scheme.

As my brain often makes seemingly mysterious connections, I immediately started thinking about pensions funds and our current financial marketplaces….realizing that our current financial management systems depend on constant ‘growth’ to remain solvent…and our past growth has been unsustainable in terms of using the Earth’s resources (even at current population size).

Then I realized the financial scale of pensions and American money-management.

Then I became depressed.

I’m not inclined to depression, almost never feel anything like depression. But – as I thought about American money management – I became depressed.

Depression is a state of low mood and aversion to activity (wikipedia). Economic depression is a sustained, long-term decline in economic activity (wikipedia).

Why was I suddenly depressed?

America has recently seen a serious and sustained decline in economic activity. We have seen this decline coincident with the aging of the baby-boomer population.

I believe we have also seen this decline of economic activity at a time where bankers and investment managers were no longer able to ‘manage’ the investment banking system…primarily attempting to use complex financial instruments to offset the financial damage being done by a pension and money management system that was becoming dysfunctional. In essence, the result of their initial confusion and frustration with the existing financial system was complex manipulation which led to an economic depression.

Troubling enough as the last five years have been, it appears to be the mere ‘tip of the financial iceberg’. America has built a private financial management system that, to a great extent, stayed solvent by using the ever increasing ‘investments’ of our boomer population to pay our social security system debts (I don’t just mean here U.S. Social Security, I also mean all the private pension, retirement, risk management systems)….an unsustainable approach both in terms of ecological and population science.

The current Obama Administration has ‘plugged’ the initial hole with a bank bailout and increased American borrowing. The period 2007 thru 2012 was just the first crumbling of our national/international scheme of paying past debts on the backs of future earners.

We will see more and more depression if we continue our current unsustainable financial system.

In listening to President Obama’s Second Inaugural Address I realized his good hearted ideology will be ‘flattened’ by our current financial dilemmas. I also had the feeling he does not ‘get it’ because he has little background in math and finance. He will not solve America’s depression. (By the way, I have liked the guy, just don’t see him solving our current social dilemma).

In reading reviews of Mr. Obama’s address I did come upon one article and a reference to another piece by Patrick Doherty, who I believe does ‘get it’.

Patrick Doherty’s Article

He is realistic and responsible in his thoughts and recommendations.

I would add that we need to combine Mr. Doherty’s notion of a broad based increase in demand with a broad based increase in respect for good work.

As Lamar Alexander quoted in his short Inaugural speech…Find the good and praise it.

Over the past two months I’ve grown more acutely aware of how petty our American economy has become…and what a pernicious effect this is having on our social ethic. Not only are we divided between Wall Street and Main Street, we are profoundly divided on the basic ideas of economic well-being.

This has a number of outgrowths. Tyler Cowen recently wrote in the New York Times an interesting short essay on Mitt Romney’s now famous 47% comment. His article, That Blurry Line Between Makers and Takers, makes the point that “OF MAKING AND TAKING The correct distinction is not “makers versus takers.” The problem is that taking, rather than making wealth, appears to be growing in relative influence.” In essence, our political body is more influenced by economic behavior that ‘takes’ from the American economic whole.

Our penchant for charitable organizations to solve these social problems – and the petty economies of many of those charitable organizations – only adds to the American economic confusion. When I was young, charitable organizations where, in large part, volunteer organizations – many with religious founding. Today charitable organizations are ‘fundraising driven’ entities – many with endowments invested in a broad range of financial mechanisms that have little relationship to the charitable mission of the organization.

Add in the inability of either political party to speak meaningfully and understandably about ‘The Economy’ (How can you speak understandably about an American government that has taken responsibility for so much?) and you have a recipe for confusion.

Add in the observed condition that we are in the second generation of Americans raised under this economic confusion and you have social decline.

The good news is we have a strong undercurrent of sensible thought that both questions our institutionalized confusion – as well as begins to offer different and sound new behavior.

I’m, as you can tell, deeply involved in all of this – both intellectually and practically – and look for your advice and counsel.

Washington (CNN) — You do not have to be an investor in the stock market or real estate or looking for a job to be alarmed when several highly regarded observers warn that the United States economy is about to be driven “off the cliff” by increasing debt, the expiration of tax cuts and the prospect of deep spending cuts.

The alarm should concern anyone who cares about our democratic system.

The reason we are getting awfully close to the edge is because the Democrats and Republicans are inclined to pull the steering wheel in opposite directions. Granted, alarms are often sounded, but as we shall see shortly, this time there are strong reasons to fear that our gridlocked political system will prevent us from responding before we go over the edge.

The most authoritative voice speaking out this time is that of Ben Bernanke, the chairman of the Federal Reserve. He stated recently that, “It is very important to say that if no action were to be taken by the fiscal authorities, the size of the fiscal cliff is such that there is, I think, absolutely no chance that the Federal Reserve could or would have any ability whatsoever to offset that effect on the economy.”

The Article